Title: Understanding Signum’s Nakamoto Coefficient — And Why It Doesn’t Tell the Whole Story
By Kim Stock
As blockchain networks continue to evolve, discussions around decentralization remain as relevant as ever. One way to measure decentralization is through a concept called the Nakamoto Coefficient — a metric designed to quantify how many entities would need to collude to compromise the core function of a blockchain network, such as block production. I recently looked into Signum’s Nakamoto Coefficient and, in doing so, uncovered some surprising insights — not only about Signum, but about the limitations of the metric itself.
What is the Nakamoto Coefficient?
The Nakamoto Coefficient, named after Bitcoin’s mysterious creator Satoshi Nakamoto, represents the minimum number of entities (e.g., miners, validators, developers, exchanges) that would need to collude to disrupt the network. The smaller the number, the more centralized the system is in that particular domain.
For example, in the context of mining, a Nakamoto Coefficient of 1 means a single entity controls over 50% of the network’s block production — making it highly vulnerable. A higher number indicates more distributed control.
Signum’s Nakamoto Coefficient (as of April 2025)
After checking data from PoolBay.io, here’s how Signum’s mining power is distributed:
• signapool.notallmine.net: 57.2%
• pool.signumcoin.ro: 25.6%
• spacepool.btfg.space: 5.7%
• Other smaller pools: ≈11.5%
To find the Nakamoto Coefficient, you sum the percentages from the largest pools until you surpass 50%. In Signum’s case:
• signapool.notallmine.net alone has enough capacity to exceed 50%.
• However, to err on the side of fairness (and because block production can vary), adding the second largest pool brings us well above that threshold.
Result: Signum’s Nakamoto Coefficient = 2
This means just two mining pools control a majority of the network’s block production, raising valid concerns about centralization — especially for a chain that prides itself on being community-oriented.
How Does Bitcoin Compare?
Surprisingly, Bitcoin isn’t much different. As of early 2025, the Bitcoin mining landscape is dominated by:
• Foundry USA: ~29–33%
• Antpool: ~21–25%
• F2Pool/ViaBTC: ~10–15%
With Foundry and Antpool alone, you’re already at or above the 50% mark. That puts Bitcoin’s Nakamoto Coefficient at 2 or 3 — not far off from Signum’s.
The Limitations of the Nakamoto Coefficient
While eye-opening, the Nakamoto Coefficient doesn’t tell the whole story. It’s just one piece of a much larger puzzle. Here’s why:
1. It only looks at one vector — usually mining or staking — ignoring the role of node operators, developers, wallet providers, or exchanges.
2. Not all entities are equal — some mining pools, even if few in number, may be widely distributed across many users, reducing actual centralization risk.
3. It lacks context — a network with a low coefficient might still be resilient if its community is strong and governance transparent.
As I reflected during my research:
“I’m not sure it means everything.”
And that’s a fair conclusion. While a useful tool, the Nakamoto Coefficient is far from the definitive measure of decentralization.
Final Thoughts
Metrics like the Nakamoto Coefficient are helpful for spotting risks and patterns, but real decentralization is more complex and layered. It lives not just in data, but in how communities behave, how software is developed, and how resilient a network is to pressure — whether social, economic, or technical.
For Signum, staying vigilant and encouraging distributed participation is key. For the rest of us, it’s a reminder: even giants like Bitcoin still walk a centralization tightrope.
