The article examines centralization in cryptocurrency systems, particularly focusing on proof-of-work (PoW) and proof-of-stake (PoS) protocols. It addresses the challenge of measuring hardware usage in PoW mining, noting that a small number of firms control a large percentage of the network's hashrate. The article advocates for research into incentivizing diverse hardware usage and improving data collection mechanisms to enhance the robustness of decentralization assessments. It also highlights the importance of understanding geographic distribution and governance in these systems.
The centralization of specialized hardware in proof-of-work mining is concerning, as one provider can dominate the hashrate, leading to risks for network security.
There is significant uncertainty in measuring mining hardware usage in real-world systems, particularly in proof-of-work algorithms, which complicates decentralization assessments.
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