Many Bitcoiners maximalists always express that Ethereum is highly centralized. But, the reality is a little different. Why is Ethereum (ETH) not as centralized as we think?
In a recent article we stated that the inequality in Ethereum was impressive, at least in numbers. Ethereum’s 10,000 top addresses control 83% of all tokens in the second largest cryptocurrency of all.
These 10,000 addresses represent 0.01% of all active ETH wallets. But, as we well know, this does not mean that only 10,000 people control this large amount, which represents more than $ 22 billion.
Why is Ethereum not as centralized as we think?
Ethereum, unlike other cryptocurrencies, has a rather unique feature. Since ETH brought with it the technology of Smart Contracts.
The reason ETH distribution seems so centralized is because of this technology.
Let’s propose as an example, it is WETH where we deposit ETH to obtain Wrapped Ether for any use of ERC20 technology. Or CryptoKitties in its moment of glory a few years ago.
This use of projects that are built on Ethereum technology is what makes the distribution of ETH seem biased.
What happens if we remove Smart Contracts?
If we say, what makes the amount of ETH that some wallets have biased. So, let’s remove Smart Contracts and see how the second crypto of all behaves. Is Ethereum not as centralized as we think?
- The top 10k have 57.2 million Ethereum or 56.7%. Down 83%.
- The main 1,000 addresses are 42.5 M.
- And the top 100 26.4 million.
While the centralization of Ethereum still seems like an exaggeration, it is now closer to the 1% nature that we see in the traditional world.
But, in the same way, we cannot say if this number demonstrates centralization, but we compare it with similar cryptocurrencies. Is Ethereum really that centralized?
If we take into account Bitcoin, which is the first cryptocurrency in the world. And at the same time, we eliminated Smart Contracts, we can notice that the game board changes completely, and already the Bitcoiners maximalists do not have much to say.
- Bitcoin’s Top 10,000 Addresses own 10.54 million BTC or 57.44% vs. 56.7% of ETH.
- 16 Ripple (XRP) addresses dominate over 55.2% of this crypto.
- 1,100 BCH hodl wallets 56.8%.
- At BSV 1250 hodl 55.6%.
- Litecoin (LTC) the number is 300 wallets hold 54.3%.
This means that in reality, Ethereum is the most decentralized of the top 6 of the most important cryptocurrencies of the cryptoverse.
Why is Ethereum not as centralized as we think? Because, in reality, it is not as centralized as the others.