What it is
The Nakamoto coefficient is a metric designed to quantify the decentralization of a blockchain network. It represents the smallest number of independent entities – such as miners, validators, or developers – that would need to collude to gain control over a significant aspect of the network, like censoring transactions or altering the chain. A higher Nakamoto coefficient indicates greater decentralization and thus, a more robust and secure network, as it requires more coordination among diverse parties to mount an attack.
This coefficient is frequently discussed in news and analysis concerning the security and resilience of various blockchain protocols, especially when comparing different consensus mechanisms. For Bitcoin, it often refers to the number of mining pools required to control 51% of the network's hash rate. For Proof-of-Stake chains like Ethereum, it might refer to the number of validators needed to control one-third or two-thirds of the staked ETH. A low Nakamoto coefficient raises concerns about potential centralization and vulnerability to a 51% attack or similar exploits.
Why it matters
The Nakamoto coefficient helps retail investors understand how decentralized and secure a blockchain truly is. A higher number generally means a more resilient network against attacks or censorship.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice