What is the problem with centralized currencies?

[Yakamoto]

I'm trying to summarize in as few words as possible, what is the problem with centralized currencies?  Writing an article about why decentralization is important.  I would like a good problem summary to start.

I would say:
 - Someone always has the ability to counterfeit
 - Controlled by centralized authority who can change the rules as they see fit
 - Centralized authority can print more money
 - People can have their bank accounts frozen

Ideally a sentence or two to summarize. Maybe something like "Centralized currencies can always be cheated by someone and manipulated in a manner that most benefits those in control, to the extent of locking you out of your account or taking away your money if you do not behave in the manner those people would like.  When the people control the currency, the people decide the rules that govern it and no one person can touch your money without your permission"?

Anything else I'm missing?

Thank you!

I wouldn't say that "Someone always has the ability to counterfeit" is a good argument when it comes to railing back against centralization, but it would make sense under certain other arguments. And while governmental bodies can change the rules when they see fit, it is typically uncommon for them to do something like that in most countries throughout the world. A majority maintain similar laws for long periods of time with minor changes or amendments to existing laws.

Beyond that you have a pretty good basis for an argument though. Good job, to say the least.

[xuan87]

Something that I don't like from centralised currencies is they can supervised our transaction and can make assumptions which they think is correct and froze our account, in centralised system we don't have the full power to control our money and there will authority that can make extra rules to seal our freedom

[Love!]

People. That is the problem with centralized currencies. At this point, a select few people control the centralized currencies of the world and, as the saying goes, he who controls the wealth controls the people.

With an unregulated and peer-to-peer network like Bitcoin, the people with the currency controls the currency. It is up to US what the values are. Therefore, by definition of the saying above, we control ourselves.

[Sled]

Something that I don't like from centralised currencies is they can supervised our transaction and can make assumptions which they think is correct and froze our account, in centralised system we don't have the full power to control our money and there will authority that can make extra rules to seal our freedom

That is why a lot of people hates centralization because it means that they can easily control our account and do the things that they want to do with our accounts. Bitcoin is one of the solution to that problem and people now are just transferring their money from bank into bitcoin because governments cannot touch their money if it is on bitcoin.

[aesma]

A centralized currency is only as good as the justice system in the country from which it comes.

In a way that makes the euro better than all other fiat currencies I can think about, because since many countries are behind it, it's more difficult to mess with it.

Still centralized with all its faults, though.

[NUFCrichard]

Look at India and you see why there are problems with centralized currencies.
They recently decided to invalidate most of thier cash money, meaning pretty much everyone in the country had to go to the (massively overworked) banks to change them for new notes.
If you had more than a certain amount, it wasn't a very high amount, then you had to explain why you had it.

If you earn your money and decide to keep it as cash, why should you be obliged to change it at the whim of the government and why should you have to explain yourself when you are there?

It might seem unlikely in America or Europe, but it could happen and the big notes are being slowly removed from circulation, they could invalidate them at some point.

[tippytoes]

Something that I don't like from centralised currencies is they can supervised our transaction and can make assumptions which they think is correct and froze our account, in centralised system we don't have the full power to control our money and there will authority that can make extra rules to seal our freedom

That is why a lot of people hates centralization because it means that they can easily control our account and do the things that they want to do with our accounts. Bitcoin is one of the solution to that problem and people now are just transferring their money from bank into bitcoin because governments cannot touch their money if it is on bitcoin.

And just to add, if our account falls below their maintaining balance, they will give penalties/charges until you can't deposit anymore and eventually closing your account. You have to pay them while your money is with them. Thinking of that is just ridiculous. But that's how bank institutions work. So yeah, they have power over your bank account/s and that's why they don't like digital currencies.

[webcam_models hiring]

The main problem of cash, that is visible, and anyone can touch it, and it smell.











The State is searching to control cash and not permit to have it too much.

[deisik]

Ideally a sentence or two to summarize. Maybe something like "Centralized currencies can always be cheated by someone and manipulated in a manner that most benefits those in control, to the extent of locking you out of your account or taking away your money if you do not behave in the manner those people would like.  When the people control the currency, the people decide the rules that govern it and no one person can touch your money without your permission"?

Anything else I'm missing?

You are missing the major point where centralized currencies fail conceptually

It is certainly true that the ones controlling fiat (which is a generic term for centralized currencies) can lock you out of your account as well as just outright steal your money from you, and that may in fact not even be related to how you good behave (which is even worse). For example, when Cyprus haircut happened, the money was taken from all depositors indiscriminately. But these are still minor details. It could be said that "the major problem of fiat money comes exactly from where its strength stems, i.e. from the arbitrariness in decision-making about the amount of money to be issued"

[Zadicar]

Something that I don't like from centralised currencies is they can supervised our transaction and can make assumptions which they think is correct and froze our account, in centralised system we don't have the full power to control our money and there will authority that can make extra rules to seal our freedom

That is why a lot of people hates centralization because it means that they can easily control our account and do the things that they want to do with our accounts. Bitcoin is one of the solution to that problem and people now are just transferring their money from bank into bitcoin because governments cannot touch their money if it is on bitcoin.

And just to add, if our account falls below their maintaining balance, they will give penalties/charges until you can't deposit anymore and eventually closing your account. You have to pay them while your money is with them. Thinking of that is just ridiculous. But that's how bank institutions work. So yeah, they have power over your bank account/s and that's why they don't like digital currencies.

It does really sucks for that kind of situation because i do experience that thing when my account have been closed because of the pil of interest rates on my account which i cant able to repay because its already huge for me.Yes, banks do really works on this way and as long its centralized we cant do anything about it but to follow their rules and terms. They dont really like crypto because of its decentralization and they cant make money out of it.

[psy0]

if the economy in a country is really bad, and the value of the currency is falling down, you can do nothing, right? Everybody does not live in northern countries, so centralized currencies usually have not any values to use.

[thunderbitz2717]

The problem with centralized currencies, is they are able to control your bitcoin or anything that you have.
They can give tax, and control your cash balance. unlike Bitcoin bitcoin was decentralized concept of a system.

[xypos]

I'm trying to summarize in as few words as possible, what is the problem with centralized currencies?  Writing an article about why decentralization is important.  I would like a good problem summary to start.

I would say:
 - Someone always has the ability to counterfeit
 - Controlled by centralized authority who can change the rules as they see fit
 - Centralized authority can print more money
 - People can have their bank accounts frozen

Ideally a sentence or two to summarize. Maybe something like "Centralized currencies can always be cheated by someone and manipulated in a manner that most benefits those in control, to the extent of locking you out of your account or taking away your money if you do not behave in the manner those people would like.  When the people control the currency, the people decide the rules that govern it and no one person can touch your money without your permission"?

Anything else I'm missing?

Thank you!

Great summary.

A lot is overlooked when people say that bitcoin is redundant and everything that bitcoin does can be done with a bank, plus more. The fact is that when you are using any sort of paper currency issued by a government you are trusting them with your wealth, just like if you stored your files on google drive you are trusting them with your privacy.

Governments are designed to benefit the people but you have to ask yourself is your government really benefiting the people? Or just themselves and their close friends and family? A lot of the times, the second one is true. Switching to decentralized currencies, such as gold and btc would mean that governments cannot control your wealth, and therefore, how you spend it.

[Theb]

Counterfeiting is not a main issue of Centralized currency but when you think of it Bitcoin also has a problem being volatile. They have their own advantages and diadvantages and both are not their fault but the users who wants to take advantage for the both of them. Actually wihout Fiat Currency a country's economy is nothing.

[SvenBomvolen]

I have an opinion that you are supporting crypto currencies centralization.
Bitcoin just can't to be centralized the first of all cause of no one country has rights for this currency and can't admit it as their national so easy. The second is centralized fiat is overfonded to countries gold wealth, with bitcoin it's impossible to make such connection. There are some more reasons, but a thing that I'm trying to say is that bitcoin don't need to be centralized, nobody want it, besides governments' heads who wish to have more money from this in their pockets. I am for some governments control in this area, but just to be protected from scammers.

[webcam_models hiring]

Bitcoin just can't to be centralized the first of all cause of no one country has rights for this currency and can't admit it as their national so easy.

Dude, where are BTC miners "centralized"?
Kiss the Ass on Chinese Communist Party for the hole in a Great Wall.
And drink some shot in memory of Chinese carbon extractor deaths in producing cheap electricity for f#cking ASIC's.

[Hydrogen]

One facet of the centralization versus decentralization debate is: competition.

What would the personal computing CPU market look like if the market were monopolized under intel for the last 20 years under a centralized format? Competition between intel and AMD incentivized CPU advancement, innovation and discovering methods to produce chips at lower cost to consumers.

Under a centralized format all of these free market, competition derived, benefits disappear. This same precedent could apply to currencies.

When they're too centralized in a way which restricts competition and innovation what is left trends towards industry wide stagnation which translates to exorbitantly high prices and corruption rather than progression or cost effectiveness.

[Amph]

centralized currency are heavily monitored, which i don't like, you can't do anything purchase, anything without "them" knowing it, also the fee are higher for some operations

then add to that all the hassle you need to have to get a debit credit card, and all the restriction per day on the withdrawals and deposit, there is nothing which is not a pay in the ass with fiat

bitcoin give you complete freedom even on fee you can decide to pay zero and wait more, maybe forever, but at least you can do it

then you have the inflation vs deflation argument, all the centralized currency have a inflation system which is going to collapse the entire economy at some point, i see bitcoin as the savior of the global economy when the current block limit issue will be solved

[deisik]

One facet of the centralization versus decentralization debate is: competition.

What would the personal computing CPU market look like if the market were monopolized under intel for the last 20 years under a centralized format? Competition between intel and AMD incentivized CPU advancement, innovation and discovering methods to produce chips at lower cost to consumers.

Under a centralized format all of these free market, competition derived, benefits disappear. This same precedent could apply to currencies.

When they're too centralized in a way which restricts competition and innovation what is left trends towards industry wide stagnation which translates to exorbitantly high prices and corruption rather than progression or cost effectiveness.

This is certainly true in respect to CPU chips

But how well does it translate to currencies? The first thing which comes to mind is that while fiat currencies are certainly centralized, they are no more centralized than the chip makers themselves as economic entities (or any other manufacturer out there). Indeed, if it were only Intel, or IMB in pre-PC era, we would likely not have a personal computer in every home. But is this really different with currencies? After all, there are over 100 fiat currency "producers" out there (but only half a dozen chip manufacturers), so you can't possibly say that there is no competition between currencies (if that was your point)

[Hydrogen]

This is certainly true in respect to CPU chips

But how well does it translate to currencies? The first thing which comes to mind is that while fiat currencies are certainly centralized, they are no more centralized than the chip makers themselves as economic entities (or any other manufacturer out there). Indeed, if it were only Intel, or IMB in pre-PC era, we would likely not have a personal computer in every home. But is this really different with currencies? After all, there are over 100 fiat currency "producers" out there (but only half a dozen chip manufacturers), so you can't possibly say that there is no competition between currencies (if that was your point)

I'll contend: one of the key reasons behind the recent tech boom is the decentralized format under which capitalist countries operate.

Google & apple began as small businesses run out of someone's garage. A massive amount of innovation and progress defining the tech sector came about as a result of open door policies where anyone who feels they have what it takes to compete is free to try their luck.

Currencies by contrast have centralized, closed door, policies which one might characterize as restricting innovation and progress. Banks have the same. Could centralization, lack of competition and monopolization of currencies be correlated with stagnation, lack of innovation & progress?