still considered a cryptocurrency ?
the word crypto only refers to cryptotechnology. a lot of this can be centralized. like single point of key infrastructure.
or single poing of coin issuance. even if crypto algorithms are used to ensure integrity/ownership nothing must be decentralized.
e.g. a blockchain based cryptocurrency like bitcoin has a lot more aspects
decentralization of nodes/mining/development
trustless interactions if you want to participate
open for all parties who are intersted (OPEN protocol! vs closed protocols/architectures)
....
Topic: Understanding Centralized Cryptocurrency (Read 489 times)
Quote
- no miner can say which transactions he wants to approve
But mining pool (admin) does.I guess you are saying about transaction censorship. Yes, an admin of some mining pool can pursue his own policy and restrict some transactions even if they offer high fees, but the admin of other mining pool won't comply with such policy and will approve any transaction he wants. Therefore the transaction censorship is surmountable in the long run.
No, I've been talking about 'de-/centralization' in general.
In the long run one may find a way to launer money or fund terrorism even with current centralized banks so this argument is negligible.
Not only censorship, there are or might be some sort of transactions/messages valide from the protocol point of view but not implemented in pool SW (or switched off by default) which makes it no way to perform even if both - sender and receiver - are agree on it.
As I said, the true decentralization is an agreement among all participants concerned and none else.
Bitcoin and cryptocurrency is decentralized
Disagree.I even don't have the better idea on this.
Neither does anybody else, certainly not Vitalik nor any other so called "crypto experts".Seriously nobody knows how to make ledgers decentralized.
That is the reality.
I even don't have the better idea on this. I know something about SciDex which is a new coin and working for scientific data. I also researched their white as well. Looks everything solid and clean. There is a good chance of earning some good money from that project.
Bitcoin and cryptocurrency is decentralized, but how does it become centralized ? By a third party. Using exchanges or sites that will help you monitor your account or withdraw makes it centralize. The third party relies also on decentralize cryptocurrency and pass it to you decentralized. If you would notice, it is also better for some greater security.
Quote
- no miner can say which transactions he wants to approve
But mining pool (admin) does.I guess you are saying about transaction censorship. Yes, an admin of some mining pool can pursue his own policy and restrict some transactions even if they offer high fees, but the admin of other mining pool won't comply with such policy and will approve any transaction he wants. Therefore the transaction censorship is surmountable in the long run.
But we all know cryptocurrencies and blockchain are decentralised by nature, so the whole concept of centralised cryptocurrency would be contradicting.
Cryptocurrencies are not decentralised by nature.
'Cryptocurrency' just refers to a currency with cryptographical technology underneath.
Neither is 'blockchain' decentralised by nature. It is just a data structrue. Comparable to a linked list.
It is the usage of the blockchain which does (or does not) make it decentralised.
Look at ripple, for example. Thats very far away from decentralised.
But we all know cryptocurrencies and blockchain are decentralised by nature, so the whole concept of centralised cryptocurrency would be contradicting.
But I already linked for you a blog which explains in great detail that extant cryptocurrencies are not decentralized when they scale up to supporting 1000s or millions of users.
Please read the "Decentralization" section in the blog I linked for you:
https://steemit.com/cryptocurrency/@anonymint/scaling-decentralization-security-of-distributed-ledgers
And yeah you're correct that means extant cryptocurrencies are contradicting what they purport to be.
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To be centralised means to trust somebody else to handle your money.
A user can store his money on the exchange, but the trust of the middleman makes it easy for a customer to recover a lost password. This can also take the pressure off of the consumer as he has given the exchange the full access to his account. There are many stories of investors losing hundreds of thousands of dollars because they lost the private keys to their hardware wallet.
But we all know cryptocurrencies and blockchain are decentralised by nature, so the whole concept of centralised cryptocurrency would be contradicting.
ultimately, its the choice of the parties involved.
A user can store his money on the exchange, but the trust of the middleman makes it easy for a customer to recover a lost password. This can also take the pressure off of the consumer as he has given the exchange the full access to his account. There are many stories of investors losing hundreds of thousands of dollars because they lost the private keys to their hardware wallet.
But we all know cryptocurrencies and blockchain are decentralised by nature, so the whole concept of centralised cryptocurrency would be contradicting.
ultimately, its the choice of the parties involved.
How is a centralized cryptocurrency still considered a cryptocurrency ? For my newbie understanding of the blockchain concepts, it should all be decentralized...
Yes, i totally agree with this point.
How is a centralized cryptocurrency still considered a cryptocurrency ?
"Cryptocurrency" doesn't imply that the currency is decentralized.
Decentralization refers to control.
Bitcoin was launched as a cryptocurrency, and in fact decentralized cryptocurrency (generally it's considered to be the first decentralized cryptocurrency).
However, the following blog goes into explanation of why Bitcoin can't scale up unless it's centralized:
https://steemit.com/cryptocurrency/@anonymint/scaling-decentralization-security-of-distributed-ledgers
Make sure to read that blog to learn more about centralization.
For my newbie understanding of the blockchain concepts, it should all be decentralized...
Arguably, real decentralized cryptocurrency doesn't even exist yet.
See what gov and bankers think about it:
A key committee in Arizona's House of Representatives has given its blessing to a bill that would clear the way for the state to accept cryptocurrencies as payment for taxes.
If approved, the bill would empower the Arizona Department of Revenue to collect taxes in the form of cryptocurrency
Illinois is also considering a similar tax payments measure
[...] considering including digital currency addresses associated with its list of persons and entities with whom U.S. persons and businesses are forbidden to transact business.
Financial institutions would be required to screen any virtual currency address provided for a transaction against a list to be provided by OFAC, and to either report, deny service to, or block transactions involving any listed addresses.
The agency's FAQ also encourages reporting of addresses associated with listed individuals, which suggests that they intend to supplement the SDN list on an ongoing basis.
What happens if you receive a transaction from a listed digital currency address?
- It is possible that the received coins would then be "tainted" as being linked back to a listed individual or entity, and that your identity and digital currency address may then be added to the OFAC list.
Are node operators or miners required to screen out transactions from blacklisted addresses?
- Maybe
miners may have a compliance obligation, which would radically change mining and confirmation of new transactions.
Miners may be obligated to not confirm, or to block, transactions involving listed addresses, which runs counter to mining itself.
Does this affect coin fungibility?
Kiss fungibility goodbye.
Financial institutions would be required to screen any virtual currency address provided for a transaction against a list to be provided by OFAC, and to either report, deny service to, or block transactions involving any listed addresses.
The agency's FAQ also encourages reporting of addresses associated with listed individuals, which suggests that they intend to supplement the SDN list on an ongoing basis.
What happens if you receive a transaction from a listed digital currency address?
- It is possible that the received coins would then be "tainted" as being linked back to a listed individual or entity, and that your identity and digital currency address may then be added to the OFAC list.
Are node operators or miners required to screen out transactions from blacklisted addresses?
- Maybe
miners may have a compliance obligation, which would radically change mining and confirmation of new transactions.
Miners may be obligated to not confirm, or to block, transactions involving listed addresses, which runs counter to mining itself.
Does this affect coin fungibility?
Kiss fungibility goodbye.
Circle also said it would create a new cryptocurrency pegged to the price of the U.S. dollar
USD Coin (USDC), will be backed by reserves of U.S. dollars
Circle believes a cryptocurrency whose value is pegged to a stable traditional currency can help drive adoption of blockchain-based systems.
Allaire said the company would provide quarterly audits on the reserves backing the USDC coin and conduct strict anti-money laundering and other checks on individuals and companies looking to buy and redeem the new coins.
You are wrong for the following reasons
Nope.You are reading wrong.
Quote
-Transactions are validate by all full nodes
I am not talking about 'validating', I'm talking about 'approval' (a kind of), i.e. for transaction to be commited it must be 'mined' by some miner(s).Quote
- no miner can say which transactions he wants to approve
But mining pool (admin) does.Quote
- when you are paying with cash you need government approval. Government can say at any time that this physical cash is worthless, he will print new ones (we lived this a lot in Brazil). Your money just become worthless with a president signature.
You don't need government approval in Brazil to pay US dollars (tough it might be 'disapproved').You can even pay in Golden Krugerrands, so no any government could say 'it is worthless'.
Contrary for BTC (or other 'crypto'-stuff) you don't have any even nearly similar option.
There were other cryptocurrencies before bitcoin, but bitcoin was the first to survive because it was decentralized, inspired on a P2P file sharing. Thanks to satoshi who invented a decentralized consensus mechanism, the proof of work.
And this is totally misleading assumption.
Just consider it in comparision with modern banking system:
When you pay in non-cash way (either by card, paypal, cheque or wire transfer) - your need a third-party 'approval', i.e. your bank, paypal, VISA system or other similar institution.
When you transfer yor BTC - you need miner's 'approval', i.e. your transaction must be included in a block 'mined' by them.
So it's the same letters, just different alphabet.
When you pay by cash, contrary, you don't need anyone's 'approval' - and this is a real p2p.
You are wrong for the following reasons:
-Transactions are validate by all full nodes, not just miners. If you have a full node you are validating your transactions.
-miners are not third party.
- no miner can say which transactions he wants to approve. He can choose which transaction to add to a block only if he finds the nonce first than others miners.
- when you are paying with cash you need government approval. Government can say at any time that this physical cash is worthless, he will print new ones (we lived this a lot in Brazil). Your money just become worthless with a president signature.
There were other cryptocurrencies before bitcoin, but bitcoin was the first to survive because it was decentralized, inspired on a P2P file sharing. Thanks to satoshi who invented a decentralized consensus mechanism, the proof of work.
And this is totally misleading assumption.
Just consider it in comparision with modern banking system:
When you pay in non-cash way (either by card, paypal, cheque or wire transfer) - your need a third-party 'approval', i.e. your bank, paypal, VISA system or other similar institution.
When you transfer yor BTC - you need miner's 'approval', i.e. your transaction must be included in a block 'mined' by them.
So it's the same letters, just different alphabet.
When you pay by cash, contrary, you don't need anyone's 'approval' - and this is a real p2p.
the moment any of the major miners merge, they can conveniently control the direction of price and nothing anyone would be able to do about it because there wont be any regulator to forestall such move just like the case it would have been in the business world where merging of two firms is likely to cause any form of monopoly of the market they operate.
If only two merged and wanted to create a monopoly, others would also merge and create an oligopoly, in which we would most likely see Bertrand competition. Those two players would undercut eachother resulting in the exact opposite of what you described. The price would drop until one player left the competition resulting in a monopoly. Then the remaining firm would raise the price until the profit was high enough for another firm to enter this market. Because those firms most likely don't trust eachother, they won't merge together.
And this understanding that the risk is greater than the perceived benefits are realised, miners themselves actively remove their own monopolies. When these "centralisations" almost happened (or did happen, depending on how you look at it) in the past, this was how they reacted. BTC Guild in 2013/14 were forced to close/sell, Gigahash more recently in 2016 also pledged never to even own 40% of total hash rate (though likely pressured by miners themselves leaving the pool).
All the major pools now are built the same, with hundreds of miners connected to them. These miners will also actively migrate as soon as they feel centralisation is imminent.
All this has happened before, and all this will happen again.
How is a centralized cryptocurrency still considered a cryptocurrency ? For my newbie understanding of the blockchain concepts, it should all be decentralized...
they are not mutually exclusive,many (too many for my liking) cryptocurrencies are centralized
the main examples here would be Ripple,NEO,Cardano,IOTA and NEM
all of them belong to top 20 according to coinmarket,yet they are cryptocurrencies and quite successfull as well
funnily enough,Ripple's CEO insists it is not centralized:
"Ripple is not centralized. To be clear, if Ripple disappeared today XRP would continue to function. To me that’s the most important measure of whether something is decentralized."
the moment any of the major miners merge, they can conveniently control the direction of price and nothing anyone would be able to do about it because there wont be any regulator to forestall such move just like the case it would have been in the business world where merging of two firms is likely to cause any form of monopoly of the market they operate.
If only two merged and wanted to create a monopoly, others would also merge and create an oligopoly, in which we would most likely see Bertrand competition. Those two players would undercut eachother resulting in the exact opposite of what you described. The price would drop until one player left the competition resulting in a monopoly. Then the remaining firm would raise the price until the profit was high enough for another firm to enter this market. Because those firms most likely don't trust eachother, they won't merge together.
That's true
Anyway, if you read the whote paper of bitcoin and the philosophy behind it, you may understand that if it is mined by 4/5 big mining farms in the world, it may be not centralized, but it is not fair anyway....
This is just my opinion of course
Anyway, if you read the whote paper of bitcoin and the philosophy behind it, you may understand that if it is mined by 4/5 big mining farms in the world, it may be not centralized, but it is not fair anyway....
This is just my opinion of course
True decentralization cannot happen with mining farms mining that much against billions of people
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