An Information Entropy Method to Quantify the Degrees of Decentralization for Blockchain Systems

Abstract

Decentralization is a key selling point of most public blockchain platforms. However, despite the widely acknowledged importance of this property, most researches on this topic lack quantification, and none of them performs a calculation on the degrees of decentralization they achieve in practice. In this paper, taking Bitcoin and Ethereum for instances, we propose an entropy method in information theory to quantify the decentralization for them. Using the information entropy, we calculate the discrete degrees of blocks mined and address balances to quantify the degrees of decentralization for Bitcoin and Ethereum systems, and the results of calculations indicate that Bitcoin's mining is more approximately 12% decentralized than Ethereum with full samples, and Bitcoin's wealth is more approximately 9.2% decentralized than Ethereum with 10,000 samples. Our method can be used to evaluate the degree of decentralization for any blockchain system.