Topic: 3 Key Facts About Centralized Cryptocurrency (Read 222 times)

It is fast steering towards centralization and we cant really blame it on the tech or people calling for it. The free decentralized nature of the Blockchain has given scammers and Internet urchins the freedom to abuse it and tag it a bad name and as it seems, only regulation can salvage what's left of the integrity of the Blockchain and cryptocurrency. I wasn't shocked to see IDEX adopt mandatory KYC for all its users. I am sure this new phenomenon will be spreading soon to other exchanges with time

Bakkt is more acceptable compared with the ETF and it will be handled by bakkt itself.
But it looks very sad to see even more dex becomes fully regulated to comply with the regulation that has already told by the regulator.
I can say this is not a good thing to see for further development in the crypto when so many decentralized entities have changed their mind to comply with regulation and becomes centralized.
this is something that is not acceptable by crypto community

There is always something that manages the blockchain based cryptocurrency.  It is no news, it has been known eversince and it is coded on the system.  The thing about decentralized and centralized is the direct participation of people managing that cryptocurrency.  Bitcoin had been managed by something and of course managed by a large number of group of people (nodes, miners and developers) in different stations and country making it decentralized.  While centralized cryptocurrency is only managed by a few individual and commanded by them on both the decision making, management and development path.

Speaking about centralized crypto, we should remember about Tether, first of all. It is a fully centralized cryptocurrency. Tether Limited is engaged in the issue of tokens and verification of payments. However, despite all the shortcomings of it and the presence of promising competitors in the face of younger stablecoins like Libra (that has not even yet appeared), Tether still remains the leader in this category of cryptocurrencies.

A centralized cryptography is a contradiction in terms and a scam to the public.
The problem is that very few understand the concept of decentralization, and when governments or, more likely, web giants propose their "coins", people will believe it.

I have a slightly different view in terms of centralized and decentralized, first I want to say that there is no single token/coin that is not controlled in cryptocurrency, all hold on centralized systems, only different methods between centralized and decentralized, secondly, blockchain is data storage The biggest ever created, with the blockchain system we can store data in the form of complex algorithms, what needs to be understood is that the creators of these algorithms must have the ability to control the algorithms they make.
third, the death of several altcoins, the fall of ETH and rising prices for bitcoin is inseparable from the influence of using the parent blockchain, so I think centralized or not centralized is just a term, because after 2017 we begin to understand that there is something/someone who manages blockchain-based cryptocurrency. Do you agree?

Nice post, we shouldn't forget what happened with government involvement of dotcom bubble, everything happened because of the government involvement, crypto gives better freedom over your asset that is why i don't invest a penny in centralized projects,Decentralization is the answer we've all be waiting for and here it is, be wise people

Three key facts about cryptocurrency are
1.How Can a Cryptocurrency be Controlled by a Central Authority
2.What is the Relationship Between Blockchain and Cryptocurrency?
3.Decentralization

A so called Centralized cryptocurrency can still function perfectly well.

The trouble with decentralized cryptocurrencies is you always need to pay a transaction fee for mining and to avoid spam. If your currency runs on 3 nodes, then you have almost instant transaction speed. and you can transfer with NO FEE.

Have you ever been involved in one of these dumps and what was your experience?

The effect of a centralized crypto is that you don't really understand what really is happening with it if you are not an in-house. It can be manipulated in volume, and time for dump and pump come like surprise to an outsider.

The ETF proposal has been one of the loudest news for the crypto society most of the time. But I think that hype and hope has gone with that thing.

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What most people are waiting now is with the Bakkt Bitcoin futures launching next month.

Fortunately, in most cases we have to follow the rules of regulation. And although some might be more time consuming than others, the end goal is to be able to stop malicious actions (like criminal activities). Some of us wish for more streamline solutions, however unless projects focused on identity verification can provide a more impactful solution, we are stuck in between.

Unfortunately, crypto industry is moving towards centralisation. The biggest news depend on SEC decision, on every second exchange you need to pass the KYC to be eligible for withdrawals and even "decentralised" exchanges like IDEX are implementing a user-desktop with KYC.

Yes, a decentralized network is subject to a 51% attack, and that 51% could be understood as a central authority. The difference here I believe, would be the fact  that a centralised blockchain can be forked or taken down, regardless of any miner percentage, it is the centralised authority that can make this call at a whim. You could wake up in  the morning and your coin is no longer.

Can i ask you what about the proposal of bitcoin fork that has already happened a few times? and some people claim if that is truly decentralized blockchain but it looks like your bold statement is not matching with the fact.
The proposal of bitcoin gets voted by the miners and big group of miners and then more voting powers will be acquired by that group of miners. That means even the truly decentralized network still has a chance to be centralized.

When Bitcoin was created, one of the features celebrated by enthusiasts and early adopters is the fact that it is a decentralized network which permits a deregulated transaction system. Breaking down the complexities of the industry, we will explore various aspects in a clarified manner. Our 3 key facts about centralized cryptocurrency will first delve into what is decentralization, look into the relationship between blockchain and cryptocurrency, as well as how a cryptocurrency can be controlled by a central authority.

1. What is Decentralization?

Charlie Lee, the creator of Litecoin, states “by definition, a decentralized cryptocurrency must be susceptible to 51% attacks whether by hashrate, stake, and/or other permissionlessly-acquirable resources. If a crypto can’t be 51% attacked, it is permissioned and centralized.”

A simple definition describes decentralization as the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group.

With regards to Bitcoin and several other cryptocurrencies, this was a major factor that differentiated them from fiat currencies that were issued by central banks. This particular class of cryptocurrencies are produced, used and managed by the very users who belong to their networks.

Regular fiat currencies that are issued by central banks are operated within the rules of the said banks. The value attached to them, even though they are based on certain economic standards, are under the control or regulation of the banks. But in the case of Bitcoin and other similar cryptocurrencies, their values are determined both by normal economic forces of demand and supply and as a result of the network activity of its users. Hence power and control does not emanate from any central point. This is what we know as decentralization.

While this system was popular among cryptocurrencies, various debates on the possible cons of a decentralized and deregulated system prompted a different kind of innovation in the cryptocurrency ecosystem. This innovation is not particularly new, but it became popular among establishments who cherished the benefits of the technology behind Bitcoin and other cryptos, but had reservations about decentralization and deregulation. These reservations lead to the inquisition of 3 key factors about centralized cryptocurrency.

Therefore, today we can find a good number of “Closed” blockchain networks that are being used by companies to facilitate internal operations, but are not deregulated or decentralized. In other words, they are blockchains that have central control.

2. What is the Relationship Between Blockchain and Cryptocurrency?

Tokens are a fundamental aspect of blockchain technology. They are the fuel that enable participation and transactions within or across blockchain networks. In order to play any kind of role on a blockchain, whether decentralized or otherwise, you need to have the tokens of such blockchains.
Therefore, when a blockchain attracts reasonable demand, thereby creating value for its tokens based on the economic factors that we have mentioned above, and gets listed in a marketplace where they can be purchased or exchanged for fiat or other cryptocurrencies, then they can be regarded as cryptocurrencies. So, centralized cryptocurrencies can be described as the tokens of those blockchains that are controlled by a central authority. In essence, those cryptocurrencies are controlled by a central authority.

3. How Can a Cryptocurrency be Controlled by a Central Authority?

Just like the example we gave above using central banks, when the minting of a currency and the rules governing its network and community are under the control of a central body, it is centralized. This is exactly the case with centralized cryptocurrencies.

Unlike decentralized networks whose rules are set from the beginning and cannot be changed, centralized networks are subject to change. The tokens are not mined by the participants of the network, they are rather issued by the governing authorities based on agreed terms. These governing authorities are in charge of the centralized server and are responsible for its maintenance.

Although the blockchain industry would easily boast of being a decentralized ecosystem, investigation reveals that majority of the existing cryptocurrencies possess elements of centralization. This simply means that the creators of these cryptos have some level of influence over their networks. As a matter of fact, as much as over 80% of the cryptocurrencies in the market today are either fully or partially centralized. The biggest among them being Ripple’s XRP.

Centralized or not, all of these tokens can be found on https://vertex.market/home for anyone who wants to participate in the cryptocurrency marketplace. The Vertex platform provides extensive liquidity in a peer-to-peer marketplace for all levels of buyers. A subject of interest is that even tokens that are yet to be listed, but have been properly researched and certified for market viability can be purchased on Vertex. Transactions on the platform are possible using bank transfer or directly linking you to over 20 different payment gateways.

We hope you found this piece on the 3 key facts about centralized cryptocurrency insightful, for more understanding of anything and everything in the cryptocurrency space, see our Medium account here -----> https://medium.com/@official_83664/3-key-facts-about-centralized-cryptocurrency-b21ddf3c55b9