How Decentralized? New Report Reveals Three Countries Control 50% of Bitcoin (BTC) Nodes
According to a recent infographic from DataLight, 50 percent of all Bitcoin nodes are distributed between only three countries.
The report, released on February 26th, 2019, also reveals that almost 75 percent of nodes are located in only 10 countries. Technically, this form of centralization shouldn’t affect a technology that in practice operates outside of geopolitical control, but it’s interesting none-the-less.
The United States and Germany lead the list of Bitcoin nodes by quite a fair margin, with 2625 and 2016 nodes respectively. France comes in a distant third with only 698 nodes, with the Netherlands and China fourth and fifth with 527 and 411 nodes respectively.
In reality, decentralization relies on no single individual having control over too large an amount of any specific cryptocurrency. However, Bitcoin’s decentralization has come under fire lately due to Chinese mining companies reportedly controlling excessively large amounts of the asset.
Chinese Mining Pools
A recent paper from Princeton and Florida International Universities suggests that China has both the means and the motive to threaten the stability of the Bitcoin network. The paper goes on to reveal that as little as six mining pools have control of over 80 percent of BTC mining activity, with five of those controlled directly by Chinese mining companies. It hypothesizes that should these mining pools band together they could potentially control enough hash power to exert a “51 percent” attack on the network. In the event of such an attack, the attacker will be able to manipulate and essentially take over control of the entire Bitcoin blockchain.
Bitcoin ‘whales’ – a term given to individuals who hold huge amounts of BTC – are also a cause for concern regarding decentralization. recent data from BitInfoCharts indicates that the 100 largest non-exchange Bitcoin wallets have accumulated 150,000 BTC (approximately $579 million worth) in the past two months. Although it’s highly unlikely that any individual Bitcoin whale could ever accumulate enough BTC to affect the network itself, they are often implicated in perceived market manipulation tactics.
Canada, the UK, Singapore, Russia, and Japan make up the lower five countries in the top 10 list of most nodes. Despite its massive popularity in the blockchain sector, Switzerland only comes in at 13, with 159 nodes.