Introduction Since 2012 I have been involved with cryptocurrencies: in particular, from 2012 to 2018 in mining, so BTC & ETH were among the first assets I worked with closely. And I still don’t give preference to one over the other. As a crypto enthusiast, I believe this makes no sense: our portfolios should be as widely diversified as possible, not concentrated in a single asset—otherwise, that’s also a form of centralization. Since 2012 Unfortunately, not everyone understands this: even such well-known figures as J. Dorsey keep repeating Bitcoin maximalism, although it makes no sense. But what’s even more meaningless is that they give Bitcoin (as a network) an advantage over Ethereum in terms of decentralization, relying not on any objective data, but on their own convictions. This only confuses market participants, especially newcomers. Dorsey So let’s compare Bitcoin and Ethereum, and also BTC & ETH, from different perspectives. BTC & ETH, from different perspectives. Disclaimer I know Bitcoin’s architecture fairly well and Ethereum’s quite decently, so I tried to compare what can be compared and left aside what cannot. Still, for me in this case a high-level and broad comparison itself is more important than the details of each comparison point, since the levels of decentralization are inexhaustible and their thorough analysis would take hundreds of pages. So I had to simplify in some places. Keep this in mind. I know Bitcoin’s architecture fairly well and Ethereum’s quite decently, so I tried to compare what can be compared and left aside what cannot. Still, for me in this case a high-level and broad comparison itself is more important than the details of each comparison point, since the levels of decentralization are inexhaustible and their thorough analysis would take hundreds of pages. So I had to simplify in some places. Keep this in mind. Levels of Decentralization. List The list can be quite long, but here is one simple approach: B2B – decentralization of the “builders” of the network: miners, validators, etc. B2C – decentralization from the perspective of the network’s clients. B2B – decentralization of the “builders” of the network: miners, validators, etc. B2B B2C – decentralization from the perspective of the network’s clients. B2C Let’s start with the first. Decentralization of Network Actors PoW vs. PoS For as long as I can remember, there has always been debate about which consensus is better. And while for me the correct answer is PoW, it cannot be denied that PoS has evolved greatly over the last 10+ years—especially in Ethereum. At one point, Ethereum had more than a million validators (1,085,264), while Bitcoin had only about a hundred pools, two of which reach 40–51%: validators pools ** **It is clear that if you understand Bitcoin’s architecture, you will immediately see what this is about: there are no fewer miners in the world than validators, and their entry point is cheaper than that of validators (around $10k (ASIC) versus $100k (32 ETH) on average), but the pooling makes the picture look worse purely visually. Be that as it may, today one cannot say that Bitcoin is obviously more decentralized in this regard than Ethereum. Be that as it may, today one cannot say that Bitcoin is obviously more decentralized in this regard than Ethereum. Nodes First let’s look at the geography. Here is Ethereum: Ethereum Or here’s another approach: approach And here is Bitcoin: Bitcoin So, we end up with 23,244 Bitcoin nodes versus about 11,202 Ethereum nodes: a difference of roughly two times. At the same time, if you look at the average number of nodes over 8 years, Bitcoin’s figure will be around 13,685, so we cannot speak of a critical superiority here either. 23,244 11,202 13,685 All the more so since the heat maps of nodes for both networks coincide. Ethereum: Ethereum Bitcoin: Ethereum has a dependency on AWS and similar (cloud) solutions: AWS Once I made a forecast that the number of TOR nodes would increase in the Bitcoin network, and this indicator (Autonomous System Number) is indeed impressive: A S N Therefore, in this aspect, the leadership goes to Bitcoin. But now let’s take a look here: here And now—Bitcoin again: Bitcoin Yes, you may not really want to compare these networks in this particular way, but here the advantage will definitely be on Ethereum’s side. You can even frame this perspective like this: like this Therefore, in terms of nodes, I would call it a draw between the two networks. But shall we move on? Let’s go… I’ll just add one more note: Bitcoin mining is mainly concentrated in the USA, China, Russia (which mostly connects to Chinese pools), Canada, and a number of other countries: countries Whereas in Ethereum, even taking into account AWS and the formal U.S. IP of such nodes, it is still easy to find nearly 90 different regions: 90 different regions It is clear that one can connect to more and more pools, that they can be p2p, etc., but it cannot be said that Bitcoin unambiguously has a higher level of decentralization in terms of geography: if anything, rather the opposite. And yes, it is clear that the architecture of full nodes in Ethereum and Bitcoin is completely different, so I won’t attempt to directly compare them. By the way, in Bitcoin node operators receive nothing at all. Miners, however, are rewarded for finding the NONCE. In Ethereum, besides validators, there are also block producers, relays, and searchers: validators, there are also block producers, relays, and searchers Validators — formally responsible for block selection and finality confirmation (they propose a block or sign attestations). Each slot assigns one validator-proposer. Block producers (block builders) — separate participants who construct the blocks themselves. They select transactions from the mempool, order them, insert MEV transactions, and optimize profitability. Through the MEV-Boost protocol, block builders pass the completed blocks to the validator-proposer. Relayers — intermediaries between builders and validators. They verify the validity of the block, hold it until publication, and guarantee payment to the validator. Searchers — algorithmic traders/arbitrageurs who generate individual transactions or “bundles” for MEV. They don’t build whole blocks but look for opportunities to insert profitable operations, which they then pass to the builders. Validators — formally responsible for block selection and finality confirmation (they propose a block or sign attestations). Each slot assigns one validator-proposer. Validators validator Block producers (block builders) — separate participants who construct the blocks themselves. They select transactions from the mempool, order them, insert MEV transactions, and optimize profitability. Through the MEV-Boost protocol, block builders pass the completed blocks to the validator-proposer. Block producers Relayers — intermediaries between builders and validators. They verify the validity of the block, hold it until publication, and guarantee payment to the validator. Relayers intermediaries Searchers — algorithmic traders/arbitrageurs who generate individual transactions or “bundles” for MEV. They don’t build whole blocks but look for opportunities to insert profitable operations, which they then pass to the builders. Therefore, one can hardly claim that a single role is more decentralized than four. And after the encryption of the mempool and the integration of ZKP mechanics, which Ethereum recently announced, Bitcoin will certainly not hold the leadership. mempool Dev Dev Let’s take all the development: gitlive.net. And ask the question: “Is Bitcoin also strong here?”. gitlive.net Whether you like it or not, Bitcoin cannot even come close to Ethereum in terms of DAPP development. Here is Bitcoin: Bitcoin But if Ethereum lags behind, it is only in certain vectors. Let’s take, for example, ERC-20 on Ethereum: it’s clear that not everything there is always about DAPPs, but what interests us now is the basic comparison, not the details: ERC-20 on Ethereum And after all, every ERC-20 token is either a project, an initiative, or a new trend, etc. Compare the applications on both networks: Bitcoin: alchemy.com/dapps/ecosystem/bitcoin Ethereum: alchemy.com/dapps/list-of/defi-dapps-on-ethereum Bitcoin: alchemy.com/dapps/ecosystem/bitcoin alchemy.com/dapps/ecosystem/bitcoin Ethereum: alchemy.com/dapps/list-of/defi-dapps-on-ethereum alchemy.com/dapps/list-of/defi-dapps-on-ethereum The leaders have always followed Ethereum: in NFT — Blur, OpenSea, which were challenged by Magic Eden, but only by repeating their schemes; in DeFi — AAVE, Uniswap, with competition only from Solana applications, but again just by imitation; DePin has now moved to Solana, but it originally started with Ethereum. The leaders have always followed Ethereum And it has always been this way: here are the data from five years ago from my old research on the number of DAPPs: You can search other aggregators as well: dappradar.com/rankings/protocol/ethereum?range=30d — the point will be the same today. dappradar.com/rankings/protocol/ethereum?range=30d L2 as the next step By the way, Bitcoin actually inherits almost everything from Ethereum: yes, colored coins were invented in Bitcoin, and standard NFTs appeared thanks to ERC-20; yes, DeFi in Bitcoin started back in 2014, but they only entered our lives on a massive scale in 2017–2020 thanks to Ethereum (even memes originated outside Ethereum, but it was Ethereum that gave them the push toward mass adoption). Bitcoin actually inherits almost everything from Ethereum That’s why Bitcoin had its own L2 — LN — but it is on Ethereum that we see optimistic and ZK-rollups (there are also 4 types of zk-EVM, though that’s a slightly different story), which include giants such as Arbitrum, Optimism, etc. And these are huge stacks: just look at the Optimism SuperChain family or the legacy of Arbitrum. L2 — LN — but it is And even with the emergence of new L2s on Bitcoin in 2023–2025, there’s really nothing to compare here: the leadership will remain with Ethereum. It’s enough to look at the numbers and the progress: numbers progress Or even here: here Again, it’s clear why Ethereum is so far ahead here: it turned L2 into proper sharding (unlike Solana, Near, or even Zilliqa). But since Bitcoin decided to fight it on this field, the comparison has become quite relevant. Bitcoin decided to fight it on this field EVM Even if something isn’t on Ethereum itself, it usually appears on EVM-compatible chains, not on Bitcoin-compatible ones. Judge for yourself: Avalanche Polkadot (Moonbeam) Cosmos (EVMos, etc.) Solana (Neon) Near (Aurora) HyperLiquid Tezos (EtherLink) etc. Avalanche Polkadot (Moonbeam) Cosmos (EVMos, etc.) Solana (Neon) Near (Aurora) HyperLiquid Tezos (EtherLink) etc. And many others — EVM-compatible or inheriting from it (like Tron/Sonic). By the way, even from an economic standpoint, many of these projects owe their existence to Ethereum: Polkadot, Cosmos, Tezos, Tron and others — all were ICOs on Ethereum. Even Avalanche, which was originally more of a competitor to Polkadot & Cosmos as a multichain solution, ended up EVM-compatible as well. Moreover, many are even ready to become L2s on Ethereum in order to fit into the decentralization economy: Lisk, for example, among recent projects, or even BeraChain, if you look at it broadly. Wallets. Accounts. Adresses Wallets. Accounts. Adresses Wallets. Accounts. Alright, we’ve studied B2B/backend (or you can call it with your own association) — that is, the decentralization of the network from the perspective of its main actors (participants). Now let’s look at the client side. If we take a look at Bitcoin, we can see the following: we can see the following In Ethereum, however, we will see the following picture: picture At the same time, Ethereum has repeatedly outpaced Bitcoin in growth rates — I quote: “Bitcoin has 140 times more daily active addresses than XRP, but has fewer addresses with a positive balance in them than ETH.” It looked like this: quote By 2023, Ethereum had more than 100 million wallets with a non-zero balance: “Ethereum reached an all-time high of 100 million Non-Zero balance addresses, according to on-chain data compiled by IntoTheBlock.” balance And now let’s take a look at the online mode: mode So in terms of activity, Ethereum — and this is obvious — once again surpasses Bitcoin in addresses. And as of today, this is already more than 350,000,000 addresses: 350,000,000 At the same time, while Bitcoin can boast only 50,000,000 unique addresses with a non-zero balance, Ethereum also shows growth in the number of unique interactions per wallet: number of unique interactions per wallet At the same time, for Ethereum itself, the figure of 120,000,000 does not seem impossible. And I repeat, the growth in the number of unique Ethereum addresses has always been observed. Here’s another example: 120,000,000 DEXs vs. CEXs Where can you buy and exchange BTC & ETH? Correct: on CEXs & DEXs of various formats. The thing is, there are still only a few bridges to Bitcoin (app.core, Thorchain, etc.), whereas for Ethereum there are a great many, and their liquidity keeps growing. And needless to say, there are far more DEXs on Ethereum and EVM — and isn’t that itself a level of decentralization? Thanks to the EVM we have (once again: EVM is external decentralization for Ethereum): external DYDX — the leader of past seasons; HYPE — the current leader; DRV — the innovator in options; And dozens and dozens more solutions. DYDX — the leader of past seasons; HYPE — the current leader; DRV — the innovator in options; And dozens and dozens more solutions. But this is only part of DeFi. And there the leadership of Ethereum is undeniable. And specifically in terms of decentralization: a huge number of protocols, a developed ecosystem, etc. But let’s glance quickly and assess briefly. (At the same time, Bitcoin is mostly traded on CEXs, and that is no decentralization at all: even OTC platforms like LocalBitcoins are shutting down en masse). DeFi See: defillama.com/chains: defillama.com/chains defillama.com/chains Add to Ethereum — Base, Arbitrum, etc. — and you will be surprised at how helpless Bitcoin (for now) looks. Of course, it is sometimes easier to obtain Bitcoin from fiat — through ATMs: coinatmradar.com/manufacturer/75/cryptomat-bitcoin-atm-producer — but how much more significant are they than OTC platforms, exchangers, card aggregators, etc. of Ethereum — that is a big and separate question. coinatmradar.com/manufacturer/75/cryptomat-bitcoin-atm-producer And in any case, this is not really about DeFi, but about adjacent sectors. Enthusiasts Bitcoin has Satoshi, and Ethereum has Vitalik. But besides Vitalik, Ethereum has quite a few other devotees, whereas Bitcoin has far fewer — although Bitcoin has a huge number of followers. Draw your own conclusions. And yes, all these company treasuries in BTC/ETH will not lead the industry to anything good, but that is also not today’s topic. What is far more important is that The DAO (about 2 years from the idea of Ethereum and about 1 year after network launch) corresponds to the great 2010 bug of Bitcoin (also about 2 years after the WP and 1 year after launch). Therefore, if you are inclined to say that The DAO case proves Ethereum’s centralization, you will have to admit that this counter-argument works against Bitcoin as well. counter-argument Conclusions I don’t know why Bitcoin (more often “bitcoin”) maximalists, Ethereum (more often ETH) maximalists, Solana (more often SOL), etc. appear, but I can explain it. And it seems to me that today Bitcoin, however much you may want to say otherwise, is in many respects not better but worse than Ethereum. It follows Ethereum, not bringing innovations to the market before that ICO of 2014. 2014 Simply put, the assessment of “bad” and “good” lost its significance already in Nietzsche’s time, and in the world of decentralization — where breadth of coverage is more important than depth of adoption, where the blockchain trilemma consists precisely of security, scalability, and decentralization as such — this is a thousand times more true. blockchain trilemma Of course, a large-scale comparison of such giants as Ethereum and Bitcoin requires not 17 pages of text and graphs but at least 10 times, and more likely 100 times, more. But for me personally, it is obvious that there are no clear signs that the Bitcoin ecosystem is more decentralized than Ethereum’s — and there never have been. 100 times At the same time, let me emphasize once again that both projects are dear to me, and both coins have always been in my portfolio, but they have played different roles: BTC as a basic hedge, and ETH as a basic collateral asset. And that is also quite a valid approach to decentralization. BTC hedge ETH collateral asset But more on that next time. For today, that’s all — Good luck! Good luck!
