Centralization Threat Metric

Abstract

Attaining consensus with no constraints on the consensus participation is a fundamental feature of decentralized blockchain solutions such as Bitcoin (Nakamoto, 2008) and Ethereum (Buterin et al., 2013). Unrestricted consensus participation removes the possibility of censorship and a potential single point of failure, but this design has led to a new concern: that of centralization. Centralization in decentralized blockchain refers to the concentration of a large portion of computing resources to a select few participants. In this paper, we identify the restriction on new participation as a critical contributor to the centralization of consensus power towards commercial and large-scale entities. We also examine the cause of the indirect restriction on participation and propose a metric to identify the degree of these indirect restrictions. This new metric may be used as a threat indicator to identify the centralization of decentralized blockchain caused by indirect participation restrictions.