Decentralization in Bitcoin and Ethereum Networks

By Adem Efe Gencer, Soumya Sankar Basu, Ittay Eyal, Robbert van Renesse, Emin Gün Sirer. Financial Cryptography, 2018

429 citations recorded by the source corpus.

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.

Subfields: Artificial Intelligence, Computer Networks and Communications, Information Systems

View Paper: https://www.semanticscholar.org/paper/50c01543a35ddc9eb7ae43f5a6cc52602ed62057

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Citations in the corpus

A Survey of Distributed Consensus Protocols for Blockchain Networks (2019, background): “[82] in 2018 shows that throughout a one-year observation period, over 50% of the gross mining power was controlled by eight mining pools in Bitcoin and five mining pools in Ethereum.”
Towards Scaling Blockchain Systems via Sharding (2018, background): “ after some number of blocks, one branch will be adopted by the entire network with high probability. PoW can scale to large number of nodes: 3000 and 4000 nodes for Bitcoin and Ethereum respectively [26]. However, its throughput is limitted, e.g., 7 and 10 transactions per second in average3, due t”
A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks (2018, background): “Typically, a P2P link in blockchain networks is built upon a persistent TCP connection after a protocol-level threeway handshake, which exchanges the replica state and the protocol/software version of each node [38], [39].”