Deconstructing “Decentralization”

Abstract This chapter first describes the current use of the term “decentralized” as applied to permissionless blockchains like Bitcoin and Ethereum. Then, it analyzes the complex, contested nature of the term, delving into issues such as the different domains where power is exercised in blockchain systems and the fluid nature of power concentration and diffusion in these systems. Next, it provides examples of events that reveal sites of concentrated power in permissionless blockchain systems, focusing on the activities of software developers and miners. Finally, it explores the significant implications for law of using a fuzzy term like “decentralized” to make legal decisions, as misunderstandings about power hidden in the term can lead to flawed decisions across a wide swath of legal fields.