Decentralization in Bitcoin and Ethereum Networks

TL;DR

This study measures the decentralization levels of Bitcoin and Ethereum, analyzing network resources, node interconnections, protocol factors, and system robustness to assess their decentralization in practice.

Contribution

It provides the first comprehensive measurement comparison of decentralization metrics for Bitcoin and Ethereum, offering insights and improvement suggestions.

Findings

Neither system is strictly more decentralized than the other.

Both networks have specific vulnerabilities and areas for enhancement.

Measurement techniques and tools like Falcon Relay Network were effectively utilized.

Abstract

Blockchain-based cryptocurrencies have demonstrated how to securely implement traditionally centralized systems, such as currencies, in a decentralized fashion. However, there have been few measurement studies on the level of decentralization they achieve in practice. We present a measurement study on various decentralization metrics of two of the leading cryptocurrencies with the largest market capitalization and user base, Bitcoin and Ethereum. We investigate the extent of decentralization by measuring the network resources of nodes and the interconnection among them, the protocol requirements affecting the operation of nodes, and the robustness of the two systems against attacks. In particular, we adapted existing internet measurement techniques and used the Falcon Relay Network as a novel measurement tool to obtain our data. We discovered that neither Bitcoin nor Ethereum has strictly better properties than the other. We also provide concrete suggestions for improving both systems.