Topic: We should separate the markets for Bitcoin* and centralized altcoins (Read 309 times)

Not only the SEC and CFTC. In the European Union, the Markets in Crypto-Assets directive (MiCa) was approved last week by the European Council (a last vote instance has still to follow). I took a look into it - and they seem to have read this thread which is impossible, as the version should be older than the thread, but the coincidence is cool The last version, which is the one which was approved, contains the following phrase:


In short: Almost all premined coins will be treated differently in the European Union from 2025 on and face sharp regulation, including a mandatory whitepaper which must be submitted to the authorities, and obligations for their marketing communication.

Non-premined coins (it doesn't matter if obtained by mining or staking or "farming" or whatever) are not affected, see the highlighted phrase.

The only premined coins which are excepted from these regulations are those distributed in a completely free way (that means, the projects cannot even airdrop them in exchange for personal data) and utility tokens (either from a single business or a group of businesses) which can be exchanged for products which already exist (i.e. no false promises are permitted).

That's certainly true, mate. Sites like CoinMarketCap and CoinGecko only give investors insights of the price of a crypto asset, its market capitalization, among other things. But they're by no means an indicator of a coin's success. People need to do their own research to determine if the coin they're willing to invest into is really worth it. It's not about hype, but rather what real use cases a cryptocurrency project provides to the world. Constant development, and innovation are one of things you should look into when buying and holding a coin for the long term.

Remember, "not all that glitters is Gold". Most people are usually following the money so they don't care if the coin they're investing into is a worthless pile of junk if it makes them money in the short term. Centralization is rampant these days because developers are focusing on scalability/performance instead of censorship-resistance and decentralization. We shouldn't worry about this as long as there's one cryptocurrency project that actually cares about Satoshi's principles. Just my opinion

This is why these altcoins do really remain sitting below ranking with Bitcoin.The community do mainly support on Bitcoin itself even though they touch up altcoins but doesnt mean that it do shows up some support

in overall essence of its existence but rather they would really be loving to have that money or possible profits.Its true that we do have lots of centralized altcoins as of today but investors arent really that blind

on not to make out some differentiation when its regards to this.Separation is already there and we could really see it on marketcap and dominance.
Let those people touch up on alts because its their money, so its their choice to make on what to engage.

The situation of alternative coins can be different depending on many factors some of them are centralized and technically the asset can be controlled by a person or an organization during the time these coins cannot be compared to bitcoin in any situation because these two are now same in any condition, while some other altcoins are decentralized or pretend to be decentralized people are mostly mistaking and they think these altcoins are fully decentralized while being decentralized like bitcoin is not the same with altcoins.

The main focus of sites like cmc is to provide a platform that house every coins/tokens that exist in blockchain for people seeking such information to access them in one place.
Maybe in the case of exchanges they can try to separate them but this will only be useful to certain number of people (probably the well informed minds) but for the average Joe's who are the majority may not really care much about such details.

Yeah very smooth concept. Send this article to the SEC and CFTC because they are fighting over which coins are securities and whether they should be controlling it or they should be forming other organization for the same. We can throw some coins like that and ask them to control those so that they can leave bitcoin alone and for us to use peacefully. 
This statement is coming out of the recent discussion that we had in bitcoin discussion over SEC fight as they think all the coins are securities and thus SEC should regulate it.
This concept is up to the mark. Thats where the separation comes for bitcoin and altcoins. On the other hand now I highly doubt if Satoshi ever imagined that his world will be messed up like this?

CMC and gecko just mixed all cryptos by basing only on their numbers. It's like a global ranking but there must be similar sites which has a different categories in terms of ranking.

Other than ranking a coin, cmc and gecko do also have other features which are useful for those who are dealing with cryptos and I think one of it is their learn and earn a crypto. They still can be used a reference to extend our crypto knowledge but if we want a more precise crypto information then our very own bitcointalk is surely a way to go. We have a lot of topics here not only in bitcoins and anyone is also free to ask a question if they can't find any topic about it.

Mostly these ratings are a rating to bring more views and thus provide investment alternatives for investors who will find more ratings and thus the possibility of investing in more currencies.

If we want to divide cryptocurrencies, we will find that they are very similar, and therefore all of these classifications have no meaning.

Well, these sites don't really look closely. They're focused only on their prices. And for as long as a coin or token is a cryptocurrency, they're lumped together. They don't care about the technology of each of these projects, or coins and tokens. And although there are already categories added, it seems they're adding more confusion instead of clarity. But I guess, this is just one perspective of the cryptocurrency market. Sites likes CMC and Coingecko, they're looking at the numbers only. So beyond that, these sites are not to be used as reference.

There's centralization all over the place. Binance not only controls a large portion of the crypto market, but it also has huge influence over it. On top of that, most altcoins are centralized as they've prioritized scalability instead of censorship-resistance. You can see how ETH defected to the regulators by doing the switch to PoS. The whole crypto/Blockchain space is going backwards (with the exception of Bitcoin) by introducing the middleman back into the system. How can Blockchain achieve its full potential this way?

Unfortunately, there's nothing we can do since greed (money) goes above all else. Wall Street has invested deeply into crypto, so centralized "shitcoins" will keep "pumping" like there's no tomorrow. The newcomer into crypto thinks everything is decentralized, when in fact, it's not. The more people support centralized altcoins, the easier it'll be for governments to enforce regulations at will. Let's hope Bitcoin does the difference by keeping itself as decentralized and censorship-resistant as possible. Just my thoughts

Maybe it can help newbies a bit to understand the difference between bitcoin and centralized altcoins. But most beginners don't even care about being centered and decentralization. So many beginners proudly juxtapose altcoins with bitcoin. that's what's dangerous. I've only recently come to understand this myself. because previously I didn't even care what POS was and What was PoW. but after knowing this then I realized the importance of knowledge about this.

Decentralization is the reason cryptocurrencies were invented after all. That's the point for me, and the reason why I think action should be taken. Centralized online currencies did exist up to 15 years before.

What the exchanges/ranking sites are doing if they're equiparating centralized and decentralized currencies is, at the end, harming the whole market. Bitcoiners are among their most important customers - they can create pressure.

See this answer. There are definitively incentives for the way exchanges are "blurring" the markets. But they are short-sighted - as the whole market could become much bigger if there were at least less centralized scams.

I'm sure they understand, at least the bigger ones. But they're intentionally not acting, because of their short-sightedness. That's why users could become aware of the problem themselves, and pressure them to change.

Coinmarketcap provides already some filters and tags. But, "strangely" premine/non-premined or centralized/decentralized isn't among them.

I also already wrote that I've more hope that smaller ranking sites like Coingecko could introduce at least the "premine" filter. I've requested that here, but there was no reaction (I'm doubting they ever read that thread, so I maybe should go for another communication channel). These sites are more likely to be used by cryptocurrency enthusiasts which do care about the decentralization issue, and so they could benefit from such a filter more.

Coinpaprika, a very small ranking site, has at least an item called "organizational structure", with the values "centralized", "semi-centralized" and "decentralized". But it's not possible to filter coins based on that attribute, afaik. (They even have a "premine" tag but it doesn't work at all.)

It isn't that pointless if you read many articles in big media outlets after Ethereum's "merge". Many of them argumented in a way like: The world's second cryptocurrency changed to a "green" algorithm (PoS), when will Bitcoin follow?

They ignore that Bitcoin is a completely different asset than ETH and has no "staff" which can "order" a transition to PoS (the Core team could "propose" such a transition, but it's unlikely everybody will follow). That's exactly the point I want to make. The "blurring" between centralized and decentralized cryptocurrencies affects the public opinion through this kind of media articles, and have influenced also the "Bitcoin is a scam" hipothesis which is very popular among non-Bitcoiners. A clearer separation between both would immensely benefit not only Bitcoin, but also other decentralized crypto projects and also honest centralized token projects.

This may be true, at least for a big part of the user demography which are only "in crypto" to make profit. However even this group could profit from a separation: as I mentioned above in the mid term a stricter regulation of centralized cryptocurrencies is likely in the EU and the US, two big markets. It's possible that it won't be possible to trade a big part of those assets in these locations in 2-3 years anymore on centralized exchanges, so they should care.

Exchanges don't even need to "manipulate" certain cryptocurrencies to be able to make good money. All a trading pair needs is a good amount of demand, and the exchange would profit handsomely from the fees alone.

As far as I know, listing in coinmarketcap is free, so long you are complying with their listing requirements.

https://support.coinmarketcap.com/hc/en-us/articles/360043659351-Listings-Criteria

There is also a short article stating that their listing is always free = https://coinmarketcap.com/alexandria/article/coinmarketcap-listing-is-free


So don't know where you got the info that they are accepting fees here. It has been known that listing here is free.
Before, you only need at least 2 exchanges where your coin is being traded at and other basic requirements.
Right now, I believe, they are stricter as there are so many crap coins coming in so they are more thorough with their requirements.

Coinmarketcap is comparing and ranking market caps. That's all. Coinmarketcap doesn't compare and rank blockchains.
Do you really think that the Coinmarketcap team cares about which cryptocurrency is decentralized and which one is centralized?
AFAIK, the business model of platforms like Coinmarketcap partially relies on listing fees, that are paid by the altcoin/shitcoin/token creators.
The more coins paying listing fees the better for Coinmarketcap. "Don't hate the player, hate the game."
The crypto exchange platforms are all about buying and selling cryptocurrencies. The crypto exchange platforms don't care about which blockhain is PoW and which one is PoS. The platforms simply want their trading and transaction fees.
Should Bitcoin be divided from the centralized altcoins? This division definitely won't stop the endless comparisons between Bitcoin and the altcoins. I think that this is a pointless idea.

How you can expect the exchanges to separate between Bitcoin market and centralized shitcoins market when they're actually don't understand what is decentralized and centralized? I can say this because they're calling centralized swap e.g. uniswap, sushiswap, pancakeswap is a decentralized exchange. Moreover they're calling DEFI and WEB3.0 are decentralized project, while we're already see so many projects are rug pull which is the developer can control their whole coins.

The thing is, I don't think that an average user actually cares whether some cryptocurrency is centralized or not, so I don't think those such websites will care about implementing differentiation either. And especially if that will mean less traffic from them.


Yep, that's one of the info I would like to see as people are unaware of that, even for some of the most popular cryptocurrencies like Ethereum. More than once I met Ethereum fan not knowing that 70% of its supply has been premined. Then again, even when they found about it they didn't really care about it as long as number goes up.

that's why we find some of these exchanges delisting some of the enlisted currencies because even them would have regretted taking such step from the start, thier criteria to get a coin enlisted should be more scrutinized that they can't even manipulate them, but we are even less concern with all these worries with altcoins since bitcoin can offer every desired benefits we could wanted, but linking them together or partial blending of bitcoin with altcoins has to be a thing to stop such away that newbies will not always fall into altcoins while in search for bitcoin investments.


then exchanges has a long way to be dealt with in this matter because a newbie has the most common launch to his experience with bitcoin by having first encounters with centralized exchanges and from there they take over to eventually got newbies persuaded through adverts, ads, memes, and the likes to go for alts while their initial harvest started with bitcoin, but centralized exchanges fabricates and refurbished ideas from newbies minds to altcoins they are promoting.

Whatever Bitcoiners want, exchanges really don't care — and separating decentralized and non-decentralized would just add unnecessary clutter on their side. And the fact that listing majority of cryptocurrencies as "centralized" will most probably put people off from buying that certain cryptocurrency — decreasing trading volume hence decreasing revenue.

Exactly. They see Coinmarketcap and think there are opportunities in low-valued centralized shitcoins, because "they could become as big as Bitcoin". This is the main problem I'd like to address here.

I think you and @hatshepsut93 make reference to the same problem:

That is true partly. I wrote already in the OP that ICOs can be a positive way to raise money, if it's clear for the potential customers which niche these ICO coins would cover. As long as these do not claim they're decentralized and "the same thing" than Bitcoin, and protect their customers, then I have absolutely no problem with that kind of tokens or coins. Same with NFTs, social tokens, et cetera.

The crypto ecosystem could benefit from honest projects of this kind to the same extent or more than from scams. These projects can of course also allocate tokens for bounties and influencers. I write "or more" because once the scams were a thing of the past or at least "crypto" doesn't get associated anymore with scams, the potential number of customers would be much bigger. It could grow into a really massive market.

The problem for me instead is when some coins claim they're a real Bitcoin competitor even if they clearly aren't, due to their centralized nature. Of course these projects want to ride the Bitcoin train, and exchanges can benefit from them. But the community as a whole I think is harmed by these projects.

I'm not making a point for government regulation here*, but for community auto-regulation. And while I think it may be illusory that Coinmarketcap adheres to the proposed transparency criteria (i.e. clearly marking premines and coins where a big part of the nodes are operated by the "founders" or the "team"), alternative, more community-focused coin-ranking sites like CoinGecko should be able to provide real added value if they incorporate this feature in their sites. Almost everybody would benefit, minus the scammers.


*In the EU and the US there are indeed projects planning to separate these two spheres, like the Markets in Crypto-Assets proposal (MiCa) which would require a mandatory whitepaper for all premined coins to be marketed in the EU.

The whole crypto ecosystem is profiting from centralized coins, shitcoins, ICO scams, NFTs and all other useless products. Those market data sites get paid by dev teams to list and promote their coins, exchanges get paid for listing coins, and they also don't care what is being traded, they collect fees anyway, they only interested in more trades. Social media influencers will promote anything, as long as they get paid.

There's simply less incentive to be honest and refuse to cooperate with shitcoin projects, because it would be hard to make money in crypto sphere while doing so.

Bitcoin is the most decentralized, mostly all others (altcoins) are not really decentralized, they are centralized to an extent.

Altcoins like ether, binance coin and most others are centralized

See stable coins, most can be freezed on noncustodial wallet. Nothing is most centralized than not having full control over your own asset. Maybe there are altcoins that are not stable coins like that too.

See what Binance is doing, the centralization is even more than creating a cryptocurrency, but into other aspects like backing completely close source hardware wallet (Safepal), having close source wallet (Trustwallet), manipulating stable coins for there own created stable coin, BUSD.

There is no coin that is decentralized like bitcoin.

People are people, even as there are many fake projects, they will still want to risk their money one those coins. I have seen Binance to be most centralized from them all, which is even beyond creating coins but about cryptocurrecies in general.

To me i think the difference is clear and boldly seen from bitcoin and altcoins since they both operate on different grounds, bitcoin is decentralized while altcoins centralized, but i think the challenges start coming with the beginners coming in, they can't understand even why should bitcoin be preferred than any other altcoins, why they should make use of a decentralized exchange and not a centralized one, why privacy and security should be more a thing of concerns, and finally why shitcoins are more ever increasing each day to be avoided, know this that exchanges couldn't create the differences because they were also out for business, all other smart contract businesses and crypto projects that want to be identified along with bitcoin swindles their way in with beginners, but an average and experienced cryptopreneur should know and avoid these.

Websites like Coinmarketcap (owned by Binance) and many crypto exchanges give us the impression that all cryptocurrencies are the same thing, and that they can be "ranked". Some of these sites at least separate between "currencies" with their own blockchains and "tokens", some do not even that.

But there are big differences between cryptocurrencies. Only Bitcoin and a few other altcoins can really be described as "decentralized", while about 99% of the rest are centralized.

Most altcoins are businesses with "providers" and "customers", Bitcoin is not

The biggest centralizing factor is the premine. A premine from the start makes it clear that there is some entity, a person or a group (often called "the team" or "the devs") who are the "owners" or "providers" of the coin. They are responsible to conduct ICOs, giveaways, bounty campaigns and so on - which is easy for them as they have generated these coins for free. Development work may be significant in cases like Ethereum. But the relation is always pretty clearly one of a single "provider" or "issuer" (the team, devs, foundation etc.) and "customers" (the users).

Compare that with Bitcoin, where no such "owner" group or "team" exists. There is of course a development team, but Bitcoin Core is simply the group who develops the most popular reference implementation. And it's perfectly possible that an alternative team eventually develops a more popular solution and becomes themselves the group who works on improvements of the "protocol", and that would be perfectly ok. In the case of centralized altcoins, in contrast, the "owners" can threaten alternative implementations with protocol changes with legal action (due to trademarks), or a fork and a dump of the coins of the alternative implementation (ETC case) due to their immense economic power.

The development team, in the case of Bitcoin, thus is not a "provider", but simply one of many "user" groups, like miners, exchangers, Lightning channel operators, merchants and simple "private" users.

I would argue even that the differences between these two kinds of cryptocurrencies are bigger than between distinct types of traditional financial products. The Bitcoin type is the only one that is fundamentally different from other products because there is no provider, no owner and also no issuer. All other financial products have clearly an "issuer".

So even a possible "flippening", where a centralized coin like Ethereum achieves a higher market cap than Bitcoin, would be absolutely a non-event. Because it would simply mean that an asset of a completely different category is currently more "valuable".

100% premined currencies and tokens should be viewed directly as securities or loans. This is not a stance of mine against these assets at all. I'm pretty positive about ICOs, security tokens, and utility tokens actually, they are a good opportunity for young businesses to raise money and should not be "regulated to death" (although they should offer customer protection). But they are a different thing than Bitcoin (and a few other coins like Monero, NMC or Groestlcoin). Coinmarketcap thus is worse than an infomational website mixing the "market cap" of shares, loans, derivatives and commodities together. Would a trader of traditional financial products accept that kind of site?

Enough rant, what should be done?

Exchanges and informational websites should help users to be able to separate the markets between Bitcoin and Bitcoin-style decentralized currencies, and centralized altcoins or tokens. So the users can actually know which kind of asset they are trading, and are not forced into thinking that "all coins are the same thing".

At the very least they should be transparent about any significant** premine that happened. Coinmarketcap did this until 2016 or 2017 (I'm not sure about the exact date) but then decided to mix everything together. Among alternative sites of the same kind, neither Coingecko nor Coinpaprika seem to have such a categorization.

Premine is an extremely easy to detect in the software as it can be always seen in the first block and in the part of the software creating the Genesis Block. The work has to be done only once per coin. So there is no excuse for not doing that.

Ideally of course the operators of these sites and exchanges read this post and take action. But as this isn't exactly likely, also users can request and try to convince them to implement this simple change in their interface - in their Bitcointalk threads or chat/communication platforms. There may be reason they won't like that proposal, but I think it's worth a try

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*I would only include those coins in the decentralized "Bitcoin category" that have strictly no premine, ideally also no instamine, where at least part of the blocks is generated by PoW and similar "open" methods (in contrast to close/permissioned methods like PoS) and obviously an own blockchain.

**A "significant premine" should be anything more than one single standard block reward. There are a few currencies with a few pre- or insta-mined "test blocks" like Litecoin; these could be included in the premined group or not.