Bitcoin vs Ethereum: Who is the true king of Decentralization?

Many people think that the degree of decentralization of Bitcoin and Ethereum is the same, but in fact, it is far from it. Although both chains claim to be “decentralized,” their implementation methods are completely different, each with its own problems.

What is true Decentralization?

Simply put: no one can control this chain alone. Power is decentralized among the nodes of the entire network, and no single organization can manipulate it. This is how it can be ensured:

• Security: No single point of failure
• Transparency: All transactions are publicly accessible.
• Anti-censorship: No one can freeze your assets

But ideals are rich, while reality is thin.

The Path of Bitcoin: Mining is Decentralized, but There are Concerns

BTC uses Proof of Work (PoW), with miners worldwide maintaining the network together. It sounds very decentralized, but —

Current Situation: A large number of mining farms are concentrated in areas with cheap electricity (such as China and Iceland), which has effectively formed several large mining pools. Research shows that a few participants can threaten network security (Nakamoto coefficient).

Another issue: A fixed supply of 210,000 coins sounds good, but it can protect BTC from inflation. However, with halving every 4 years, the miners' rewards will significantly decrease. Will this affect their enthusiasm? This is a long-term concern.

The Ambition of Ethereum: Powerful Functionality, Greater Centralization Risks

Ethereum switched from PoW to PoS (Proof of Stake) in 2022, reducing energy consumption by 99%, which is really impressive. But the question arises:

Validator Centralization Risk: PoS requires validators to lock ETH to participate in consensus. What’s the result? Large institutions and major exchanges dominate the staking pools, while the participation of small retail investors is low. The more money you have, the greater your influence.

Infrastructure Dependency: Many L2 scaling solutions rely on centralized cloud services like AWS and Google Cloud. Isn't this like shooting oneself in the foot?

Unequal distribution of rewards: The rewards for validators on the beacon chain are distributed unevenly, making the rich richer.

Data Speaks: Who is More Decentralized?

The industry uses several indicators to evaluate:

• Nakamoto coefficient: The minimum number of participants needed to execute a 51% attack. The larger the number, the more decentralized.
• Gini Index: Measures wealth distribution. The closer to 0, the more equal.
• Herfindahl Index: Observe market concentration

The most heartbreaking thing is: Cardano, these latecomer chains, actually surpass BTC and ETH in these metrics. This indicates that Cardano relies on fewer big players.

The Rise of DEX: The True Direction of Decentralization

Centralized exchanges (CEX) have frequently encountered issues (in October 2025 alone, there was a liquidation of $19 billion), leading more and more people to migrate to decentralized exchanges (DEX).

Advantages of DEX:

• On-chain transparency: All transactions are on the blockchain, and cannot be cheated.
• No intermediaries: You control your private keys, so you don't have to worry about exchanges running away.

The Real Dilemma

Decentralization sounds good, but there are three major challenges in implementation:

1. Scalability Dilemma: With more transactions, fees have increased and speed has decreased. How to strike a balance? There is no perfect answer.
2. Infrastructure Trap: Even decentralized chains still rely on centralized cloud services behind them.
3. Small Retail Investors Are Being Pressured: In a PoS system, if you have less ETH/ADA, the rewards you earn from participating in consensus are lower, making you less competitive.

Conclusion: There is no perfection, only trade-offs

Bitcoin is more “pure”, but mining has already become industrialized. Ethereum is powerful, but the risks of centralization are rising. The road ahead is still long, and the key is to see how each chain finds a balance between decentralization, security, and speed.

In one sentence: Which chain to choose depends on what you care about the most.