Changpeng Zhao: Bitcoin Retained by Most Specific Wallet Addresses

JAKARTA – The founder of Binance, Changpeng Zhao or CZ, shared his views on centralization and decentralization in an article on the official Binance blog. According to him, centralization and decentralization are not black and white. He also considered decentralization not binary and not singular.

“I believe the first thing to understand is that decentralization is not binary and not single-dimensional,” said CZ. “There are many aspects to decentralization. Every aspect is gradient scale, not just black-and-white.”

According to DailyCoin, decentralization refers to the absence of centralized authority with supreme authority over anything. With crypto, the same terminology implies that there is no control over money by a central bank or financial institution.

However, the CEO believes that decentralization is not an end in itself, but “a means to an end.” The goal here is freedom, security, and ease of use. In addition, it discusses the impact of the number of validators on network centralization.

For reference, BNB Chain, the blockchain initiated by Binance, currently has 21 validators and barely passes the Nakamoto 8 coefficient.

“You may hear people say, 'too few nodes or validators, so you are centralized'. While it is true that the lower the number, the more centralized the blockchain is, there is no absolute number on which everyone can agree. It's a gradient scale," Zhao said.

Centralized or Decentralized?

Furthermore, Zhao took the example of Ethereum. He explained that its founder, Vitalik Buterin, can influence the course of the ecosystem. CZ judged this as a weakness. Hence, Bitcoin is more decentralized in this respect.

“Blockchains with associated founders clearly have this weakness. Bitcoin is more decentralized in this respect. In the defense of Ethereum, Ethereum has also forked several times.”

Despite all that, CZ explained that he has far less involvement with the BNB ecosystem. On the other hand, he explained that Bitcoin is actually centralized because it is controlled by the majority of certain BTC holders.

“Bitcoin is centralized because a few addresses hold a large number of coins,” he said.

The Binance founder further explained that “Dogecoin is even worse” because the top one address holds 30 percent of the total supply, and the top 20 addresses hold more than 50 percent. Furthermore, CZ explained that the Binance ecosystem is a big supporter of decentralization.