How do you measure decentralization?
Quote of the day, "Tell me how you measure, and I will tell you how you behave"
People often say one of bitcoin’s unique qualities is decentralization. This property gives bitcoin censorship resistance. How do you measure decentralization, what is the appropriate criteria?
In a recent post of “The Daily Bitcoiner” by Cory Klippsten, he alludes to a recent speech by Gary Gensler. The article concludes that the appropriate criteria is; how easy is it to change the consensus rules of the protocol.
The article alludes to a recent speech Gensler gave at The practicing law institute. The best part of the article is here:
“Gensler posed a question to all the lawyers in the audience. He asked, “Do you represent any clients regarding their token projects? How exactly were you hired? Did you enter into an engagement letter? I’m going to guess that you had a client. I’m going to guess that you did not take on the work on behalf of a dispersed, unidentified group of individuals in an “ecosystem.” What Gensler
is getting at here is, how decentralized is your project? If a foundation or centralized team can hire a lawyer to defend them in court, well, that doesn’t sound very decentralized at all, in fact, that sounds a whole lot like a company. It is hard to argue against Gensler’s logic here, but how does one measure the decentralization of a project exactly? The answer is that you can’t, at least not objectively. Most of the metrics frequently cited to measure decentralization, such as the number of nodes, developer commit listings, exchange trading volumes, etc., fall short because they are easily gameable, and their volumes can be faked.
The article concludes
In the end, the only way to measure whether or not a project is sufficiently decentralized is by looking at outcomes. Only through attacking a project, and trying to change its consensus rules, can someone really know if it is decentralized or not. Bitcoin has never changed its consensus rules in its lifetime. It has done so while constantly operating in a highly adversarial environment. Its track record speaks for itself — Bitcoin has proof of work. In other words, the proof is in the pudding. Bitcoin is the only cryptocurrency in existence that has proven to be decentralized because only Bitcoin’s consensus rules have remained unchanged since its inception.
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