1.4 C
Amsterdam
28 February 2021
PumpMoonshot
Image default
Blockchain

Centralizing Decentralization – The Devolution of Blockchain Freedom as an Inevitable Outcome of Market Development

There are always parallels drawn between markets – whichever they be, as there are always guidelines that govern general investor sentiment and mathematical models dictating statistical means and norms. A perfect example is the correlation between traditional trading and the cryptocurrencies market, where near identical algorithms and forecasting models are used to predict chart behavior and trends. There is truly little innovation, regardless of the hype.

The same can be said of the founding principles of the blockchain market, such as total freedom, transparency, independence of third parties, decentralization etc. The parallels that can be drawn with such bold terms reminiscent of the French Revolution’s “Liberté, égalité, fraternité” can be found in what modern social networks like Facebook, Twitter and the others were once claimed to be. But, the latest events that have shocked social consciousness of the tyranny of social networks are clear illustration of the inevitable devolution of any system into total centralization. The same is already happening with blockchain networks.

A shining example of the encroaching centralization of blockchain is the Ethereum network with its 2.0 update that is aggressively pushing forth staking as the new consensus model. Freedom is never for free, as there is no such thing as free block generation. Running nodes is an expensive business and the data generation is never openly available to anyone, only to those connected to the network. Bitcoin is just as sinful in this regard, as mining gains difficulty with every halving and its growing costs are centralizing access to the data over time. This automatically negates the purpose of decentralization and its freedoms, raising the question as to whether blockchains are truly decentralized.

“According to our approach, the answer is “no”. Clearly, this approach can be debated, but it must be seen that data which is not within the blockchain cannot be considered abs olutely transparent. Nevertheless, the off-chain approach has its own place and value too, but one must see how it is different from its on-chain based counterpart,” as stated by Norbert Goffa, Co-founder and Executive Manager of ILCOIN Blockchain Project.

As such, another rightful question is whether decentralization, as the founding principle of the cryptocurrency market, has a decisive impact on crypto market conditions and the prices of major digital assets. If the virtues of blockchain are merely transparent philosophies acting as a canvas for profit-making on crypto trading, then there is really no sense in struggling for developing a fully decentralized system that would be independent from third parties.

“I believe that the cases mentioned above do not affect crypto-market conditions to the same extent that exchanges do. This is because even though we have a decentralized Ethereum or Bitcoin, what is it worth if we can only realize our business opportunities within the framework of a third party’s subjectively central regulation. In other words, decentralized cryptocurrency in a centralized system will turn into the same money as the operation of the banking system or any other regulators. Obviously, the essence of the decentralized approach would be to completely eliminate the possibility of third-party influence in the processes. The challenges that may accompany doing this is a different question to which only innovative solutions of the technology can provide reassuring answers,” as Norbert Goffa concludes.

News Source

Related posts

Hat-trick hero: Empty stadiums get blockchain and soccer to play together

PumpMoonshot

Too Soon for Blockchain Benefits in 2019, Says UPS Executive

PumpMoonshot

Corporate Blockchain Adoption Reaches 44%, Says Survey

PumpMoonshot

Leave a Comment