BSC News Roundtable: Is Blockchain Decentralization a Myth?

BSC News Roundtable on Blockchain Decentralization

Welcome to the BSC News Roundtable, where we leverage the expertise of our staff (inside and out of the newsroom) to discuss important topics in blockchain and crypto.

In this edition, we pondered the big question: “Is blockchain decentralization a myth?” In doing so, we built off our last Roundtable, where we discussed the $580 million BNB bridge exploit and BNB Chain’s ability to quickly convince validators to temporarily pause activity on the chain.

All BSC News staffers who participated in the Roundtable agreed that decentralization is a myth, with several pointing out how chains like BNB, Ethereum, and even Bitcoin are more centralized than might initially meet the eye.

As to the benefits of decentralization, and whether it is desirable or even possible to achieve true decentralization, opinions were more varied.

Read on to view highlights from the discussion:

Kyle Heise, BSC News Director of Content based in California with a background in diplomacy, linguistics and technology, and a penchant for meme projects

“I’ve had a mantra basically the whole time I’ve been in crypto, and it’s been that decentralization is a myth. I’ve never been able to shake this. If you think about BNB Chain, it’s centralized around its validators. It’s a very small amount of validators. You can almost count them on your fingers and toes.”

“People like to talk about how Ethereum is truly decentralized. But in recent weeks, we’ve seen that only five entities hold two-thirds of all staked ETH. So all that staked ETH is centralized. Going further, look at the recent actions of Sam Bankman-Fried and the regulatory solutions he’s putting forth here in the United States, where he more or less wants to have DeFi mirror traditional finance in a lot of ways. And there’s been a lot of shouting at him in the past few weeks about that because people are fearful that it’s going to become way more centralized than it should be.”

“Bitcoin is really the true DAO -- a Decentralized Autonomous Organization. It’s potentially the most decentralized crypto asset we have to date, which is why it is still the most powerful digital asset in existence. It is still the purest form of decentralization that we have. It’s likely still the best tool to lead us toward a more decentralized life or more decentralized digital world in the future.”

“To me, decentralization is 100% a myth. We have to be able to acknowledge as an industry, as a group, that we don’t live in this perfectly decentralized world, that there are still several actors who hold a lot of sway and hold a lot of power. That’s not a world we should be trying to preserve.”

*****

Andrew Sawa, BSC News Journalist based in Nigeria, with a background in fintech and an interest in blockchain and Web3

“I don’t know if there is a consensus definition on what decentralization should be or what decentralization is for blockchains.”

“If you look at it in a real sense, even Bitcoin, which I think of as the gold standard of crypto, it’s by far the most decentralized but when you look at the mining pools you'd see it is relatively centralized with a few of these pools controlling over 50% of the hash power.”

“Decentralization is something that the users, the masses, the community want to be a reality. People have lost faith in centralized authorities, big governments, big organizations. As of today, we have to be sincere with ourselves, it’s still a mix. Maybe it’s the eventual goal we’re striving for, but as of today you can hardly see decentralization as a reality.”

“I don’t know if there is a consensus on what decentralization should look like, but even so, it’s still a myth as of today. I hope it becomes a reality. But for now it isn’t.”

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Ahamdi Abarikwu, BSC News Journalist based in Nigeria, with a background in electrical engineering and a passion for crypto, writing and editing.

“Decentralization is the basic idea of blockchain technology. But I personally doubt whether it can actually be implemented in its purest form. It’s human nature. Decentralization wants to entrench equality, with more participation and equal rights. But is it practicable in our world?”

“We know what we want to achieve with decentralization, but at the point where we need to put it into practice, that aspect of human nature will eventually come up. How would you ensure that each party, every stakeholder in the system has equal rights? You can’t regulate people’s financial power, really.”

“Decentralization does not want regulation. Decentralization can very well apply to things like gaming and gaming systems. But when it comes to financial markets, where people’s lives and economies are at risk, there’s always bound to be some form of regulation.”

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Samuel Mbaki, BSC News Journalist based in Kenya, with a background in writing and journalism on many topics, including crypto

“Decentralization is a myth for me. I believe that the world should reach a point where decentralization and centralization are at a balance. For instance when you come to things like attacks, like what happened with BNB Chain, were it not for centralization, the chain would have lost a lot of money.”

“Also, I still believe that even coins and things that are believed to be decentralized, they are still far away from that. For instance, Bitcoin. You believe it is the most decentralized coin that we have and the best one, but if you look, something like only four mining pools account for over 51% of the hash rate. That does not sound so decentralized.”

“How far should decentralization go? Because if you let it go too far, it can ruin the system instead of making it as we would want it to be, in my view.”

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Soumen Datta, BSC News Journalist based in India, with a background in laser physics and an interest in DeFi, P2E gaming and NFTs

“I believe we have a long way to go to achieve ‘Decentralization’ in decentralized finance. Even Bitcoin, the largest cryptocurrency by market cap, is held primarily by a few whales, and we know about MicroStrategy. Further, a handful of validators controlling one-third of the staked assets can hijack most proof-of-stake chains.”

“Moreover, a single influencer, such as Elon Musk, can have a massive impact on the price of a token. In this sense, any cryptocurrency can become centralized as a result of an individual or group's influence on the community.”

“To combat growing DeFi centralization, a community-first approach may be the way forward. Yet, much work needs to be done before we can get there.”

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Patrick Brendel, BSC News Editor based in the Cayman Islands, with a background in many aspects of journalism and an interest in blockchain and crypto

“I’m not sure myself what the value of decentralization is. Is it something we should always be going toward, or does it matter as long as we have the luxury of having a variety of blockchains to choose from? I can do my project on Ethereum. I can use an L2. I can use BNB if I want. I can use Cronos. I can spread my own personal, very modest investments around to different projects on different chains with different DAOs. So I always have a choice of using the level of decentralization as one factor to consider when I’m voting with my wallet, so to speak. As long as new projects are being created, new blockchain options are coming online, then that element of freedom and choice still exists.”

“The problem arises as power structures become more entrenched, through regular use, and the status quo starts to take hold. Then the really big caliber bullet in the chamber is government regulation. Then when they start stifling the creation of new projects, and the ways that blockchains can function, then that can stifle individual users’ choices. One aspect of a heterogeneous system is you can choose the level of centralization or decentralization that you want, because there isn’t one central authority setting a standard for what level of centralization is appropriate.”