What if crypto becomes centralized like the Internet in the future?

[Abiky]

With the ever-increasing popularity of Bitcoin and altcoins, we've seen many Blockchain businesses and startups gaining traction over the past years. Governments have taken their part in trying to regulate the crypto industry while enforcing KYC/AML laws. On the other hand, centralized exchanges are largely dominant in the industry where they have the final say of a cryptocurrency's long-term success (like Binance). Even the mining industry has become extremely centralized (Bitmain) where only a few players have control of the entire Bitcoin network.

Given the path crypto has taken, it seems to me that it's becoming closer towards full centralization in the same way the Internet did a while ago. The Internet once started to be decentralized, but then became largely dominated by big companies with a lot of power. Now, the Internet is not decentralized as it used to be, and crypto might be headed towards the same path. Everything will depend on the people themselves, whenever they will allow this to happen or not. It's hoped that crypto remains as decentralized as possible in order to fulfill Satoshi's vision within the mainstream world.

Nonetheless, what are your thoughts about this?

[ashraf79]

I think this will not happen, even this exchanges may ask you for KYC, you have a choice to use it or no, most of exchanges allow you to trade up to 2 BTC without ask about KYC.

[kindbtc]

We are already seeing the centralized crypto concept being initiated by big companies , governments and business houses. Mostly these centralized crypto projects are based on stable coins backed by fiat just like facebook's libra, some other companies like walmart are also working on their coin and also jp morgan wgich a bank, so they are basically meant for payments, shopping and transfers but i think these coins will not be able to compete with traditional crypto in terms of investment potential, anonymity, efficiency and global acceptance.

[Abiky]

We are already seeing the centralized crypto concept being initiated by big companies , governments and business houses. Mostly these centralized crypto projects are based on stable coins backed by fiat just like facebook's libra, some other companies like walmart are also working on their coin and also jp morgan wgich a bank, so they are basically meant for payments, shopping and transfers but i think these coins will not be able to compete with traditional crypto in terms of investment potential, anonymity, efficiency and global acceptance.

There's no stopping businesses from making their own ventures within the crypto movement, as they see a great opportunity for profits. While there are many centralized services which are good, I believe that we need more decentralized solutions in order to counteract the effects of a single point of failure. Otherwise, the crypto world will be entirely dominated by big businesses, and corporations alike. When you see movements such as Facebook's Libra coin, Binance's unstoppable exchange platform, and even Bitmain's monopolistic mining operation, you get the feeling that decentralization is just a mere myth. Luckily, Satoshi designed Blockchain tech to be open source and distributed by design. This will allow people to protect the technology from malicious actors (third parties) by forking off their own cryptocurrency.

Which is why, if the entire crypto industry becomes centralized like the Internet, anyone can quickly grab Bitcoin's source code in order to design a new cryptocurrency with tighter rules that would minimize the risks of centralization in every way. With many decentralized alternatives to current services such as DEXs, atomic swaps, dApps, and even decentralized mixing services, it's the possibility of centralizing crypto becomes minimal each day. Just my opinion

[rosezionjohn]

On the other hand, centralized exchanges are largely dominant in the industry where they have the final say of a cryptocurrency's long-term success (like Binance).

It is important to note though that CZ has been talking about decentralization is the future. That's why there's Binance DEX now.

Given the path crypto has taken, it seems to me that it's becoming closer towards full centralization in the same way the Internet did a while ago. The Internet once started to be decentralized, but then became largely dominated by big companies with a lot of power. Now, the Internet is not decentralized as it used to be, and crypto might be headed towards the same path. Everything will depend on the people themselves, whenever they will allow this to happen or not. It's hoped that crypto remains as decentralized as possible in order to fulfill Satoshi's vision within the mainstream world.

This is an interesting comparison. Just like the internet, will cryptocurrencies be divided into two? One will be mainstream (centralized/government issued) and the others will be considered like the "dark web coins" (bitcoins and other non-government issued)?

[pishite]

With the ever-increasing popularity of Bitcoin and altcoins, we've seen many Blockchain businesses and startups gaining traction over the past years. Governments have taken their part in trying to regulate the crypto industry while enforcing KYC/AML laws. On the other hand, centralized exchanges are largely dominant in the industry where they have the final say of a cryptocurrency's long-term success (like Binance). Even the mining industry has become extremely centralized (Bitmain) where only a few players have control of the entire Bitcoin network.

Given the path crypto has taken, it seems to me that it's becoming closer towards full centralization in the same way the Internet did a while ago. The Internet once started to be decentralized, but then became largely dominated by big companies with a lot of power. Now, the Internet is not decentralized as it used to be, and crypto might be headed towards the same path. Everything will depend on the people themselves, whenever they will allow this to happen or not. It's hoped that crypto remains as decentralized as possible in order to fulfill Satoshi's vision within the mainstream world.

Nonetheless, what are your thoughts about this?

There are pros and cons:

Of the pros:
If the cryptocurrency takes the path of centralization, then protection against frauds awaits us, since many projects will not be able to raise funds so easily, they will be obliged to return money to investors if they cannot develop it, as additional papers will be signed and anyone can sue the developers.

But of the cons:
But as for the minuses, then everything is much worse, the state will require to pay taxes on each transaction made, you will need to provide documents to pay for something. It will not work to save or postpone something, because you will have to notify the state about it, if they don’t have it, they will have the opportunity to independently find your funds and deprive you of money through legal measures.

[Herbert2020]

you can not centralize everything!

in the end there will remain fully decentralized cyrptocurrencies (bitcoin) alongside fully centralized cryptocurrencies (Libra?). it has already happened too. right now we have only bitcoin that is fully decentralized then others have traces of centralization with most of the altcoins being fully centralized like ETH, XRP, BCH, BSV, ... basically most of the top coins. the problem is when they are competing against decentralization they will always fail, as it is the case of all these mentioned coins failing these days.

as for businesses i believe anything that has any connection to fiat will be fully centralized, as it is the case with all bitcoin exchanges and anything that doesn't like altcoin exchanges will become fully decentralized and any centralized altcoin exchange like Binance will disappear because they don't fit this world. and the only reason why other exchanges (with fiat) would work is that they will act as the link between the two worlds.

[lixer]

You can see that this is already playing out really in the cryptocurrency space also, as we have so many centralized companies, even the so-called decentralized ones are just hiding under the name, but they are actually operating a centralized platform.

We already have very rampant centralized projects and to me, it is not a bad news, it is better, it would only continue to make people see bitcoin for what it truly is , bitcoin will be the only decentralized coin as there would be no one to compete with it, and when other platforms are all struggling for users, bitcoin will continue to grow its user base naturally without putting much efforts to it, and Ethereum is another project that I know can manage to get an expanded community also in future.

[nxnqauff]

I am sure this will not happen even in the far future. Then what would be the difference between Fiat and crypto? Decentralization is the unique feature of crypto in the financial world.

[caffu chino]

crypto is popular because it is decentralized and anonymous. if crypto becomes centralized nobody else wants to use it. all will return to the mainstream platform. this will be devastating for the crypto market. that's why I'm sure, in the future crypto will never be centralized.

[Denreal]

The government or other private entities might be seen to have their free course with time. If they could have their ways during the internet days, they will try every means possible to ensure that crypto also becomes centralized. Agreeably, it has started already, most especially with the issues of KYC/AML.
When KYC/AML were introduced, there were lots of murmurings, yet a lot of people obliged. Therefore, I will not be surprised if people also obliged to making crypto entirely centralized.

[cytpoway121]

That will be hard and I do not see it happening
Internet involves a centralized process procurement and procedures

Everyone can create a token with little as 5$
But I believe regulations are needed

[gunhell16]

Most of coins and tokens in cryptocurrency will become centralized as it is needed for many countries to accept it.
Government should or must have the power to monitor the funds of their citizen this is for the taxes which the states needed for building better nation.

[Abiky]

It is important to note though that CZ has been talking about decentralization is the future. That's why there's Binance DEX now.

That's certainly true, mate. While decentralization is the way of the future, the crypto market is still largely dominant by centralized entities. Some say that Binance's DEX is not truly decentralized as Binance controls a large portion of the Binance Chain blockchain. That greatly defeats the purpose of crypto, as a single point of failure takes place. We need true decentralization if we want crypto to succeed for the long term. Many companies and startups have made bad use of the term "decentralization" for their own benefit. Even Ripple's XRP ledger is not truly decentralized as they claim it to be.

Sooner or later, we'll live in a crypto world largely dominated by big players in the industry. It's unfortunate, as people don't seem to care about preserving the longevity of crypto. They're just in it for the money than anything else. In the end, crypto might become extremely centralized like the Internet is nowadays, greatly dwarfing Satoshi's vision of a decentralized world.

This is an interesting comparison. Just like the internet, will cryptocurrencies be divided into two? One will be mainstream (centralized/government issued) and the others will be considered like the "dark web coins" (bitcoins and other non-government issued)?

Good point. This seems to be the path that crypto will take over the long term. I believe that there will still exist a small portion of decentralized cryptocurrencies, while the rest will be controlled by worldwide governments. It's similar to the Internet where we have public and private networks. As time goes by, people will decide which path to take for mainstream finance. It seems likely that both sides will co-exist for a very long time given how prominent Blockchain technology has been within the mainstream world. Governments will continue to work on their solutions, while people will continue to support decentralized cryptocurrencies. As a result, you'll see a more interconnected world with an improved economy like never before.

[Nivia1st]

to solve the KYC / AML problem you can use DEX. by using DEX you don't need to think about this.

for the Miner problem, maybe you're right. but that's only for bitcoin. then what if later bitcoin reaches max supply? surely the company that dominates mining will split because it looks for other coins that are profitable to be mined.

so it means it is difficult to make crypto centralized because from the beginning there are many ways to overcome this problem. the most important thing is the role of the whole community. they must be firm in dealing with all problems.

[Abiky]

to solve the KYC / AML problem you can use DEX. by using DEX you don't need to think about this.

for the Miner problem, maybe you're right. but that's only for bitcoin. then what if later bitcoin reaches max supply? surely the company that dominates mining will split because it looks for other coins that are profitable to be mined.

so it means it is difficult to make crypto centralized because from the beginning there are many ways to overcome this problem. the most important thing is the role of the whole community. they must be firm in dealing with all problems.

DEXs are a solution, but they lack liquidity unlike centralized exchanges. Still though, it's better this than nothing in order to achieve true censorship-resistance. Most people don't seem to care about the harmful effects of centralization over crypto, as they're only in it for the money. This is only the concern of true crypto enthusiasts. Powerful crypto companies like Binance and Bitmain have been largely dominant on the space because people have allowed them to do so. They have the power to prevent full centralization by using decentralized alternatives.

As for the mining problem, I don't think that it could ever be fixed. Of course, once all Bitcoin has been mined, big mining companies like Bitmain will look for other cryptocurrencies to mine. As long as there are still coins left to mine, the mining industry will be largely dominated by big players with a lot of wealth. Even ASIC-resistant cryptocurrencies have find it hard to avoid the effects of mining centralization. On the other hand, PoS provides some level of centralization while the situation becomes worse with DPoS and BFT consensus algorithms. Which is why, I believe that there's no such thing as 100% decentralization. One way or another, there will exist a certain level of centralization within existent cryptocurrencies.

Nonetheless, the decentralized and open source nature of crypto will allow it to become resilient against single points of failure. In the event people notice centralization within any blockchain, they could easily "fork" it to create a new Blockchain that adheres to their rules. This happened with Ethereum, then with Bitcoin Cash, and so on. Hopefully, people will move on in order to preserve the decentralization crypto was meant to provide for the whole world. Just my opinion

[charlop24]

I personally don't see crytocurrency getting a full centralisation in the long term. I agree that there have been some extent regulations which has brought about increased centralization, but that should be in some aspect of the market.

[Pet240]

If it is possible for cryptocurrency to continue to remain normal s it has been from the onset, that is, decentralized, it would have been good but the system is already changing.
Some things are already showing that it is gradually becoming centralized, meanwhile they could not be stored. So I am afraid if it can be stopped, when it is about to become fully centralized.

[kawetsriyanto]

Maybe some cryptocurrency does have a centralized system. However, not all of them use the same mechanism. In this case, it is back to one of the initial objectives, namely some crypto which was created for a decentralized system, anonymous, and also with its volatility. However, about the KYC process for some crypto projects or exchanges, they are true, but it doesn't mean to generalize that it will be centralized at all.
BUt of course, who knows the future?

[rdluffy]

I'm a little skeptical about the idea of decentralization we have in our minds, and how the cryptos are
We speak loud about decentralization, but BTC and another cryptos is being mined and controled by ony a few big companies such as Bitmain, so, this is the real decentralization?