Decentralization in Bitcoin refers to the control of a system being held by several participating members rather than a single person or entity. This leads to a situation where the greed of the few does not ignore the interests of the many.
The entire technology behind Bitcoin runs on a decentralized network in which individual nodes (called miners) act in consensus to ensure that transactions in the network are valid.
How Satoshi Ensured Bitcoin Remains Decentralized?
Satoshi created an incentive system to ensure that all network miners remain compensated for their work. Initially, that compensation was at 50 BTC per successful block, but with each halving (in 2012, 2016, 2020, 2024, and so on), the rewards are halved to reduce inflation.
Each miner brings some computational power to the Blockchain and gets rewarded in proportion. To ensure that someone with a giant computer would not take over the entire system (i.e., centralize it), Satoshi ensured that the computer would receive more rewards for working alongside others rather than disrupting everything.
To ensure censorship resistance, the Bitcoin blockchain would be a completely anonymous network. No miner or user would be able to get to know others directly. If any identity is revealed, all they need to do is change their address (by moving their BTC).
Principles of Decentralization Emerging from Bitcoin’s Whitepaper
Bitcoin’s Whitepaper serves as the DNA of Blockchain technology, guiding it with the principles Satoshi would have envisioned.
Trustless Network
An anonymous network must remain trustless, with its functions secured by scientific calculations rather than trust.
Bitcoin ensures trustlessness through miners. Each miner verifies a transaction by checking all the details about the sender and the receiver. Further, to ensure no network works selfishly, a transaction is verified by multiple miners before it is finally added to the Bitcoin blockchain.
Anonymous
Satoshi ensured that Bitcoin users remain anonymous for several reasons, such as maintaining privacy, ensuring censorship resistance, preventing overrun, and preventing hacks.
Immutability
To ensure Bitcoin remains a trustless network, it must be immutable. This provides the transaction’s finality once it is confirmed on the network.
Permissionless
Bitcoin was envisioned as permissionless, so that anyone participating in the network never has to reveal their identity. Further, a permissionless blockchain was necessary for the greater adoption of Bitcoin.
Censorship Resistance
Bitcoin was essentially competing against fiat currencies, so it was natural for governments to act against it. Censorship resistance was necessary for Bitcoin to help its users avoid being shut down by centralized entities or even by governments.
Open Source
Bitcoin’s open source code was necessary for developers to continue building on it, make copies, or even fork it into different chains like Bitcoin Cash, Bitcoin SV, etc.
