The Decentralization Lie: BTC and ETH Are Not What They Seem
By Dr. Pooyan Ghamari, Swiss Economist and Visionary
For more than a decade, Bitcoin (BTC) and Ethereum (ETH) have been celebrated as revolutionary forces, championing decentralization, financial freedom, and a future free from the control of centralized institutions. These narratives have fueled massive adoption, speculation, and an industry that has grown to trillions of dollars. Yet, behind the veil of innovation and disruption lies a sobering truth: the so-called decentralization of BTC and ETH is, in many respects, an illusion.
The Centralization of Mining Power
At its core, Bitcoin was designed to be a peer-to-peer currency where anyone could participate equally in securing the network. However, the reality today is starkly different. Mining is now dominated by a handful of large pools, often concentrated in specific regions with access to cheap electricity. This concentration of computational power undermines the decentralized ethos of Bitcoin, leaving its security and governance effectively in the hands of a small number of actors.
Ethereum faces a parallel issue. While its transition to Proof-of-Stake was marketed as a move toward sustainability, it has also concentrated power in the hands of the wealthiest validators. Those with the largest holdings of ETH gain disproportionate influence over transaction validation and network consensus, creating a system where the rich quite literally get richer.
Development and Governance Bottlenecks
True decentralization requires not only distributed infrastructure but also distributed governance. In both Bitcoin and Ethereum, however, the core development teams hold immense sway. Decisions about protocol upgrades, forks, and future directions are typically driven by small, centralized groups of developers and influential stakeholders. This creates a hidden hierarchy, where the illusion of decentralization masks what is, in practice, a highly centralized governance model.
Dependence on Centralized Exchanges and Custodians
Another layer of centralization is found in how BTC and ETH are actually used by most participants. The majority of trading and liquidity is handled through centralized exchanges, which control access, set rules, and act as custodians of vast amounts of user funds. Furthermore, these exchanges are increasingly subject to regulation, making BTC and ETH far less immune to state influence than their advocates claim.
The Myth of Immutable Freedom
Proponents of BTC and ETH argue that these networks are immune to censorship and government intervention. But as regulators tighten their grip globally, it becomes clear that both ecosystems remain vulnerable. Exchanges can freeze accounts, governments can impose compliance rules, and developers themselves can implement protocol changes that fundamentally alter the networks. What is sold as “immutable freedom” is, in reality, a system tethered to both regulatory and financial interests.
Toward True Decentralization
The lesson here is not to abandon BTC or ETH entirely, but to recognize their limitations. Decentralization is not a static claim—it must be continuously evaluated and re-examined. Newer blockchain models, governance structures, and technologies may be required to truly achieve the ideals that Bitcoin and Ethereum only claim to embody.
As investors, innovators, and policymakers, we must not be blinded by slogans or marketing narratives. The future of digital finance will only be as decentralized as the mechanisms we design to keep power genuinely distributed.