Most cryptocurrencies aren’t decentralized. Not even shut.
This surprises most individuals exploring digital property, who assume decentralization is crypto’s defining trait — the core worth that makes it compelling. However as Alan Hibbard has proven via years of analysis into crypto, the fact seems to be nothing like that. Most cryptocurrencies as we speak are merely distributed variations of centralized methods.
Right here’s why that issues for buyers.
What Is the Blockchain Trilemma?
The blockchain trilemma is an idea launched by Ethereum’s Vitalik Buterin. It states {that a} blockchain can optimize for under two of the next three on the similar time:
- Decentralization — no central authority, equal participation
- Safety — robust safety in opposition to assaults
- Scalability — means to course of a number of transactions shortly
The trilemma suggests you’ll be able to’t maximize all three with out sacrificing one. For instance:
- Bitcoin prioritizes safety + decentralization, however isn’t extremely scalable.
- Many fashionable crypto tasks select safety + scalability, however hand over decentralization.
- Others attempt to maximize scalability + decentralization, however weaken safety.
For this reason claims of “fixing” the trilemma are normally deceptive — trade-offs at all times exist. And extra importantly, most fashionable crypto tasks have quietly chosen to sacrifice decentralization so as to obtain the scalability wanted to compete.
The Fantasy of “Solved Decentralization”
Many crypto tasks declare to have cracked the blockchain trilemma — providing safety, scalability, and decentralization all of sudden.
However as Alan’s evaluation of dozens of networks reveals, most of those “options” merely redefine decentralization reasonably than really attaining it.
They haven’t rewired the structure. They’ve simply rebranded it.
What Decentralization Actually Means
In its truest type, decentralization means guidelines with out rulers — a system the place nobody has particular permissions, privileged entry, or override energy. Everybody operates on equal footing.
You see this clearly in:
- Gold — anybody can uncover it, mine it, refine it, or personal it. Its governance is constructed into nature itself.
- Bitcoin — no basis, no CEO, no board. Community modifications require broad consensus, not elite approval.
That is decentralization as Alan defines it: methods ruled by physics and math, not committees.
Distributed Methods ≠ Decentralized Methods
Many crypto networks market themselves as decentralized just because they run throughout a number of nodes. However construction doesn’t equal sovereignty.
Most give particular validator rights to a small group — whether or not it’s stakers, insiders, early buyers, or a basis. That’s not decentralization; that’s distributed centralization.
Consider the Federal Reserve.
Twelve regional banks unfold all through the nation? That’s distributed. However in the end, energy flows upward to a centralized authority.
Many crypto tasks observe the identical sample — distributed infrastructure, centralized management.
The Drawback With “We’ll Decentralize Later”
A typical promise in crypto is, “We’ll turn into extra decentralized over time.”
However as Alan factors out, decentralizing really turns into tougher as a community grows. To really decentralize later, a venture would want to voluntarily hand over scalability benefits, insider controls, privileged validator roles — and sometimes income itself. Few venture-backed groups are prepared to make these sacrifices as soon as they’ve achieved product-market match.
So “decentralize later” nearly at all times means by no means.
Why This Actually Issues to Buyers
For long-term buyers — particularly these defending wealth in an unstable monetary system — the distinction between “distributed” and “decentralized” is just not educational.
It’s a danger mannequin. Centrally managed property can:
- collapse via governance failures
- be captured by regulators
Property ruled by physics (gold) and math (Bitcoin) keep away from these tail dangers fully.
That’s why Alan typically emphasizes these property as true crypto decentralization benchmarks — methods the place no privileged group can abruptly change the foundations or seize management.
In an period of political volatility, inflation stress, and technological uncertainty, that distinction issues greater than ever.
Study Extra: Ask Alan Webinar (December ninth, 2025)
Alan can be increasing on crypto decentralization — together with gold, Bitcoin, and macro technique — in an upcoming reside webinar. That is your likelihood to ask questions instantly and perceive how he evaluates true decentralization versus advertising and marketing claims.
Individuals Additionally Ask
What does crypto decentralization really imply?
True crypto decentralization means a system operates with guidelines with out rulers—nobody has particular permissions, privileged entry, or override energy. Bitcoin exemplifies this: it has no CEO, basis, or board, and community modifications require broad consensus reasonably than elite approval. Most cryptocurrencies declare decentralization however really preserve centralized management via particular validator rights or insider privileges.
What’s the blockchain trilemma in easy phrases?
The blockchain trilemma states that blockchains can solely optimize for 2 of three qualities: decentralization, safety, and scalability. Bitcoin prioritizes decentralization and safety however sacrifices scalability, whereas most fashionable crypto tasks select safety and scalability however hand over true decentralization. For this reason claims of “fixing” the trilemma are usually deceptive — trade-offs at all times exist.
Are most cryptocurrencies really decentralized?
No, most cryptocurrencies aren’t really decentralized regardless of advertising and marketing claims. They run on distributed methods (a number of nodes) however preserve centralized management via foundations, particular validator rights, or insider privileges. As Alan Hibbard’s analysis exhibits, the distinction between distributed infrastructure and decentralized governance is essential for buyers to know.
What’s the distinction between distributed and decentralized crypto?
Distributed means a community runs throughout a number of nodes or places, whereas decentralized means no single group has management or particular privileges. Many crypto tasks distribute their networks throughout nodes however nonetheless focus actual management—very like the Federal Reserve, which spreads regional banks throughout the nation but retains a government. True decentralization, as we see with Bitcoin or gold, depends on math or physics to set the foundations as an alternative of committees.
Which cryptocurrencies are really decentralized?
Bitcoin stands out as genuinely decentralized, with no basis, CEO, or particular privileges — community modifications require broad consensus. Gold, whereas not a cryptocurrency, units the final word decentralization benchmark as a result of physics alone governs it.
