The chink in the armor: traces of centralization

[pooya87]

The reason why decentralized networks work and can continue staying alive is that they operate on a purely peer-to-peer basis without significant traces of centralization. We have the Torrent, Tor and Bitcoin networks as 3 excellent examples of such systems.

But with the passage of time, we have centralization creeping in. Sometimes it is 100% centralized services like CEXes that are a flaw through and through and sometimes we have what is known as "decentralized" services but they are either centralized behind the scene (eg. Binance DEX) or have significant "traces of centralization" that acts as their vulnerability or that "chink in their armor" which is going to be exploited by the anti-decentralization regimes to shut them down or worse to take control of them and turning them into honeypots.

The most recent case is the Samourai wallet. At first look it is an open source software, it talks about CoinJoin, looks "decentralized" and all is good. But at the root of it, this is a centralized company and when you use it you are relying on a centralized coordinator (server) both of which could always been shut down and they eventually did get shut down.

The worst part is that the same "chink" can be seen in a lot of places.

• There are simple cases like bitcoin.org which is a centralized website with a single owner that we saw how easily a well known scammer could force to take down the Bitcoin paper in UK by manipulating the legal system.
• There are not so obvious cases like the server dependent SPV wallets that rely on connecting to a single centralized server that can be shut down
• There are similarly server dependent DEXes that suffer from the same flaw just because the developer of that DEX wanted to make money (through fees) not develop something decentralized to solve a problem!
• Last but not least is the worst of them all: centralization in mining in form of mining pools that can be taken over, shut down or forced to attack Bitcoin (eg. the US based MARA pool attacking Bitcoin principle of censorship resistance)

The only viable solution is to patch the chink in the armor! To eradicate as many traces of centralization as we can. After all we should remove the attack vector not try to defend against the attack.

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[Z390]

Someone needs to repeat what Satoshi Nakamoto did with Bitcoin, only this time with a decentralised exchange or with samourai wallet like Bitcoin wallet.

They should do it in a way it can't be tampered ever again, just like Bitcoin, and they should become nameless, unknown and walk away just like Nakamoto walked away.

I know its not easy but by now we should have this done already, instead, both old and upcoming developers are running after money since crypto space is the new gold rush, no one wants to make real sacrifice like Nakamoto did.

This is the reason why Bitcoin is different from all other crypto coins out there, no one is ready to make sacrifices without wanting something back, without their names be heard and them available to take the credits, of cos, the centralized entities will crawl in. Shame.

[Charles-Tim]

I am expecting what to decentralized to have many nodes instead of central server that its developers are using to make money. You have stated good examples like the Torrent, Tor and the bitcoin networks (nodes) excluding the mining pools.

Mining pool is another problem that bitcoin developers failed to avoid. There should be something like ASIC resistant (and even if possible GPU resistant) means in the protocol. Just CPU is enough in a way it can not turn to a mining pool. Bitcoin mining would have been decentralized than this.

How about decentralized exchanges like Bisq? I do not know how truly the exchange is. Is it using centralized server or through decentralized nodes? There are many things that I thought to be decentralized before but later notice they are not decentralized but centralized in one way or the other.

The web3 that was proposed to be decentralized was also later done in a way that it is centralized.

[Smilevictorobinna]

Centralization is the starting point of failure in cryptocurrency ecosystem.
If there is an issue or challenges or the centralized exchange faces operational issue all there users will lose all there money and they will not have access to it again or even have access to there account in the centralized exchange.
There has been cases like this before and that is why it is advisable to invest only on decentralized cryptocurrency to avoid losing everything you have worked for over time.
The only way forward is decentralization of cryptocurrency just like Bitcoin.

[Die_empty]

The issue of decentralization is becoming more complicated for an average Bitcoiner who has no in-depth knowledge of the technical aspect of the coin. It was generally believed by most people in the industry that the Samourai wallet was okay because it was decentralized and open-sourced. Now there have been contradictory arguments that the wallet was not what people thought it was. My concern is that these revelations about the Samurai wallet were not as loud as those before it was attacked by the government. Does it mean that we would have to wait till a perceived decentralized platform is brought down before we know that they had massive pitfalls?

[Ambatman]

The ones worse than centralized exchange are the ones that projects a decentralized image but centralised in the core
Wolves in sheep clothing.
Mining sector has always been a scare to me
Seeing how the power of certain mining group increase by the years and as it becomes More difficult to mine a Bitcoin
Centralization in the mining sector of Bitcoin would become more centralized
They can choose to confirm transactions they want and at what price.
Centralization is becoming like a plague pestering man for existence
When would we ever be truly decentralized?

How about decentralized exchanges like Bisq? I do not know how truly the exchange is. Is it using centralized server or through decentralized nodes? There are many things that I thought to be decentralized before but later notice they are not decentralized but centralized in one way or the other.

Bisq for now has shown to be decentralized and more like a market centered on Privacy.
It's use of Tor is a proof that at the moment it does protects it's users privacy.
It's quite similar with Bitcoin (guess that explains why it's mainly only on BTC) as a peer to peer exchange more of a market.

No it's not using centralised server but a DAO. Quite similar to Bitcoin proposals by developers individuals with BSQ token can vote on certain proposals to improve the service.
I do have a Bisq account and I would say Bisq while been decentralized has some element of custodial and wouldn't really recommend it much
Because like CEX in case of dispute your funds can be held by individuals called arbitrators and unlike machines
Humans have emotions, So you can tell there would be element of bias sometimes in their judgement.

[Frankolala]

I am really happy about bitcoin that Satoshi created, because it has become a burden to the government on how they can control it, and they are trying everything possible to see how they can monitor investors into bitcoin transactions but it has been a pain on the ass for them, because they can only get down services that helps to make bitcoin users keep to their privacy and anonymity, but they can never make bitcoin centralized.

 At least someone have proven to the government that they cannot control everything made of man, initially they thought they could but Satoshi proved them wrong. US and other countries government will not sleep and will ever be worried until they find a way to see how they can control bitcoin which will not be possible because of the way bitcoin was designed. My fear that the mining pools should keep to the purpose of bitcoin creation, and don't allow themselves to be controlled by the government.

The problem here is that a decentralized network is using a centralized server, that sucks. Are there no decentralized servers out there. It is a threat to the purpose of bitcoin creation.

[HeRetiK]

• There are similarly server dependent DEXes that suffer from the same flaw just because the developer of that DEX wanted to make money (through fees) not develop something decentralized to solve a problem!

I think this issue lies at the heart of the problem: Creating a truly decentralized system is hard, and doesn't pay. At least not in the way a system with traces of centralization does. And most users don't care that much about decentralization anyway, so the financial incentive of merely pretending to be decentralized is incredibly high.

As Z390 said, we got really lucky with satoshi's sacrifice. And I'm not sure we'll have a "second coming", now that it's clear that there's a lot of money to be made.

[Blitzboy]

You're absolutely right about centralized stuff being a problem in decentralized systems. It's frustrating, man. Goes against everything blockchain's supposed to be about. There's still one weak link that makes everything go wrong, even though we want this to be free of rule and control.

The thing is, Bitcoin works since it's not controlled by a single group. It doesn't belong to anyone, and no one can shut it down. Things with the Samourai wallet and those bigger mining pools are going in a bad way. We're going back to the old ways of doing things and putting trust where it shouldn't be.

Better tech has to be the answer. Blockchains can't just kind of work or only work when a certain company or group acts perfectly. We need protocols, or rules for how to do things, that are not organized at all. There should be no easy ways out, as that would defeat the purpose. Then we have something that no one can touch. That's what blockchain is meant to have: power.

[goldkingcoiner]

Someone needs to repeat what Satoshi Nakamoto did with Bitcoin, only this time with a decentralised exchange or with samourai wallet like Bitcoin wallet.

They should do it in a way it can't be tampered ever again, just like Bitcoin, and they should become nameless, unknown and walk away just like Nakamoto walked away.

I know its not easy but by now we should have this done already, instead, both old and upcoming developers are running after money since crypto space is the new gold rush, no one wants to make real sacrifice like Nakamoto did.

This is the reason why Bitcoin is different from all other crypto coins out there, no one is ready to make sacrifices without wanting something back, without their names be heard and them available to take the credits, of cos, the centralized entities will crawl in. Shame.

People are too greedy. Centralized is more profitable to an individual because they can control the profit going into their pocket. A decentralized system would mean they have no control over it.

[un_rank]

This is the inevitable effect of adoption on a massive scale as what Bitcoin is experiencing. The other two examples of truly decentralized networks tor and torrent are no where near as popular and as used as Bitcoin or are on the decline in usage. People tend to go for easier to use alternatives, after-all, they do not consider centralization in their daily activities. Bitcoin does not have a real alternative, people want to use it, hold it and profit from it, but just not in the way it was designed to be.

Writing down your seedphrase, not being able to recover your sats if they are lost, checking the source codes of a software, running your own node and choosing your servers is not what a massive amount of the population are willing to do, but they are what create mass adoption.

I do not know what the solution will be of if there is one. The trends of closed and failed exchanges stealing people's money was not enough to scare others from centralized exchanges, cause they want to trust something. The exchanges can come up with "SAFU" and everyone relaxes again or were never alarmed at all.

Best case scenario will be to double down on privacy for those interested in it. Filtering fully open source softwares from partial ones and identifying platforms which are not as decentralized as they claim to be.

- Jay -

[Helena Yu]

• Last but not least is the worst of them all: centralization in mining in form of mining pools that can be taken over, shut down or forced to attack Bitcoin (eg. the US based MARA pool attacking Bitcoin principle of censorship resistance)

This will be the hardest part.

It's easy to avoid CEX, we have plenty way to trade e.g. no KYC P2P, DEX, this forum, direct P2P.

It's quite easy to run full node, just need time and storage.

But if all of the pools agree to censor the transactions that asked by SEC, the only way to combat is to set up own mining pool...

[tranthidung]

The most recent case is the Samourai wallet. At first look it is an open source software, it talks about CoinJoin, looks "decentralized" and all is good. But at the root of it, this is a centralized company and when you use it you are relying on a centralized coordinator (server) both of which could always been shut down and they eventually did get shut down.

The reminder is good that people mostly believe that Decentralized Exchanges are actually decentralized. From your example, I hope they can see a red flag that centralized companies and teams are behind these DEX.

At the end, there are centralized entities and people that can be targets of governments and regulations so that these DEX can be shut down any time with a sanction from national government and international cooperation.

[pooya87]

The issue of decentralization is becoming more complicated for an average Bitcoiner who has no in-depth knowledge of the technical aspect of the coin. It was generally believed by most people in the industry that the Samourai wallet was okay because it was decentralized and open-sourced. Now there have been contradictory arguments that the wallet was not what people thought it was. My concern is that these revelations about the Samurai wallet were not as loud as those before it was attacked by the government. Does it mean that we would have to wait till a perceived decentralized platform is brought down before we know that they had massive pitfalls?

That's why we need more independent/international developers who would create different tools and more independent reviewers who would look at the code of those tools and let others know how they work, whether they have a vulnerability, etc.
Specifically reviewers is something I feel like we're lacking. People who can read code just don't spend time doing so... and if they do, they are not vocal enough...

Are there no decentralized servers out there.

That would be a paradox because a server by definition works in a hierarchy in the server <> client relationship whereas in a decentralized peer-to-peer network all participants are at the same level (peers) without any servers.

I do not know what the solution will be of if there is one.

Incidents like the case with Samourai wallet have a silver lining, they act as a wake up call that reminds us of vulnerabilities and forces us to think about solutions before a catastrophe happens. We don't have to come up with a solution right away but it is a good thing to first know the problem and strive to solve it.

[NotATether]

• There are similarly server dependent DEXes that suffer from the same flaw just because the developer of that DEX wanted to make money (through fees) not develop something decentralized to solve a problem!

I think this issue lies at the heart of the problem: Creating a truly decentralized system is hard, and doesn't pay. At least not in the way a system with traces of centralization does. And most users don't care that much about decentralization anyway, so the financial incentive of merely pretending to be decentralized is incredibly high.

As Z390 said, we got really lucky with satoshi's sacrifice. And I'm not sure we'll have a "second coming", now that it's clear that there's a lot of money to be made.

Bitcoin was financially worthless with Satoshi had created it, there was only the incentive of decentralization.

The only problem is, Satoshi had the heart to be anonymous, and i'm not sure we can find another character like that, since most of us who are posting here or elsewhere in Bitcoinsphere have already blown their covers.

[HeRetiK]

I think this issue lies at the heart of the problem: Creating a truly decentralized system is hard, and doesn't pay. At least not in the way a system with traces of centralization does. And most users don't care that much about decentralization anyway, so the financial incentive of merely pretending to be decentralized is incredibly high.

As Z390 said, we got really lucky with satoshi's sacrifice. And I'm not sure we'll have a "second coming", now that it's clear that there's a lot of money to be made.

Bitcoin was financially worthless with Satoshi had created it, there was only the incentive of decentralization.

There's also a strange beauty to this: Bitcoin is decentralized and independent the way it is because there was no real incentive to run this as anything else but a "hobby" project, albeit a highly sophisticated one (of course speculation existed from its very beginning, but Bitcoin's success was far from certain). Yet without being as decentralized and independent the way it was from the get-go, I doubt Bitcoin would have ever gotten the traction it did.

The only problem is, Satoshi had the heart to be anonymous, and i'm not sure we can find another character like that, since most of us who are posting here or elsewhere in Bitcoinsphere have already blown their covers.

While satoshi's anonymity is a great bonus I don't think it's even that big a factor. It's the challenge of finding someone with the expertise to pull something like this off and the willingness to completely leave it into the hands of the public.

[Darker45]

Probably one of the reasons why centralization thrives is that the market is apathetic about it. You sell the public with centralized services and they take it. It's sad to see decentralization being prostituted by private and centralized companies, but what's even sadder is that you actually don't have to mislead the public, to market lies, to make false promotions.

The truth is that you don't have to falsely claim that what you're offering is a decentralized service or a peer-to-peer service. Many here, for example, are well-informed about the basics and yet they willingly prefer centralization.

Chink and traces connote a small or tiny amount. The reality is that centralization is brazenly mainstream. I'm afraid it is already the rule rather than the exemption.

[kryptqnick]

I guess the question is what we mean by eradication. Being aware and personally avoiding centralized services is one thing. I agree that it's a good thing to do, and perhaps we even need a platform that would helpfully sort out those intricate and not so intricate cases, so that a person could just find the necessary info in one place. But if eradication means lobbying for bans of centralized services or trying to impose some sort of restrictions, then I don't support it because I believe that an ability to choose between centralized and decentralized options is a part of financial freedom which Bitcoin is all about.

[Aanuoluwatofunmi]

The reason why decentralized networks work and can continue staying alive is that they operate on a purely peer-to-peer basis without significant traces of centralization. We have the Torrent, Tor and Bitcoin networks as 3 excellent examples of such systems.

This is true and are part of the heavy giants we are having against the use of traditional local currencies of fiat, we cannot go by the continuation of a centralized financial means and expect that everything concerning our financial economy to change for good when they are under the control of central authorities, government are the main brain behind this, because they will always wanted to have control over our finances, but thanks to Satoshi for making bitcoin a success upon several attempts from other developers which availed to nothing.

[Husires]

How can this problem be solved if governments decide that they do not want centralization? In the end, developers are individuals and have families and do not want to confront the government.
Mining pools can be moved outside the United States, but it is still possible to establish a legislative framework between several countries and it is easy to know where mining is located.
Using a full node may be a solution but the developers are still known and you must use a central site to download the software, synchronization is slow and not everyone may be able to manage a full node.