What is the problem with centralized currencies?

[mczarnek]

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!

[CryptoBry]

We have already seen it with the Mooney we are usually using...centralized currency is guaranteed by the state and that is good but it is also subject to control and manipulation of the authorities. Though I am not saying that decentralized currency can have no disadvantage that is far from the truth as anything man-made or any system made by man can always have negative aspects as well...but decentralized currency can be better for now than centralized ones because practically our authorities are proven to be not trust-worthy and they are always subject to politics and self-vested interests or in other words decentralized currency is very much subject to human nature.

[ImHash]

Governments are betraying their people as soon as they take the control of the state, otherwise the world needs centralization. They having the ability to print money and control everything is what people wanted them to in order to fight chaos, in order to be safe and have security but the only way they know how to bring safety is by building armies and military, that has costs, results in them cut other costs to manage the military, while some where in between some people are stealing for themselves, bitcoin doesn't let anyone to steal because it doesn't give the control in the first place.

[Arindava]

Too complicated to solve the problem of money centered, need regulation from all countries to be able to agree.

[gracia0023]

 The problem with this is the question of who will be the leading country who will launch the centralized currencies? What will be the basis to be qualified? Who will be the authorized persons to do this? But beyond those questions, the fact that clear rules must be set prior to that.  I guess, if we have centralized currency, the authority can manipulate the flow of money easily.  They can also control the production of money as well as its value.  More people will be having the idea of counterfeiting the money since there will be only one pattern of money.

[gribble]

Too complicated to solve the problem of money centered, need regulation from all countries to be able to agree.

Yes and the big problem with centralized currency are the inflation we are losing the values of money
 put the funds in fiat money is like burn the money slowly,
after couples years later the values of money is losing and our whealty is losing too, we can not become
 controller on printing fiat money and can not ask about it.

[iamTom123]

In my own view, the biggest reason against centralized currencies is the fact that people manning the systems are corrupt and can't be trusted. You see, the financial and banking systems which issued those currencies have been in there for a long, long time and slowly the problem of human nature crept in. Had it been managed by people who have good intentions and clean conscience, then we may not need to have a decentralized system of currency as represented by Bitcoin.

Still, I believe that we can have the best of both worlds. Bitcoin can posed a big challenge to the centralized currency system to improve their structure and governance so that they can gradually restore the faith of their intended market...while at the same we are enjoying the benefits of decentralization.

In life, we would learn that not one single solution fits the big problems and challenges we faced as a human race.

[cafucafucafu]

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!

The main problem is not someone counterfeiting.

The main problem is that you are trusting someone else, no matter whether it's the government, your bank, whatever. Any sort of centralized framework, you are putting a lot of trust into others. As humans we have seen that others, no matter how trustworthy they seem to be can also turn around and stab you in the back. This isn't something that you would want.

Another problem as you said is the way that governments are manipulating their currencies to suit their needs, to fulfill the promises they made back in election. This often involved printing a lot more currency than the country could afford to in order to not tax more people(a very unpopular policy).

Bitcoin basically solves all this. You don't need to trust anyone.

[ktabb]

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!

To be honest, I don't think any of the reasons you listed here are significant. The main reason that decentralization is appealing is because of trust. With crypto, people place their trust in the regulation of the currency into algorithms, as opposed to trusting a government that can be corrupt and manipulate the currency.

1. Counterfeit is an extremely minor issue.
2. The fact that a centralized authority can change the currency is actually arguably a positive, since it means the government guarantees a certain value for the currency.
3. The ability to print more money is necessary with any physical money.
4. I don't know what you are talking about with people's bank accounts being frozen or how that would not apply to bitcoin. In fact, bitcoin wallets are SIGNIFICANTLY less secure and reliable than bank accounts.

[talkbitcoin]

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!

To be honest, I don't think any of the reasons you listed here are significant. The main reason that decentralization is appealing is because of trust. With crypto, people place their trust in the regulation of the currency into algorithms, as opposed to trusting a government that can be corrupt and manipulate the currency.

1. Counterfeit is an extremely minor issue.
2. The fact that a centralized authority can change the currency is actually arguably a positive, since it means the government guarantees a certain value for the currency.
3. The ability to print more money is necessary with any physical money.
4. I don't know what you are talking about with people's bank accounts being frozen or how that would not apply to bitcoin. In fact, bitcoin wallets are SIGNIFICANTLY less secure and reliable than bank accounts.

i completely agree with 1, 2 and 3 you nailed it. but you screwed up in number 4 because it is total nonsense.
there is nothing more secure than a properly created bitcoin wallet.

you can obviously use a web wallet, use a wallet on an online computer riddled with malware but that doesn't mean bitcoin wallet is insecure it means you had some cash with you and put it in a see through plastic and left it on a park bench and closed your eyes wishing nobody takes it!

a cold storage that is created right can not be penetrated. and it is SIGNIFICANTLY more secure than anything else you can ever imagine.

[Lieldoryn]

Maybe someday this problem will be solved. I think that is not difficult to come up with encrypted removable media for cold storage savings in bitcoins. Similar to a Bank card, but without reference to any Bank or e-wallet.

[Sled]

You can't really do a lot of things if the currency is centralized because it is controlled by a certain group whether organization, government and many more. That is why people now are just looking for a currency that is decentralized that gives freedom to themselves and also give them a place where they can decide on what they will gonna do to their money without having issue from the government.

[omonuyak]

I think the major problems with centralized currencies is inflation, manipulation, looting and higher interest rates. The financial problems we are facing today is due to centralized currencies. Decentralized currencies on the others hand ratified this issue.

[HabBear]

Nice topic!

I believe the biggest problem with centralized currencies is how the actual use differs from the theoretical use. Theoretically a committee of experienced people managing the currency may be wise, but if those people are human (as they all are) they are at risk of becoming corrupt and then manipulating the currency to suit their own benefit. And there are likely more scenarios where centralized currencies are manipulated to "protect the people" or "protect from a greater evil"...like hyper inflation or recessive spending or to spark an economy. This type of rationale leads to a slippery slope of continued manipulation.

And Bitcoin isn't as decentralized as we all hope. There is a core group of developers that used to influence Bitcoin quite a bit and now we have a core group of miners that can impose their will over the future of bitcoin (see UASF and SegWit topics for more detail).

I read in Nathaniel Popper's Digital Gold book that only 15% of bitcoin's blockchain remains in the form that Satoshi deployed, due to the custom developing that has gone on. Would you think this is good for a decentralized currency or bad?

Here's an opinion article that may provide an interesting perspective: https://medium.com/metacurrency-project/national-currencies-arent-as-centralized-and-bitcoin-isn-t-as-decentralized-as-you-think-fa2afa022a2b

And can I request one thing - will you please share your research paper with us here? We all benefit from the different analysis, opinions, and research our fellow members are conducting.

[bouren]

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!

The biggest ill I see with centralised money is ownership. If I pick any currency note, it is clearly written on top-
"Promised by Central Bank"
So in the end, I am just representative of that money, real ownership of that note is still with government, the government who proudly says,
"People's government "
But in reality we are the ones on bad side always and government kill our rights through regulation and we aren't free to use our own money.

[SHAWN-MIDWAYS]

Problems of centralized currencies is if the people delegated to manage it make wrong decisions we are likely to see a negative impact not only on the currency but the economy of that country. One of the biggest problems of centralized money to date is counterfeit and corruption which can only be minimized by adopting the blockchain technology.

[Bagaji]

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!

In my own view, trusting someone else or institutions like government is a very big problem when it come to the issue of centralisation of currency. This is because the government will be able to manipulate, print or influence its availability or holding its which can either lead to inflation or deflation in the economy.

[Chin Cheng]

You really do not need to research anywhere else to know the problem when it comes to centralized currencies,lets take the example of Ethereum,hope everyone knows that there was a hard fork when there was a hack and everyone close to Vitalik Buterin lost some money with it and how he single handily took the decision to fork the entire chain without any consensus,if you develop something you need to stand by the general consensus and never take individual decisions according to your taste and not to forget the pre mine which is really huge and that is the biggest example i can give you for these sort of centralized currencies.

[rizkyhiw]

Too complicated to solve the problem of money centered, need regulation from all countries to be able to agree.

that's true , it's not that easy to change any regulation regarding currency ,
but it's always better to use a decentralized currency like crypto when you have know well about it ,
as time goes by people will switch into decentralized currency if then the crypto project accepted well in general public , hopefully
governments are the only authority that most people know about who control of currency circulation , anyone else?

[btccashacc]

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

- in decentralized currency, bitcoin can't be counterfeited.
- this is why decentralized is better than centralized, no one can control and change the rules, i've tired when my banks change their tos.
- so far this is the problem for them to control the inflation.
- yeah they can lock or freeze our money if we against their Tos.

in additon:
- decentralized is good for those who want privacy like purchase porn, gambling etc.