A team of computer scientists from Cornell University examined whether the bitcoin and Ethereum networks were truly decentralized. Emin Gun Sirer, Robbert van Renesse, and Adem Efe Gencer analyzed the
A team of computer scientists from Cornell University examined whether the bitcoin and Ethereum networks were truly decentralized. Emin Gun Sirer, Robbert van Renesse, and Adem Efe Gencer analyzed the node networks by measuring latency and geographic distribution across both systems.
Their paper, "Decentralization in Bitcoin and Ethereum," found that Ethereum has more geographically dispersed nodes compared to Bitcoin. Nodes in the Bitcoin network cluster heavily in data centers controlled by a handful of operators. The team discovered that 56% of Bitcoin nodes sit in data centers, while only 28% of Ethereum nodes do.
"Part of the reason for this is that a much higher percentage of Bitcoin nodes reside in data centers," the paper read. "Nodes that reside in data centers may indicate an increased level of corporatization. They may also be a symptom of nodes deployed to skew node counts for various different implementations."
Bitcoin developers have long criticized Ethereum's network as inferior in security and decentralization. The Cornell paper contradicts this, finding Ethereum's nodes more geographically dispersed and less concentrated in data centers.
Decentralization in mining tells a different story. Both networks concentrate mining power among a small number of operators. The top three miners in Ethereum and the top three in Bitcoin control more than 50% of the hash rate between them. Fewer than 20 mining entities across both systems produce the vast majority of new blocks.
Sirer outlined the findings: "in Bitcoin and the top three miners in Ethereum controlling more than 50% of the hash rate. The entire blockchain for both systems is determined by fewer than 20 mining entities. Thus, we see that more research is needed in this area to develop permissionless consensus protocols that are also energy efficient."
The concentration of mining power doesn't weaken either network's security. Individual miners in a pool can leave at any time and move their computing power elsewhere. If miners lost trust in a particular pool, they could switch to another. Mining pools commanding most of the hash rate reflects the capital requirements for mining rather than a fundamental network weakness.
Bitcoin's open-source development community approaches new changes cautiously, requiring extensive review before integrating anything. Ethereum's development community embraces more risk, pursuing experimental approaches and untested technologies when the potential benefits warrant the risk. This philosophical split has led the two networks to pursue different technical goals.
Bitcoin developers are testing Lightning, a system designed to process transactions faster without burdening the main blockchain. Ethereum's team is further along in developing ZK-SNARKs, Plasma, Sharding, and Casper, a suite of technologies meant to improve scalability and the network's consensus mechanism.
