The Myth of Crypto Decentralisation

The Myth of Crypto Decentralisation

A cryptocurrency is a form of digital asset based on a network that is distributed across a large number of computers in the form of digital ledgers we call blockchains. One of the key characteristics of a blockchain is that it is decentralised. This characteristic not only enables peer-to-peer transactions but also hopes to achieve an ecosystem where many players can equally participate and share. Now, a lot of people swear by the importance of decentralisation in the blockchain and crypto world. But how decentralised is crypto?

As of February 17, there are over 17,500 cryptos and the total market capitalisation of cryptocurrencies is around $1.9 trillion (roughly Rs. 1,41,70,000 crore). Of this, the share of the top 5 cryptos by market capitalisation is:

  • Bitcoin (BTC): 41.8 percent
  • Ethereum (ETH): 18.8 percent
  • Tether (USDT): 4.1 percent
  • BNB (BNB): 3.6 percent
  • USD Coin (USDC): 2.8 percent

The top 5 cryptos account for more than 71 percent of the entire crypto market!

Now, let’s see how decentralised the top 5 cryptos are.

1. Bitcoin

Bitcoin transactions are “confirmed” by miners using a process called “proof of work”.

Bitcoin’s “hash rate” is the amount of computing and processing power in the network. If malicious miners get 51 percent of the hashing power, they could cause devastating problems such as:

  • double-spending coins, and
  • prevent certain transactions from being verified

According to statistics from, over the last 1 year, this is the hash rate share of the top 5 mining pools:

  • AntPool: 15.16 percent
  • F2Pool: 14.86 percent
  • Poolin: 11.81 percent
  • ViaBTC: 11.10 percent
  • Binance Pool: 10.18 percent

The top 5 mining pools control 63.11 percent of the hash rate!

2. Ethereum

Ethereum also runs on proof of work and the top 2 mining pools control over 51 percent of Ethereum’s hash rate!


3. Tether (USDT)

USDT tether cover unsplash drawkit illustrations large Tether

Tether (USDT) is a 100 percent centralised fiat-backed stablecoin issued by a Hong Kong-based company called Tether. The company keeps commercial paper and other reserves that are equal in USD value to the number of USDT in circulation.

4. BNB (BNB)

BNB is the native token of the popular Binance Smart Chain that chooses the top 21 highest-stake nodes as validators. The minimum amount for self-delegation is 10,000 BNB. That’s over $4 million (roughly Rs. 30 crore). This makes the Chain highly centralised.


5. USD Coin (USDC)

USD Coin (USDC) is a 100 percent centralised fiat-backed stablecoin issued by the Centre Consortium, which has 2 founding members – peer-to-peer payment services company Circle and the Coinbase cryptocurrency exchange.

Rohas Nagpal is the author of the Future Money Playbook and Chief Blockchain Architect at the Wrapped Asset Project. He is also an amateur boxer and a retired hacker. You can follow him on LinkedIn.

 Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.

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