Decentralization has always been a cornerstone promise of crypto. Today, as we near Bitcoin’s 20-year mark, it seems the very asset class that promised decentralized finance has become over-centralized instead, and the only parts left of decentralization are among crypto’s weakest points.
Somehow, crypto ended up with several centers and seems even more centralized than the system it was meant to replace. Today, the crypto industry depends heavily on a few players, with decision-making, value, and control highly centralized.
Decision-making is centralized around foundations, whether these are the organizations responsible for the development and advocacy of different cryptocurrencies and blockchain projects or for-profit companies issuing and managing these projects.
In both cases, these foundations are usually the largest holders of the cryptocurrency. Although most permissionless blockchains offer a governance mechanism that allows voting these organizations out of control, we still haven’t seen this happen. Attempts to revoke a foundation’s proposed changes usually result in a less popular, less valuable chain split.
Ethereum Classic (ETC) was born when a part of the Ethereum community rejected the reversal of the transactions of the DAO hack, and Ethereum PoW (ETHW) was forked by the community that rejected the shift from PoW to PoS consensus mechanism. Bitcoin’s community disagreements resulted in Bitcoin Cash, Bitcoin Gold, Bitcoin SV (short for Satoshi Vision), and a long list of chain splits (sometimes from other chain splits).
Long story short, decentralized decision-making rarely works against the will of the foundation behind the blockchain, and while this results in unpopular changes in the case of most major layer-1 chains, it results in less agility and ability to update or upgrade where the foundations are weak, such as in the case of Bitcoin, where most chain splits happened over wanting, rather than rejecting, changes.
The result is the same: a non-dividing initiative can only be taken by a central organization.
Control and custody are centralized around exchanges. Well, two exchanges in particular. Binance and Coinbase host up to $504B worth of crypto assets, according to DeFiLlama and SEC numbers (Coinbase self-reported). That’s the equivalent of almost 20% of the total crypto market cap as calculated by CoinGecko. When the news about Binance’s hack was released, Bitcoin saw a drop of over 4% within hours.
When FTX, the second-largest crypto exchange then, collapsed, Bitcoin, which was already around 70% away from its one-year-old all-time high, lost 26% of its value in almost 3 days; by default, it dragged the rest of the space with it, which I’ll discuss in a bit.
This exchange centrality stems from a simple fact: the tech needed for decentralization to work is so complex for regular users. A mediator is needed, and just like crypto’s nemesis, banks, this mediator needs to have some sort of control over your money.
Value is centered around Bitcoin. Although blockchain technology saw some significant developments over the last two decades, since May 2021, Bitcoin’s dominance has never gone below 40%. Out of ~$2.6T in crypto market cap, Bitcoin’s share is $1.6T. In other words, Bitcoin’s value is larger than all the other crypto projects combined by over $400 billion, including stablecoins, wrapped coins, and any shitcoins that made it to the list of over 22,000 projects observed by CoinGecko.
And even this one asset, overshadowing the whole space, is quite concentrated in terms of ownership. The top 100 identifiable owners of Bitcoin hold around 9.18% of the max supply of 21M BTC. If we add Satoshi Nakamoto’s estimated holdings, this number rises to over 14%. Yes, 1 of every 20 bitcoins is owned by one anonymous person.
Bitcoin’s centrality means other projects’ attraction of more investment and better chart performance is dependent on an external factor. Ambitious blockchain projects like Ethereum, Polkadot, or Solana will always see their largest upsides and downsides as side effects of Bitcoin’s movements, which affect, rather than reflect, the general sentiment on overall crypto.
This level of concentration tells us that crypto is not a “space” where projects are competing. It’s rather somewhere between a single asset and an asset class, mostly closer to the former end of the spectrum.
The only part left from decentralization is the worst: transaction irreversibility, which makes crypto hacks and thefts much worse and harder to mitigate. While blockchains are still immune from attacks so far, most crypto adopters rarely use the blockchain directly, but rather use intermediaries, all of which have been hacked one way or another.
Self-custody software gives the illusion of control, but it still can be—and has been— hacked. More than 5,000 Atomic wallets were compromised in 2023, with over $100M worth of crypto stolen. Trust Wallet suffered vulnerabilities in 2023 that led to stealing $170k worth of crypto, and again got attacked in 2025, with estimated losses of around $7M.
However, decentralization is not the only promise that crypto failed to deliver on. Two other promises were broken: privacy and defeating traditional finance.
In exchange for hopes of more moonshots and making astronomical profits, crypto longed for more regulation and integration within the traditional financial systems. The extensive KYC process any user has to go through today to buy crypto safely not only eradicates the privacy features, but, ironically, makes traditional finance provide more privacy than DeFi. Your bank won’t be publishing a record of your transactions on a publicly accessible ledger.
As for the promise of bringing global finance to its knees, well. Both Wall Street and crypto bros shout in anger at the interest rates lately, with ETF net inflows becoming more of an optimism factor than public adoption of crypto. This ship had sailed a while ago already.
So… (uncomfortable silence) what’s left of crypto?
It’s the least decentralized projects, such as Circle, Tether, and Ripple, that help freeze and recover stolen assets. Crypto projects with some degree of centralization have been on the rise in the last few years.
If we exclude Bitcoin’s market cap, cryptocurrencies with some kind of centralization comprise about 52% of the top 100 crypto projects’ market cap. Stablecoins alone comprise over 26%, with a ~$280B market cap.
The trend is kind of clear, especially if we count government-run central bank digital currencies (CBDCs) that have started to move from headlines to actual implementation. According to the Atlantic Council’s CBDC tracker, 146 countries are exploring or involved in CBDC projects, 41 of which are in the pilot phase, including China’s massive e-CNY, which has processed 3.4 billion transactions in 2025, worth a whopping $2.3 trillion.
While crypto failed to create the financial anarchy it once hoped for, it seems like it ended up enhancing the financial system it aimed at. The advantages of security, speed, and lower transaction costs it brought are only going to go further, with much of its contributions happening behind the scenes, providing institutions with better, more cost-effective channels for record-keeping, transfers of value, and settlements.
Pushing for the crypto revolutionary dream is a lost cause. However, pushing institutions to pass down the benefits that crypto and blockchain technology brought, instead of using them as a profit margin boost, is not.