Decentralization is definitely one of the most important reasons to consider the use of blockchains. Not having a single point of failure, enabling for voluntary participation to the protocol, and allowing anyone to mine or stake are all must-haves for any serious cryptocurrency project. However, the situation is not always favorable for decentralization, even among the most popular projects.
Jackson Palmer, the often bitter Dogecoin creator, has decided to take his criticism of the cryptocurrency market to a new level by creating arewedecentralizedyet.com. In order to ask this puzzling question, he decided upon five criteria which include the number of entities controlling more than 50% of the hash power, the percentage of coin supply being held in top 100 wallets, the number of clients which run the coin’s protocol, the number of live public nodes, and whether or not miners or node runners are incentivized.
Accordingly, the otherwise rational and sound inquiry “Are we decentralized yet?” gets answered from a technical, political, and monetary point of view. It’s everything we need to know about the most important cryptocurrency projects in order to get an objective insight into the state of development. A more centralized coin is definitely undesirable, as it’s more likely to fail in the aftermath of malicious attacks or government interventions. The more decentralized ones should attract more investors, developers, and community members, as they tick all the monetary, engineering, and ideological boxes to become interesting and worthwhile.
In theory, everything is clear and simple. But in practice, we’re bound to discover how more decentralization doesn’t really imply more success. On the contrary, a quick look at the list suggests that projects like NEO, Stellar (XLM), IOTA, NEM, and Nano are very much centralized.The "Are we decentralized yet?" spreadsheet is coming together nicely with the help of some great community member...