Is Bitcoin a Decentralized Currency?

Abstract

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