The whole point of cryptocurrencies is that they’re decentralized. Peer-to-peer cash; trustless exchange; bypassing intermediaries. So why are numerous cryptocurrencies structured more like central banks? From adjusting wallet balances to controlling nodes, many crypto projects behave just like the financial institutions they were meant to replace. Throw in the cult of a strong leader, and there’s little to differentiate some altcoins from the Paypals and Visas of the world.
The De-Decentralization of Cryptocurrencies
The word “decentralized” doesn’t appear in Satoshi’s original white paper (nor does “blockchain” for that matter) but it’s since become synonymous with Bitcoin and its successors. For a digital currency to be truly decentralized, it needs to achieve two things: to be censorship-resistant and to be immune from meddling by project leaders. If the price of a coin is dependant upon its founder staying alive, it’s not decentralized. Similarly, if its speed and scalability are on account of centralized nodes, it’s not decentralized.
By that reckoning, many of the top 20 cryptocurrencies fall woefully short of the standard required. Several work to a “future decentralization” model in which the developers promise to renege control as soon as they’ve got things running smoothly, while others lack the nodes or the hashpower to prevent 51% attacks. Here’s how the world’s most popular cryptocurrencies shape up when rated by node and leadership decentralization. The lower the score (1 to 10), the more centralized the currency.
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