Northwestern University Scholars Say Centralization is Key to Bitcoin Going Mainstream

Researchers from Northwestern University suggests that complete decentralization is slowing Bitcoin's adoption rate and that centralization is 'necessary' for mainstream adoption.


A report from researchers at a Northwestern University suggests that Bitcoin’s lack of scalability comes from its complete decentralization, suggesting that a compromise is necessary to achieve mass adoption.

Bitcoin has to compromise to achieve mass adoption

Researchers at the Kellogg School of Management have concluded that for Bitcoin to achieve massive adoption, there must be a compromise, which they suggested to be building a centralized network.

According to the university, the Proof-of-Work protocol currently present in Bitcoin’s consensus model is serving as an obstacle to adoption because of the low transaction volume.

To solve this problem, the university suggests that there must be some sort of compromise between Bitcoin’s network and central banks.

Clinical associate professor of strategy at Kellogg School of Management at Northwestern University, Sarit Markovich, in commenting about their finding on the Bitcoin network said:

“When you look at two networks like Bitcoin and a central bank, one is CENTRALIZED and one is not. If we want it [Bitcoin] to scale we have to compromise, which means we need to get to some level of centralization,”

While cryptocurrencies are favoring decentralized networks, there are still centralized networks such as EOS, where block validators are chosen by votes as opposed to hundreds of thousands of computers engaging in mining.

The claims of the researchers, which propose more centralization of a cryptocurrency ecosystem from the get-go, would not be well accepted by most crypto enthusiasts.

Centralization of the Bitcoin network would essentially go against one of the most important pillars of Bitcoin, decentralization, and censorship, which are both inexistent in a centralized ecosystem.

The bloXroute solution

The researchers at the Kellogg School of Management in collaboration with bloXroute Labs are reportedly developing a platform that could help resolve the scalability problem posed by the centralization of the Bitcoin.

bloXroute calls this problem a “scalability bottleneck” caused by the sheer amount of work that goes into processing one single block in a decentralized blockchain network.

The bloXroute solution aims to increase block sizes while at the same time reducing the amount of time that it takes to process transactions, hence a more effective and productive network.

According to Sarit Markovich, the proposed solution would be 100 times better than the Proof-of-Work protocol currently present in Bitcoin’s consensus model.

Although proposing a better network, Markovich stated that there are still little details about how the network would function.

As evident in the blockchain networks of many crypto-projects, regardless of the problem of decentralization, there is still the possibility of maneuvering the consensus model to produce better transaction speeds and higher scalability.

Projects have also leveraged the zero-knowledge proofs technology, which essentially adds anonymity into the mix, allowing people to have quick and private transactions.

While there is little known about the proposed solution, we do not know if all these would be possible in a completely centralized network.

Fake adoption?

On the other hand, leveraging centralization to improve adoption can be seen as ‘fake’ adoption. True adoption is likely to come rather through three aspects:

  • Education (learn how Bitcoin works, how to use it and wallet security)
  • Improved and simplified infrastructure (Bitcoin’s inherent complexity make it rather difficult to understand and use in its raw form. User-friendly wallets and exchanges eliminate this barrier)
  • Trust (as people start trusting the technology, they will be more open to using it regularly)

Nonetheless, centralized companies like Coinbase have had a tremendous impact in bringing the average individual into cryptocurrencies and Bitcoin (BTC). Perhaps companies like Coinbase will become obsolete when decentralized payment systems go full mainstream.

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