What Blockchain is the Most Decentralized?
The traditional Internet is a web of gatekeepers. You might have some control over which websites you visit (unless they’re banned), but not so much control over your data. If you want to send emails, SMS, or memes, you’ll have to trust that the service you’re using will keep your data private.
However, centralized platforms have shown time and time again that they cannot be relied upon to protect your data, flaunting regulations like the GDPR. This extends to the financial world, where users don’t truly own their money. Banks retain custody of your capital, trading firms charge hidden costs for their services, and governments can seize your assets at any time.
But what if you could have control over your data, without having to rely on intermediaries? You can do this by using a blockchain.
Blockchain: A Quick Background
Blockchain technology is one of the most exciting developments in the tech industry over the past decade. Decentralization means there’s no single entity or group of entities controlling a blockchain application. There are no banks or central intermediaries to charge excess fees for transactions, and there are no governments who can seize assets via inflation or politics.
At its core, blockchain is simply a list of records, called blocks, that are cryptographically linked together. Each block contains a reference to the preceding block, forming a chain of blocks. The blocks are all encrypted with a cryptographic hash function so that it’s very difficult to tamper with them. This is known as blockchain immutability.
Blockchain technology was first introduced in 2008 by Satoshi Nakamoto (believed to be a pseudonym), the creator of the cryptocurrency bitcoin. Nakamoto’s paper describes how to create a protocol that can transact value in a decentralized manner and ensure that no one entity controls what is recorded.
Blockchain technology has since been used for other purposes, such as creating decentralized applications, or “dapps,” that are run by a community of people instead of a centralized authority. These applications include new types of investment funds, decentralized energy initiatives, truly transparent voting, social networks that give value back to their users, and more.
Why the Level of Decentralization Matters
While decentralization is often discussed in the blockchain space, not all blockchains are created equal. The degree of centralization in a blockchain can be measured in many ways, such as the number of nodes running it, the difficulty of running a node, and governance mechanisms.
If there is a low number of nodes, then a small group of people will be able to come together and change or censor data, or even take over the network.
One risk that’s enabled by relatively high centralization is the 51% attack.
A 51% attack occurs when a miner or group of miners controls the majority of the mining power on a blockchain. This allows them to make changes to the ledger, such as creating new blocks, without going through the consensus-building process. If there’s no one to stop them, they could theoretically take over the network.
Many smaller blockchain networks have suffered 51% attacks, such as Feathercoin (FTC), Vertcoin (VTC), Bitcoin Gold (BTG), Ethereum Classic (ETC), Verge (XVG), and Bitcoin SV (BSV). What was once considered impossible is now a fairly regular occurrence, though only among smaller chains with few nodes.
The aim of blockchains like Bitcoin and Ethereum is to decentralize control among many participants. However, this comes at the cost of speed and scalability, which is why many blockchains such as Cosmos lean towards greater centralization.
The more centralized a blockchain is, the faster it can process transactions and the more scalable it can become. Horizen overcomes this so-called “blockchain scalability trilemma” with its sidechain technology, which allows for greater scalability and speed while still maintaining decentralization.
In Horizen, the nodes are not run by a central authority but rather through decentralized consensus mechanisms. Horizen’s mainchain operates using Proof of Work, with the sidechains based on Proof of Stake. In Proof of Stake, users enter a queue to have a random chance to win the mining reward, which is more efficient than having everyone compete based on mining power.
So, Who Wins?
The most well-known blockchains, Bitcoin and Ethereum, have among the highest node counts, at 12,000 and 3,000, respectively. The latter recently suffered a precipitous drop in the number of nodes after an unintentional hard fork, which has yet to be resolved.
Next-generation blockchains, like Solana, Cosmos, and Polkadot, all have significantly fewer nodes, with Solana at around 600, Cosmos at just 150, and Polkadot at 300. Horizen has the most decentralized network of all blockchains, with 45,000 Secure Nodes and 5,000 Super Nodes.
While there are dozens of other blockchains to analyze, blockchain enthusiast Aat de Kwaasteniet has already done the hard work of ranking blockchains by their number of nodes, finding that Horizen is far and away at #1. One blockchain with a worrying degree of centralization is Bitcoin SV, and as we briefly explored, it suffered a “massive” 51% attack, which is only possible due to its lack of sufficient nodes.
As of writing, Cosmos and Polkadot have a similar number of nodes to Bitcoin SV, while Solana has just around twice as many.
Ultimately, the more decentralized a blockchain is, the more secure and trustworthy it will be. The greater the level of decentralization in a blockchain network, the stronger its security and immutability.
The Future of Decentralization
Decentralization is not only about security and trustworthiness; it’s also about censorship resistance and censorship avoidance. Horizen also implements an extremely strong privacy feature called zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge), which allows users to send and receive data privately.
zk-SNARKs allow users to transact without revealing their addresses or any other identifying information. This is significant because it means that censorship cannot occur on the Horizen network, which is a major advantage over many of its competitors.
Horizen’s strong privacy features combined with its low latency and high TPS (transactions per second) make it the most decentralized blockchain in the industry today.