Articles

Is Bitcoin a Decentralized Currency ?

A. GERVAIS, V. CAPKUN, G. O. KARAME, S. CAPKUN

IEEE Security & Privacy

May-June 2014, vol. 12, n°3, pp.54-60

Departments: Accounting & Management Control, GREGHEC (CNRS)

Keywords: Cryptography, Proposals, Peer-to-peer computing, Internet, Online banking, Privacy, Bitcoin, Decentralized decision process, Security


Bitcoin has achieved large-scale acceptance and popularity by promising its users a fully decentralized and low-cost virtual currency system. However, recent incidents and observations are revealing the true limits of decentralization in the Bitcoin system. In this article, we show that the vital operations and decisions that Bitcoin is currently undertaking are not decentralized. More specifically, we show that a limited set of entities currently control the services, decision making, mining, and the incident resolution processes in Bitcoin. We also show that third-party entities can unilaterally decide to “devalue” any specific set of Bitcoin addresses pertaining to any entity participating in the system. Finally, we explore possible avenues to enhance the decentralization in the Bitcoin system


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