Bitcoin and Ethereum: Levels of Decentralization

# Bitcoin and Ether: levels of decentralization

Which of the two leading cryptocurrencies will demonstrate a higher level of decentralization by the autumn of 2025? Web3 researcher Vladimir Menaskop shares his opinion on this issue with ForkLog readers.

From the Author

I have been involved with cryptocurrencies since 2012: specifically, from 2012 to 2018 — mining, so BTC and ETH were among the first assets I worked closely with. I still do not prefer one over the other. And as a crypto enthusiast, I believe this is pointless: our portfolio should be as widely diversified as possible, rather than concentrated on something singular — otherwise, this is also a form of centralization.

Unfortunately, not everyone understands this: even well-known figures like Jack Dorsey keep insisting on bitcoin maximalism. They give the first cryptocurrency network an advantage over Ethereum in terms of decentralization, basing it not on any objective data but on their own beliefs. This only confuses market participants, especially newcomers. So let's compare the Bitcoin and Ethereum networks, as well as BTC and ETH, from different perspectives.

Disclaimer I have a good understanding of the architecture of Bitcoin and quite a decent one of Ethereum, so I tried to compare what is possible and avoided what cannot be compared. Still, for me, a high-level and broad comparison itself is more important than the details, as the levels of decentralization are inexhaustible, and their thorough analysis would take more than a hundred pages. This means that at times I had to simplify. Keep this in mind.

Decentralization Levels. List

The list can be quite long, but here is one of the simple approaches:

• B2B — this is the decentralization of the network "builders": miners, validators, etc.;
• B2C — this is decentralization from the network's client side.

Let's start with the first

Decentralization of network actors

PoW and PoS

There has always been a debate in the community: which consensus is better? And while for me the correct answer is PoW, it cannot be denied that PoS has evolved significantly over the past 10 years or so. Especially — in Ethereum.

At the moment, there were over a million validators on air (1 085 264), while Bitcoin has only about a hundred pools, two of which reach 40—51% of the total mining volumes.

Data: Blockchain.com. If you understand the architecture of Bitcoin, you will immediately realize what the issue is: there are as many miners in the world as there are validators, and their entry point is lower than that of the validators ( around $10,000 compared to $100,000), but pooling spoils the picture purely visually. Nevertheless, it cannot be said that Bitcoin is more decentralized than Ether.

Nodes

First, let's look at the geography. Here is Ether:

Data: Etherscan. Or here is another approach:

Data: Nodewatch. Here is Bitcoin:

Data: Bitnodes. So, we have 23,244 Bitcoin nodes against about 11,202 Ethereum nodes: a difference of about two times. Moreover, if you look at the average number of nodes over 8 years, BTC will be around 13,685, so we cannot claim critical superiority here either.

Especially since the heat maps of the nodes for both networks match. Ether:

Data: Nodewatch.Bitcoin:

Data: Bitnodes.Ethereum has a dependency on AWS and similar cloud solutions:

Data: Nodewatch. Once, I predicted that the number of TOR nodes would increase in the Bitcoin network, and this figure (ASNS) is indeed impressive:

Data: Bitnodes. So here Bitcoin is in the lead. But now let's look here:

Data: Ethernodes. And now — again Bitcoin:

Data: Bitnodes. You might not want to compare networks this way, but here the advantage will definitely be on Ethereum.

Before continuing, I would like to make one remark: Bitcoin mining is concentrated in the USA, PRC, RF ( which mainly connects to Chinese pools ), Canada, and a number of other countries:

Data: Bitnodes. While in Ethereum, even considering AWS and a formal American IP, such nodes can still easily be found in 85 different locations:

Data: Nodewatch It is clear that one can connect to more and more new pools, and they can be P2P, etc., but to say that Bit clearly has a higher level of decentralization geographically is not true: rather the opposite.

And yes, the architecture of full nodes in Ethereum and the first cryptocurrency network is completely different, so I won't compare them.

By the way, Bitcoin node holders receive nothing at all. However, miners do get paid for finding nonce. Meanwhile, in Ethereum, in addition to validators, there are also block producers, researchers, and relayers:

• validators are formally responsible for block selection and confirming finality (, proposing blocks or signing attestations ). Each slot assigns one validator-proposer;
• block producers — individual participants who construct the blocks themselves. They select transactions from the mempool, order them, insert MEV transactions, and optimize yield. Through the MEV-Boost protocol, block producers pass the ready blocks to the proposing validator;
• relayers are intermediaries between builders and validators. They check the validity of the block, hold it until publication, and guarantee payment to the validator;
• searchers are algorithmic traders/arbitrageurs that generate individual transactions for MEV. They do not build an entire block but look for opportunities to embed profitable operations, which they then pass on to builders.

To say that the first of these roles could be more decentralized than the fourth, the language does not turn. And after the encryption of the mempool and the introduction of ZKP mechanics, as recently announced in Ethereum, the leadership will definitely not be with Bit.

Development

The digital gold network can't even come close to Ethereum in terms of dapp development. Here is Bit:

Data: CryptoMiso.Ethereum, if it lags behind, does so only in certain vectors. Let's take, for example, ERC-20. It is clear that in this context we are not always talking about dapps, but we are currently interested in a basic rather than detailed comparison:

Data: Etherscan. Each ERC-20 token is either a project, or an initiative, or a new trend, etc.

Compare the applications on both networks:

• Bitcoin;
• ether.

Leaders always follow Ethereum. In NFTs, it's Blur and OpenSea, which were squeezed by Magic Eden, but only by replicating their schemes. In DeFi, it's Aave and Uniswap, which were only really competed against by Solana apps, but again — through repetitions. DePIN has now moved to the same Solana, but started with Ethereum.

And it has always been like this. I will present statistics from my old research on the number of dapps:

Data: Vladimir Menaskop L2 as the next step

Yes, the DeFi networks of the first cryptocurrency originated back in 2014, but they only entered our lives massively in 2017—2020 thanks to Ethereum ( and even memes were born off-chain, but it gave them a push ).

L2 for Bitcoin also had its own — LN, but it is Ethereum that has optimistic and ZK-rollups. And these are huge stacks: take a look at the Superchain family or at the Arbitrum products.

Even considering the emergence of new L2s in Bitcoin in 2023-2025, there is not much to compare here: leadership will remain with Ethereum. Just take a look at the quantity and progress:

Data: L2Beat. Or even here:

Data: Rollap.wtf. Again, it's clear why Ether is so far ahead here: it turned L2 into normal sharding (unlike Solana, Near, or even Zilliqa). But since Bitcoin decided to fight him on his turf — the comparison became relevant.

EVM

Even if something is missing in Ethereum, it typically appears on EVM-compatible chains rather than Bitcoin-compatible chains. Judge for yourself:

• Sonic;
• Avalanche;
• Polkadot (Moonbeam);
• Cosmos (EVMos);
• Solana (Neon);
• Near (Aurora);
• HyperLiquid;
• Tezos (EtherLink).

By the way, even from an economic point of view, many of these projects owe it to the air. Polkadot, Cosmos, Tezos, Polkadot, TRON, and others are all ICOs on Ethereum. The same Avalanche, which was basically a competitor to Polkadot and Cosmos as a multichain solution, is also EVM-compatible in the end.

Moreover, many are actually ready to become even L2 on Ethereum to fit into the decentralization economy: for example, Lisk and Berachain.

Wallets

We have studied the decentralization of networks from the perspective of its main participants. Now let's turn our attention to the client side.

In the case of Bitcoin, the following can be observed:

Data: BitinfoCharts. In Ethereum, however, the picture is as follows:

Data: Etherscan. At the same time, Ether has repeatedly outpaced Bitcoin in growth rates — I quote: "Bitcoin has 140 times more active addresses per day than XRP, but fewer addresses with a positive balance than ETH." It looked like this:

Data: Glassnode.As of 2023, Ethereum had over 100 million wallets with a non-zero balance.

And now let's take a look at the online mode:

Data: BitinfoCharts. So in terms of activity, Ethereum obviously outpaces Bit. Today, there are almost 350 million wallets:

Data: Etherscan. While Bitcoin can boast only 50 million unique addresses with a non-zero balance, Ethereum also sees an increase in the number of interactions across wallets:

Data: Growthepie In this case, the figure of 120 million does not seem impossible. And, I repeat, the growth in the number of unique addresses in Ethereum has always been observed. Here is another example:

Data: Santiment DEX and CEX

Where can you buy and exchange BTC and ETH? That's right: on CEX and DEX of various formats. However, there are still a few bridges to Bit, while there is a great number to Ether, and their liquidity is only growing. And it goes without saying that there are more DEX on Ethereum and EVM. Isn't this the level of decentralization?

Thanks to EVM, we have:

• dYdX — leader of past seasons;
• HYPE — the leader of the current;
• Derive — options innovator;
• and dozens and dozens of solutions

But this is just part of DeFi. And there, the leadership of Ethereum is undeniable. And it is precisely in decentralization: a huge number of protocols, a developed ecosystem, etc. But let's take a quick look and assess quickly.

DeFi

Here are the data:

Data: DeFi Llama. Add Base, Arbitrum, etc. to Ethereum, and you will be amazed at how helpless Bitcoin ( looks so far ).

However, of course, it is sometimes easier to mine BTC from fiat — through crypto ATMs. But how much more significant they are than OTC platforms, exchanges, and card aggregators of Ether is a big and separate question.

Enthusiasts

Bitcoin has Satoshi, Ethereum has Vitalik. But besides Buterin, Ethereum has quite a few other admirers, while digital gold has many fewer. Draw your own conclusions.

Speaking of the community, it is much more important to remember that in response to the case of The DAO, there is a great bug in Bit from 2010. Keep this in mind when citing the collapse of Buterin's project as proof of the centralization of Ether.

Summary

I don't know why BTC maximalists and ETH maximalists appear. But it seems to me that Bitcoin lags behind Ethereum in many parameters today. It is constantly trying to catch up, without offering innovations.

However, the assessment of "bad" and "good" has lost significance since the times of Nietzsche, especially in a world where the breadth of coverage is more important than the depth of implementation, where the blockchain trilemma consists of security, scalability, and decentralization as such, such categories are even more meaningless.

Of course, a large-scale comparison of giants like Ethereum and Bitcoin requires not 17 pages of text and graphs, but at least 10 times, if not 100 times more. However, it is clear to me that there are no obvious signs of greater decentralization in the Bitcoin ecosystem compared to Ethereum.

At the same time, I want to emphasize once again that both projects are important to me, and both coins have always been in my portfolio, but they played different roles: BTC is the basic hedge, while ETH is the basic collateral asset. And this is also quite a reasonable approach to decentralization.