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Vitalik Buterin: It’s Bitcoin which is Centralized, not Ethereum

Vitalik Buterin took on the Bitcoin community on Twitter by a storm by tweeting that it’s the Bitcoin community that has a lot of middlemen like Tether, Bitfinex, and Blockstream’s sidechain called Liquid while Ethereum community is leading the decentralization by using smart contracts.

Vitalik’s response came to a tweet of a Bitcoiner who alleged that Ethereum has been enabling middlemen through DeFi. DeFi stands for Decentralised Finance and Ethereum is the go-to platform for building DeFi applications. Almost all major DeFi applications from insurance to loans run on Ethereum’s blockchain and use Ethereum ERC-20 tokens.

On being asked about recent censorship of some countries by Uniswap Protocol—a supposedly fully decentralized protocol for exchange, Vitalik commented that the ban was only on the front-end and users from those countries can still access the servers by calling backend directly—an option only fit for very technical traders.

The community also held him responsible for forking the Ethereum blockchain from Ethereum classic after the famous DAO hack, throwing the idea of immutability and permanent nature of blockchain out of the window.

Before founding Ethereum in 2015, Vitalik Buterin was one of the first writers and co-founder of Bitcoin Magazine where he extensively wrote about Bitcoin. Ethereum classic is the version of Ethereum which existed prior to the DAO (Decentralised Autonomous Organization) hack. After forking, there was a philosophical conflict where many Ethereum believers refused to migrate to Ethereum’s new version as it was against the very principles of blockchain. 

Ethereum appears to be more centralized than Bitcoin because Ethereum has influential faces like Vitalik Buterin and Joe Lubin who almost control the narrative around Ethereum while Bitcoin has no such centralized figure after the departure of Satoshi Nakamoto—the author of the Bitcoin whitepaper. 

Bitcoin is not free from the effects of centralization either. Though it does not have a univocal leader like Vitalik Buterin, the mining of Bitcoin is dominated by a group of powerful miners. The bitcoin mining equipment manufacturing industry is also dominated by a select group of companies. Report estimates that Bitmain controls nearly 66% of the mining industry market. 

Bitcoin development is funded majorly by private players like Blockstream Lightning Labs and Square Crypto. A recent report by BitMex found that Blockstream and Lightning Labs are currently funding 8 Bitcoin developers each. 

Powerful crypto exchanges like Binance are evolving into the traditional financial system’s conglomerates. Not only Binance runs the largest crypto exchange but also controls regional crypto exchanges like WazirX in India, owns and operates crypto aggregator site like CoinMarketCap or Dapp aggregator site like DappReview, run a bitcoin mining pool and runs one of the largest futures trading platform.

It would be fair to say that both Bitcoin and Ethereum have centralization problems. In a book by CoinGecko —” How to DeFi”, the company found that none of the DeFi applications were wholly decentralized and all of them had elements of centralization. 

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