alt19 (OP)
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July 13, 2015, 10:21:33 AM Last edit: September 29, 2015, 09:57:10 PM by alt19 |
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The rise of Litecoin demonstrates pretty well that Bitcoin is not the only ruler or the only driver of crypto world. How about other coins?
An year ago POS coins were popular. Now anonymous coins are trendy. Devs are working hard to implement true anonymity features and to bring their coins to the mainstream. Unfortunately both POS and true anonymity coins are less decentralized than POW. About POS you probably know, but why anon coins are bad for decentralization?
When you buy online, you anyway leave your delivery information, thus it doesn't matter how anonymously you pay in this case. In fact true anonymity is good for illegal things mostly (scams or violence). Government will fight anon coins, and it will hurt other cryptocurrencies. Anon coins will not get wide adoption because the masses don't like "spy games" and don't like to risk by being involved in something illegal or suspicious. Even if government can not regulate or destroy anon coins, they still may tell people that these coins are both immoral and illegal. If government tries to ban coins with transparent transactions, people don't approve that, but if government tries to ban anon coins, 90% of people will agree with government. Government can say that anon coins are bad, but after all it is nonsense to say that coins with transparent transactions over long term can be used to trade illegal things or finance any violence. Transparency is one of the most important features of decentralization.
Thus anon coins cannot be the decentralized solution: they never will get wide adoption, their capital will be concentrated a lot, investors will avoid them. Transparency is a very important thing. Cryptocurrency doesn't mean anarchy or dissoluteness, cryptocurrency refers to a fairer world. We have nothing to hide, we just know that cryptocurrency is fair and moral, let's keep this and people will never say that we stealthily want to do something bad with crypto.
Satoshi's POW idea is simple and ingenious. It will work over long term. Merged mining and mining contracts will help.
But you know that Bitcoin is not 100% decentralized. Early adopters, some unfairness of distribution (who knew about BTC in 2009-2012? IT workers and almost nobody else) and concentration of capital. BTC can be attacked: price manipulations, possible ban or very strict regulation for exchanges and other BTC businesses, hackers' attacks. BTC reputation can be attacked also, and we see how it is being attacked now: ask people who know about BTC but don't buy it and 90% would say BTC is HYIP (but we know that it is not true of course). But the most sensitive targets are BTC related websites: Coinbase, Bitcoin.org, Blockchain.info, Bitcointalk, exchanges…
While BTC market cap is so high in comparison with other cryptos, while cryptocurrency means BTC, a successful attack against BTC can destroy people's trust.
How about limitations of technology? Be it issues with block size, with the speed of transactions, or with synchronizing a wallet? Yes, there are lite versions and online wallets, and "0 confirmations", but all these solutions are less decentralized again. It seems Satoshi Nakamoto didn't mean that Bitcoin would be the only one solution of decentralization in digital economy. He was speaking of "several years" of BTC leadership.
True decentralization is in diversity of cryptocurrency.
There is one problem. You know how people are bashing altcoins now. Even Litecoin or Dogecoin with its large community are being called garbage, clones. To say nothing of other coins.
This way of thinking affects decentralization more than any government control or regulation.
Are crypto innovations are so important indeed? Do traditional currencies differ so much due to technical features or they all are printed, protected against forgery, and have different names and logos?
One important thing about altcoin market that it is not similar to stock market. Coins are not stocks, coins are currencies. So there are no penny stocks, no bankruptcy, no dividends. Things that matter: inflation (deflation), price fluctuations, liquidity, a number of users who use and trust this currency, name, security, usability and what you can buy or sell with it. But if somebody tells you: we have BTC, we have LTC, why do we need DOGE or other coins, that is not correct. There are many traditional currencies, not only dollar and euro. There are precious metals and stones, not only gold and silver. Diversity. Many nations. Many ideas. A lot of people. We all have pretty similar DNA and consciousness but it doesn't mean we all are simple clones of each other. Currencies (coins) are quite similar, too, the same technology often, but the spirit of their community, name, fortune and history make them all different.
Let's say, improvement is always good. But does it mean that we need new and new coins to provide decentralization?
No, launching a new coin is not decentralization-friendly in fact. Why? Just imagine there is a good talented dev (not scammer). He would want to launch a new and cool project. He would need to run a website (thus not decentralized), he would need to promote, to create community, to run network (again not decentralized) and provide market liquidity. Anyway first adopters will be his friends. It is not decentralized either.
Forget about new coins, there is another way, good and decentralized at the same time: devs can just choose one from 200-300 old abandoned coins with community (even small or inactive one), and to develop it, to revive, to fork, to swap coins to completely new blockchain, even to rename it, if community approves it. Cryptsy doesn't delist old coins as they wait for somebody who will develop them. Many prefer Bittrex or Poloniex, but it looks like Cryptsy still has more users than Bittrex and Poloniex together.
This way would be more moral, launching a new coin always hurts crypto market because it dilutes market, other way round developing an old coin helps investors who probably earlier had invested even more that they could afford to lose in "new and cool" projects. They would be thankful to that talented dev who would bring a coin to life again. A dev could also buy a coin on exchange and get a good motivation to work.
Speaking of decentralization, the solution can be 200-300 developed old coins (similar to the number of traditional currencies in circulation) with merged mining and mining contracts (and long term derivatives) which would balance the market and mining profitability. That would be hard to attack them all, and people will be more free in selecting a coin. They could choose one with the name they like, with community they like, with other features to prefer.
True decentralization is in diversity, not in monopoly, nor in anarchy.
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