Topic: Gary Gensler: "Bitcoin is not that decentralized" - page 5. (Read 1202 times)

IMO, it won't be avoided that he's going to talk a lot since he's part of the approval of the Bitcoin ETF spot which is beneficial to the price of Bitcoin with these applications that have been approved to contribute to its volume that we're getting right now. The effect might be for long term and the demand has been coping up high so, there could be some thoughts that let's just give it to him. But he should also stop nonsense arguments if he don't fully understand what he's saying but, he's the sec and he knows what he's doing and talking about based on his own perspective as he won't be sitting on that position for nothing.

I don't know how he can consider something he says isn't decentralised dangerous. For example, the dollar is not decentralised either, or any stock exchanges are also fully centralised. I guess his words should not be taken seriously. Your bitcoins belong only to you and that is enough to understand that there is no centralisation here.

for those still tying to quantify whats considered decentralised in regards to coin amounts:
 
if you look at the customer count total numbers of the 5 prominent bitcoin exchanges..

and then look at bitcoins UTXO count (excluding the silly ones of <900sats produced by ordinals junk dust creator)
the number of UTXO's are less then customer count of CEX

not all UTXO represent individuals..
so if we had say 100m viable countable UTXO to represent individuals. max.
then CEX customer count would need to be below 100m to be considered decentralised

I think the way most investors use Bitcoin today--wherein they don't physically hold their own private keys--demonstrates the exact opposite: that if Bitcoin were conceived as a reliable centralized system (e.g. like any standard financial institution), it would be far more popular and ubiquitous than it is today because it would actually work as a mainstream currency and not just an investment instrument.

Consumers don't care about technical terms like "decentralization", they just want an investment instrument that makes them a profit, and/or they want a cheap and fast means of performing anonymous transactions. Bitcoin can do the first, but it can't do the second. A currency that could do both, in my opinion, will eventually be much more popular than Bitcoin--and "decentralization" won't have anything to do with it.

It's certainly got some elements that you could mistake for being a little on the centralized side, but at the end of the day bitcoin is decentralized through and through. Like considering the fact that no one owns bitcoin besides those who had them in their wallets, are also far-reaching and global with little to no-wait time (in some cases let's be real here lol) sets the precedent that bitcoin's as decentralized as it can be. ETFs however would make you think it's centralized since now, companies could effectively sell bitcoins but at the end of the day, they aren't selling the coins, they are sellign you the rights to own the coin so you're basically paying for a title and not for the property/asset itself.

So yeah, Common Gary L. He's always painted bitcoin in a precarious spot ever since he stepped into the throne. I don't like how he's painting bitcoin to be when millions of people around the planet had benefited from it and none of this would've happened in the first place if bitcoin's unreliable and centralized. Let that sink in.

ask your mentor.. he is the one not wanting normal people spending on the bitcoin network and instead locking coin up to use other systems requiring middlemen handing the payments in some other system

But what's the threshold/the percentage of total circulating supply to be held by one entity, or a cartel of centralized entities working together, before we can truly say that Bitcoin has centralized towards said entities and has failed?

I have been asking that question, not because I was trying to find at what percentage is the threshold, but to know what others believe might the threshold might be. No one would give a direct opinion. Hahaha.

Bitcoin is a community-managed asset and it is not owned by anyone. So whether it is truly decentralized or not will be judged by the whole world and the community, it cannot become centralized just because Gary Gensler says it is centralized. And any individual or government has no right to decide whether bitcoin is centralized or decentralized. So I think we don't need to worry too much about what this guy says about bitcoin. What he says won't change anything or have any impact on bitcoin, so why do we care what he says?

Yeah I think hes just confusing everyone. Gensler's talking about exchanges holding a ton of Bitcoin which messes with the whole decentralization vibe. People dumping their BTC on exchanges is a problem. Remember not your keys not your coins! Keep that crypto safe in your own wallet, not on some exchange

gensler knows of bitcoin. he taught it at MIT

but his job, common sense, rationality prevents him from screaming "invest invest invest, i trust it with my life"
he has to say the risk averse standard disclaimer wordage, the stand back-ish stance and ofcourse needs to play to his bosses preferences

E.Warren sits on many boards that decide the direction SEC should follow. going against her and his own job would not play right for him


many people in this forum wish everyone would never mention any negatives and only scream out the utopian dream hype mountain of hope..

yet many smart people and investors actually do want a fair open dialogue of good and bad. to do due diligence and make a decision based on merits of both sides.
after all. if there is too much positivity, the words "too good to be true" start to play out and things start to sound like a scam
also trying to hide or have the negatives dismissed does not look good either.. so its better to just be open to even mention that things are not perfect, nothing ever is

by accepting bitcoins as an asset to be invested, is acknowledgement that its an asset that wont vanish easily. and thats all most people need to hear, the risk averse disclaimer after is just normal speak to expect

..
as for other large institutional influencers.. we can find positives in their negatives too
take the "bitcoin is rat poison²"

i fully agree with that statement
everyone knows wallstreet is the rat race.. and thus fiat is the rat. so if bitcoin is the thing that can poison fiat exponentially. wouldnt that make it a good thing to say for bitcoiners

Isn’t this the same Gensler who is the antagonist of bitcoin? Is it possible to hear “kind” words from him about bitcoin? Of course not. All these government or near-government officials actually have a vague understanding of bitcoin and the principles of its operation. Therefore, in their statements, in attempts to discredit the bitcoin by identifying shortcomings, they only show their ignorance in understanding this issue. In short, they don't have sufficient expertise on this topic, and therefore, what they say can't be taken as truth.

Are you surprised? I am not. Regulation is non-negotiable in the crypto world, and what we've seen is just the tip of the iceberg. In the next 10 years or thereabout, you would have seen enough regulation that would have further lessened the decentralization of Bitcoin. By the principle of operation, Bitcoin is decentralised and nothing may change that, but when it comes to the way businesses are being built around it, you can't say that anymore.

We first had the centralised exchanges and other centralised systems allowing Bitcoin that the government has been on their neck, and now again, the ETF, what do you expect? The usage will be more centralised. I see nothing so different from how the fiat currencies are being overseen by the authorities in this regard. I don't think that the government can ever allow what is dealing with money to be happening without having a say in it, so I understand their plight too. However, people have a choice, they can try to do it without the use of any centralised system. It is so possible as far as Bitcoin is concerned. This is just a choice in my thoughts, but I am certain that the decentralized system can cover up, at least for now.

However, I used "at least for now" because, with time, the government might start clamping down on decentralised websites and apps, it is only a matter of time. I hope people can refer to my warning when the term comes.

be sure to read the terms and conditions of signing up to a service. as that is the binding/unbinding of any legal claim you can make of funds you give to a service

many scams actually wrote terms where the funds were not customers. or wrote in ways that left customers with no legal claim..
giving someone else, some other service your coins/funds does NOT mean defacto remain your ownership. the devil is in the detail of the small print
the terms could be wrote that all deposits are treated as gifts/donations and any returns are at sole discretion of service.
the terms could be wrote that all deposits are held in trust, but at sole discretion of service they can close anyones account without notice and without offering refunds. and that then becomes the services right to do so, as you signed(by using service you are showing signs of agreement to terms) to say you agree to those terms


even with the FTX case, lawyers had to check on the published details of the customer application terms/conditions of different dates to classify FTX customers. not all customers had same terms and thus some customers were separated into different classes.
https://www.coindesk.com/policy/2023/10/16/sbf-trial-what-did-ftxs-terms-of-service-say-about-customer-funds/

He's really not. If you read what he says in context, you'd see that he's pointing out that almost all investors in Bitcoin don't physically hold their own private key, meaning that their holding of Bitcoin is stored in some centralized Oracle database just like any bank account or brokerage holder would be.

For almost all individual holders of Bitcoin, there is nothing "decentralized" about Bitcoin--it's just a brand name they are betting will become incrementally more popular, meaning the value of their holding will go up in value so they can sell it at a profit.

You can talk all day long about what Bitcoin is supposed to be, the reality is that it's just not used that way by most investors. For most it's no more "decentralized" than AAPL, MSFT, or USD in a checking account.

How you can make sure if Binance, Coinbase, Gemini, Kraken, Kucoin, ETFs, institutions and other centralized entities aren't fraudsters? don't forget with the popular idiom "don't trust, verify".

No one can know the credibility of those centralized entities, what if they stole all of the money and use "hack" as the excuse?

Imagine if all Bitcoin has been mined and all of them belong to centralized entities, they force people to buy, sell and hold Bitcoin in the centralized exchanges. Can we say Bitcoin is still decentralized? decentralized in theory, but no longer decentralized in practical.

It is theoretically possible for the governments and central banks to make Bitcoin centralized. What makes you think that it would be impossible for the governments and central banks to take control over any decentralized altcoin like Litecoin or Monero?
I guess that Gensler is mistaking decentralization with redistribution. A few big corporations can hold most of the BTC in existence, but the BTC blockchain will remain decentralized, as long as there are multiple BTC miners and nodes. Anyway, the process of concentration of capital and resources in the hands of a few major corporations is completely natural. Bitcoin is no different than any financial asset. It's normal for most BTC in circulation to be bought by several big banks and corporations. BTC is a scarce financial asset with big potential for a higher price in the future.

economic nodes are the business services, like exchange services, which mining pools depend on for their coin rewards to be seen by, and miners of those pools depend on so they can cash out and pay bills with their reward splits
(user nodes are a few levels down and of lesser importance to the network/economy/politics)
in short miners follow their rewards and if a merchant is not accepting their rewards(threats of rejecting blocks after mandatory date) they have to change their block format/money presentation to their services acceptable desires,

the power triangle is
  
                      other software
                 following core reference
                                 |
                            core dev
                             politics
                                /\
               economic  /__\ mining
             / full nodes         pools  \
      user                                   miners
     fullnodes
         |
 user pruned
 user stripped(backward/unupgraded)
    nodes
         

when users of any level or miner want to withdraw coins from an exchange or to an exchange. they play to whatever the majority services use. else they cant do anything.

when services collaborate with core devs because businesses dont have their own dev team so rely on core as the reference development of software they rely on.. economic nodes just follow core dev politics or be left running with outdated code that doesnt fully validate everything

if mining pools dont follow thee politics and have economic nodes threaten that their blocks would be rejected(unseen) the pools fall inline

and because core have become the defacto reference client.. its all become defacto centralised of follow the leader as the choices are not there

Gensler is right but to some extent only, because if there were any loophole in the code of BTC then it would be found till now, but there is no, but it still embarked on the centralized path due to the ETFs approval, high money involvement, but truly that's not that much, according to ETF tracker website, 10 ETFs have around 719,321 BTC in their holdings, and I read somewhere that 11 ETFs have around more then 111K BTC, I don't know how true is that, but the thing is we are not really going toward centralization by the authorities, it's just most of the BTC newcomers are only into BTC for money, they are creating hype of ETFs, making it something big, not only newcomers but they are the ones influenced by old comers.

They are creating a hype bubble, which is a good one though but it will pop with time, BTC can't be centralized by any means, if all the people using it start to run a node for validation purposes only, (just a thought), that would be a contribution towards BTC but the power consumption and other costs are high and newbies (not making money) can't really contribute but at least the ones making money should do. And according to CMC, Binance has around 426,701.49 BTC, which is less than those 10 ETFs combined, so, I think CEXs reserves don't matter that much.

And you know the funds of 10 ETFs are custoded by Coinbase, the competitor of Binance which was sued for the same reason Binance was sued, but Binance is the one forced to leave the country while coinbase was saved. That's not a coincidence.

With that context he's saying about Bitcoin and exchanges, yeah, no need to argue as most of the centralized exchanges have been keeping a huge number of deposits from their customers. Even it is not from them, it's like a funnel that goes on them and so as Gensler says that it's sort of not actual decentralization, it goes with the system in the exchanges and shouldn't be on Bitcoin. Bitcoin alone is decentralized and that's why he's mixing it up to make it look like that Bitcoin is as what he says but in reality, there's an involvement with the exchanges and obviously, many have been depositing their Bitcoins there to sell or just simply hold which is a very wrong idea and we always give reminder not to keep it there.

I don't like Gary Gensler especially that rug pull scam of ETF Twitter hack that happened but as much as I like to defend Bitcoin, he is not far from the truth but that doesn't make Bitcoin not decentralized. It's a great concern with the large number of Bitcoin that are concentrated on Centralized exchanges but this Bitcoin doesn't belong to the exchange, it belongs to the people. If today all the people want to withdraw their coins from exchanges, many of them will ran into one problem or the other because they don't have exact number of Bitcoin they owe people. However, people don't even care about this at all, they don't imagine the possibility of how exchanges might run away with their money when anything hoes wrong.

Decentralized exchanges are not that simple and I must confess that one of the basic thing that make people like centralized exchanges is because of simplicity. Look at how simple uniswap exchange is, if they can create something more unique and simple like that, I believe a lot of people will use it and not depend on centralized exchanges.

Gary should face his business, he has been saying off statement these days ever since he granted Bitcoin ETF.