- Bitcoin faces centralization risks with only Bitcoin Core as the client and diminishing home mining profitability.
- Ethereum’s decentralization is bolstered by over 170 active developers and strong anti-centralization measures.
As of late 2024, Bitcoin (BTC) faces increasing scrutiny regarding its decentralization, while Ethereum (ETH) is acknowledged for its robust decentralization practices, as outlined by investor and advisor Anthony Sassano.
Challenges in Bitcoin’s Infrastructure
Bitcoin’s decentralization is challenged by several key issues. The predominant issue is the lack of diversity in Bitcoin client software, with Bitcoin Core being the only mainstream option. This creates a central point of potential failure or control.
Additionally, the largest Bitcoin mining pools, Foundry and AntPool, implement KYC requirements, which could centralize control over mining activities. The profitability of mining Bitcoin at home has decreased, leading to more centralized, industrial-scale mining operations.
The security of Bitcoin, dependent on its proof of work (PoW) mechanism, may diminish as the network’s security budget decreases with each halving, expected to lower significantly in 8-12 years. Moreover, the departure of key developers from the Bitcoin Core team, with fewer than five reportedly active, raises concerns about ongoing maintenance and development.
Ethereum’s Decentralization Efforts
Ethereum, on the other hand, has taken several steps to ensure its decentralization. It has set up strong anti-centralization measures and supports a large and diverse developer community, with more than 170 developers actively involved.
Ethereum also resists censorship and has maintained a social layer that fosters free discussion, enhancing its adaptability and resilience.
Why I believe that Bitcoin is less decentralized than Ethereum:
– No client diversity so Bitcoin Core is effectively the protocol spec
– 2 KYC’d mining pools in the U.S are the biggest pools
– PoW inherently centralizes over time due to economies of scale
– Impossible to mine at…— sassal.eth/acc
(@sassal0x) December 30, 2024
Following ETHNews reports, The economic model of Ethereum, featuring “tail issuance,” is considered sustainable and conducive to long-term security and development, contrasting with Bitcoin’s fixed supply model.
Despite Ethereum’s structural advantages, its market performance relative to Bitcoin has seen fluctuations. On November 21, the ETH/BTC ratio dropped to a multi-year low, although there has been a slight recovery since then.
ETHNews analysis reveals that while Bitcoin is grappling with centralization issues due to its infrastructure and developer activity, Ethereum is advancing in decentralization through continuous development efforts and community engagement, shaping the narrative and potential trajectory of each in the cryptocurrency ecosystem.
Bitcoin (BTC) is currently priced at $93,945.07 USD, with a 24-hour trading volume of $29.36 billion USD. In the past 24 hours, the price has declined by 1.73%, adding to a 4.67% decrease over the past week.
Despite this short-term bearish trend, Bitcoin maintains its dominance as the largest cryptocurrency, with a significant market capitalization of $1.86 trillion USD and a circulating supply of 20 million BTC tokens.
In the last 24 hours, Bitcoin has traded within a range of $92,852 USD to $95,638 USD, demonstrating moderate volatility. Currently, Bitcoin is trading approximately 13.74% below its all-time high of $108,135 USD, which was recorded in December 2024.
In the short term, Bitcoin’s price is likely to fluctuate between $92,500 and $96,000 USD, with potential for upward movement if the $96,000 resistance is broken. However, failure to hold above $92,500 may lead to further declines toward $90,000.
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