i dont get how people can say bitcoin is decentralized when coinbase literally has a physical address??
— Neeraj K. Agrawal (@NeerajKA) May 30, 2023
I asked ChatGPT, and here’s the answer (and a pretty good one..)
Bitcoin is often referred to as decentralized because it operates on a decentralized network called the blockchain. The blockchain is a distributed ledger that is maintained by a network of computers, known as nodes, spread across the globe. Each node stores a copy of the entire blockchain, which contains a record of all Bitcoin transactions.
When people say that Bitcoin is decentralized, they mean that no single entity or authority controls the network or has the power to manipulate it. Transactions are verified by the network of nodes through a consensus mechanism, typically through a process called mining, which ensures the integrity and security of the network.
Now, when it comes to Coinbase or any other cryptocurrency exchange, it’s important to distinguish between the underlying technology (Bitcoin) and the platforms or services built around it. Coinbase is a centralized entity that provides services to buy, sell, and store cryptocurrencies like bitcoin. It has a physical address because it is a traditional company with headquarters and offices.
While Coinbase acts as an intermediary for users to interact with Bitcoin and other cryptocurrencies, it does not control the Bitcoin network itself. You can think of Coinbase as a bridge between the traditional financial system and the decentralized world of cryptocurrencies. Users can send their Bitcoin from Coinbase to any other Bitcoin address, and the transaction will be recorded on the blockchain, independent of Coinbase.
So, the decentralization of Bitcoin refers to the network and the consensus mechanism that powers it, while centralized platforms like Coinbase are separate entities that facilitate the use and exchange of cryptocurrencies.