Emin Sirer Gyun: Bitcoin and Ethereum is not as decentralized as it seems

Researchers at Cornell University, using a network of Falcon Relay Network, came to the conclusion that the two most popular cryptocurrency blockchain — Bitcoin and Ethereum, not as decentralized as it seems. According to the results of a two-year study it was concluded that bitcoin is not the full advantage of the networking opportunities, Ethereum is better distributed than Bitcoin, and Bitcoin rewards for small-scale miners often unpredictable due to the limitations of block size.

«Decentralization of the networks Bitcoin and Ethereum» — study group Initiative for Cryptocurrencies and Contracts (IC3) at Cornell University, headed by Emin sirer Kyeong-a (Emin Gün Sirer), University Professor and co-founder of the group, can become a cause of concern for members of the cryptocurrency community. Initially, the study planned to present in February at the conference Financial Cryptography and Data Security in curaçao, however, the document was published online January 15, 2018.

The document examines the actual decentralization of the two largest cryptocurrency networks on the market — Bitcoin and Ethereum. The researchers studied the nodes and their interconnection, Protocol requirements and how they withstand the attack, using a network of Falcon Relay Network (FRN) to collect data.

The study was conducted from 2015 to 2017, a group of researchers, which included ADEM EfE Genser (Adem Efe Gencer), Some Bass (Soumya Basu), Itta AAL (Ittay Eyal) and Robert van Reness (Robbert van Renesse). One of the basic elements of the research was to document 2016. Apparently, the capacity of the nodes of Bitcoin increased 1.7% in 2016. Based on this the researchers argue that the block size can be increased without affecting decentralization.

Mining centralization

The researchers argue: «To date, we are unable to find arguments in favor of any particular value of the maximum block size in Bitcoin», they insist that there is «dissonance between the technical validity of the arguments and the facts».

«Compared to Ethereum nodes of Bitcoin, tend to be more grouped, both from the point of view of the network delay and from a geographical point of view,» the study argues. «In other words, nodes Ethereum more, and they are better distributed around the world. This indicates that the distribution of full nodes, Ethereum is much more decentralized». The researchers attribute this to data centers that contain a large percentage of Bitcoin nodes — more than half. In the case of Ethereum, the number of such nodes is about 25%.

Data centers hinder the pursuit of decentralization, as they often belong to the corporations. Accounting node can also help to distort public opinion through the so-called Sybil attack. These attacks can have an impact on the P2P system, creating an impression of more consensus than there really is. This is a real problem for consensus networks such as Bitcoin.

The results show that in Ethereum and Bitcoin «mining is very centralized — the four largest Bitcoin pool and three large pool Ethereum control more than 50% can see networks.» In fact, «the fate of the blockchains of both systems is determined in less than 20 mining companies.»

Finally, «the reward for mining Bitcoins is unpredictable for small miners», if you compare this figure Ethereum. «This is partly due to the fact that high speed building blocks of Ethereum (about 15 seconds) helps to provide more opportunities to small miners on the law of large numbers, while Bitcoin with his rare blocks can exhibit much more uncertainty from month to month.»

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