You're about to experience a heartbreaking video that will ruin crypto for you forever. I mean, you're going to hear the biggest lie in crypto today, the one that 99% of people in Bitcoin, Internet Computer Protocol, and almost every other altcoin actually believe. It's decentralization.
What is decentralization? That means everything's not all controlled by a tiny amount of people. Almost everybody in crypto thinks that things are so decentralized. And this is why we got into crypto in the first place, because the world is very centralized. A tiny amount of people control huge amounts of things on the planet right now. I got excited about crypto because, for the first time, there's the potential to have peer-to-peer currency, where we don't have a centralized third party moderating transactions, like a bank or a government, sitting in between us. But the unfortunate reality today is that almost everything in crypto is centralized in almost every single way.
Bitcoin is not decentralized, and the evidence takes one minute
Let's start with Bitcoin, because a big claim like this requires very clear and obvious evidence. So here's the clear and obvious evidence that the most important part of Bitcoin is not at all decentralized. If you look at the Bitcoin mining pool comparison today, Foundry USA and Antpool control half of the Bitcoin mining power by themselves. And then if you throw in F2Pool and ViaBTC, just four single mining pools control over 75% of Bitcoin mining. You can imagine those mining pools each have a single person you could talk to if you wanted to get something done. That's more than likely four people in the world who effectively control Bitcoin mining.
Now, does that sound decentralized to you? Does that sound any different from our existing system? No. Bitcoin mining didn't used to be this centralized, but with Bitcoin mining companies having stocks you can pour money into, this is what's happened. Bitcoin mining is not at all decentralized. So all the claims people are making about how decentralized Bitcoin is are absolutely, provably false in one minute. It's not decentralized. It is very centralized.
And if you want to look at this from another angle, look at how many people are on the official Bitcoin Core GitHub repository. This is the official Bitcoin GitHub for the Bitcoin Core wallet, which is the official developer wallet and where you set up a node. There are about 17 people on it. Now, that's more decentralized than Bitcoin mining. But if you combine that with the mining pools, that's like 20 people who control almost everything important in Bitcoin. Is that decentralized, given it's a two-trillion-dollar-plus market? No. That sounds like more of the same.
And then if you want to look at the supply, it's the same as the rest of finance. About a quarter of 1% of Bitcoin addresses hold around 80% of all the Bitcoin. A hundred addresses hold roughly 15% of all the Bitcoin, and about 2,000 addresses hold almost 40% of all the Bitcoin. Even though it's been out 15 years, this is not decentralization. The supply of Bitcoin is centralized, the Bitcoin Core GitHub is centralized, and the Bitcoin mining pools are centralized. And this is the most celebrated, quote, decentralized cryptocurrency.
The public view versus the inside view
What I have been learning after 10 years in crypto is that the further and further you get into it, the more almost everything in life applies. There's this matrix of how people think things look from the outside, the public view, and then when you get on the inside, there's the inside view. The public view of crypto is: we're so decentralized, come join us, it's a much better world, it's totally different from this centralized, controlled world you're a part of. But then when you get on the inside, like I am, it's like, oh, it's the same crap. It's just that people don't think it is. It's the same stuff.
Now, what's even worse than this is how most people are actually interacting with the Bitcoin blockchain. Do you think most people have a Bitcoin Core wallet and are just on their computer? I mean, that's a hot wallet, so I wouldn't even recommend it, but do you think most people have an official Bitcoin Core wallet and that's how they're interacting with the blockchain? Nope. One reason Bitcoin is so centralized is that most people are buying Bitcoin through a centralized exchange. That removes any thought of decentralization. You've got one or two people who control massive amounts of Bitcoin on exchanges. There's something like $200 billion of Bitcoin sitting on centralized exchanges, and that's how most people are buying it. And Bitcoin ETFs? Centralized, controlled.
Ethereum tells the same story, maybe worse
So then you say, well, what about Ethereum? Same story. On Ethereum right now there are about 30-something million ETH staked. One single staking provider has almost 10 million ETH staked. So one single staking provider has a little less than a third of all the Ethereum staked. They call themselves Lido DAO, but if you dig into the details of how the DAO works, is it actually DAO-controlled where everything's fully on chain, or do you have to go off chain? Do developers have to make changes? Is it actually controlled by one or two people? Well, if you dig into the details, it's controlled by one or two people.
The Ethereum blockchain itself doesn't have the capacity to do every single thing you'd need to do with Lido DAO completely on chain. So there's a website you go to that's off chain, controlled by the Lido DAO team, and anything that can't be done on chain is controlled off chain, and therefore it comes back to being totally centralized. And the other huge amounts of staked Ethereum are in more staking pools that, again, come back to centralized control. Ethereum staking is by no means decentralized. Even Vitalik Buterin doesn't stake his Ethereum, because he doesn't think that's a good idea. Your Ethereum can get slashed. For example, if you aggravated Lido DAO, it's possible they could slash your stake.
Ethereum is not decentralized by any means. This is why they've been able to censor transactions on Ethereum, where certain transactions won't be allowed through and the nodes will ignore them. Many of the nodes are all hosted in the exact same place. Most would argue Ethereum is more centralized than Bitcoin. And clearly, if Ethereum is more centralized than Bitcoin, and given what I've just shown you about Bitcoin, then that's pretty bad. If you want to keep going down this rabbit hole with me, I keep this conversation going in my Money playlist, and I've made the argument before that Bitcoin is essentially a trillion-dollar spreadsheet rather than the revolution people sell it as.
Yes, ICP is centralized too, and I'm the one telling you
Now, I'm big on ICP. I talk about Internet Computer Protocol every single day. And the argument a lot of the critics make is, well, Jerry, that's totally centralized. If DFINITY isn't constantly working on Internet Computer Protocol, then what's it going to do? And unfortunately, this is a valid criticism. But keep in mind, it's valid for Bitcoin too. Those Bitcoin mining pools can do whatever they want with Bitcoin, as can the people on the Bitcoin GitHub.
On ICP, you've got DFINITY instead of a couple of Bitcoin mining pools. DFINITY still has a huge amount of the voting power, but it's even worse than it looks on the dashboard. On the dashboard, DFINITY has about 20% of the total voting power, but you've also got a whole bunch of people who follow DFINITY. So when DFINITY votes, like half the whole supply votes with it. DFINITY still has Internet Computer Protocol completely locked down.
Now, for people out there who believe the lie that Bitcoin and Ethereum are so decentralized and then point at ICP as if it's the horribly centralized one, here's the fact: I don't see anything really useful in crypto that's meaningfully decentralized. Sure, there are a couple of little projects and DAOs with some meaningful decentralization, but almost everything that people have money in is totally centralized, and ICP has the most promising technology. And yes, ICP is right there with everything else. All the critics saying how centralized ICP is? You're absolutely right.
Now, at least ICP does have the potential to decentralize further. The voting power has gone down from DFINITY having 40% to 20%. That said, if DFINITY votes on something, it doesn't matter what the rest of the community wants to do. That's just plain facts. If you look at the voting at the Network Nervous System, all these DAOs and all these proposals, when DFINITY votes for something, it happens. In some areas, when DFINITY votes, it's immediately executed. There's literally no discussion. You can go see these kinds of proposals yourself in the Network Nervous System. Some things DFINITY votes on are just immediately executed, no discussion, and like 80% of the voting power just plows in immediately. So many people are following DFINITY that there's no thought of decentralization at all.
If you look at the ICP supply, same story. Half the ICP supply is sitting in addresses with a balance greater than 100,000 ICP. They hold half the entire supply. And how many addresses is that? Right now there are about 786 addresses holding more than 100K ICP, and they hold half the entire supply of ICP. That's in line with Bitcoin, where 0.28% of addresses hold around 82% of the supply. ICP is right in line with that, 786 addresses holding about half the entire supply.
Decentralization theater in the DAOs
And then there's OpenChat, which I'm very excited about. I use it every day. I'm excited about all these DAOs on ICP. I did a little experiment where I submitted proposals to do a single video about all these different DAOs. If you look at the most active DAOs in crypto right now, in the top 10 there are nine of them on ICP. The top nine DAOs are all on ICP, and most of the top 20 are on ICP as well.
But if you actually submit a proposal to these DAOs, which most people haven't done but I have, you'll notice most of them are completely centralized. If the founding team does not vote on your proposal with their massive voting power and massive following, then nothing happens. I've had proposals where the community voted overwhelmingly in favor, but the founding team didn't vote on it, and therefore the proposal didn't execute. I won't call any one project out in particular here, because there are a bunch of them like that. I've put out proposals where the community voted like 20 times as many yes votes as no votes, and the proposal was rejected because the founding team sat there and did nothing. That's not decentralized. That's decentralization theater. And that's the big lie in crypto. Everything in crypto in a meaningful way, as far as I can see today, is decentralization theater.
Even Internet Computer Protocol, the nodes come back to DFINITY
It's all decentralization theater, even Internet Computer Protocol. Now, I think Internet Computer Protocol is in one of the best positions to provide real decentralization, but the fact is it's centralized today too. I've seen people complaining that in order to get listed as a node on Internet Computer Protocol, you have to get DFINITY to approve you. So all the nodes on ICP have been approved by DFINITY, and they often aren't even accepting new nodes. So the nodes on ICP are totally centralized, even though technically they're different companies. They've all been approved by DFINITY, and there are a few people that it all comes back to. It all comes back to DFINITY again. Total centralization.
Yeah, there are more people who work at DFINITY than are on the Bitcoin Core GitHub, but at this point it seems like we're just splitting hairs. Is there any real decentralization in crypto? As far as I can see right now, almost everybody interacting with crypto is doing so through an exchange, and if you're doing anything on an exchange, all decentralization has been removed completely. Anything you're trading on an exchange, you are in a centralized environment. You're effectively at a bank, where it doesn't matter how decentralized the blockchain is. If you're trading crypto on an exchange, if you're trading meme coins on an exchange, unless it's one that's fully on chain like ICPSwap, and even then the founding team has so much voting power that it's not even really meaningfully decentralized either. And that applies to everything, not just one exchange or one project in particular. If you've felt this same disillusionment, I went even further in why I believe 99% of crypto is theft.
Why I keep facing the dark side anyway
So yeah, this is pretty depressing. I have days where I wake up and think, why? This is why I quit crypto before. I quit crypto in 2018 when I got to be enough of an insider to see how fraudulent it is, when I realized almost everything the public believed was wrong, and that the very reason I got into crypto was a lie. That said, you've got to do your best with what you've got today. I mean, ICP is some of the best tech we've got in the world right now for preventing cybercrime. It has some of the greatest potential to be decentralized, if DFINITY didn't have to approve everything themselves and if the DAOs weren't all centralized.
So I think it's important to face the dark sides, the lies, and the things that are not how you'd like them to be in anything, whether that's a relationship you're in or a job. This is part of the reason I quit doing crypto again earlier this year. I'm like, this is gross. I know that most people are being lied to and deceived. All these people throwing money into the Bitcoin thing, betting on the future, you're all being lied to. But that's pretty much all of this, isn't it? The whole matrix of reality we're in is pretty much like that. So at least we're in this together. I've laid out the more hopeful side of my thinking in why I think the market caps are a distraction and only ICP is real, even with everything I've just admitted about its centralization.
If you want to come talk about this with me and give me feedback, you can find me at jerrybanfield.com, which runs on Internet Computer Protocol, which arguably has some decentralization, though whether it's meaningful is debatable. You can hop into my OpenChat and chat with me there.