Comprehending the attributes and capabilities of centralized cryptocurrencies.
Cryptocurrencies exist in various forms, depending upon the factors of its initiation. The original version of Satoshi Nakamoto was to create a decentralized form of financial economy which would prove to be like come back to the centralized financial system. But it can be concluded that apart from Bitcoin all the other Altcoins are centralized in the domain. This is because of the reason that they have some point of origin and is controlled by that authority, but in the case of Bitcoin even the owner Satoshi Nakamoto is undisclosed and it is highly Decentralized. Being decentralized has a lot of advantages with it, however, both the form of cryptocurrencies have their set of pros and cons. Let’s read about centralized cryptocurrencies.
The Centralized cryptocurrencies
In Centralized cryptocurrencies, the authority and decisions around the cryptocurrency development are vested with a single authority. He /She is responsible for all the development or failure of the centralized cryptocurrencies. The organization controls the functioning of centralized cryptocurrencies, as they are providing security, servers, gain feedback, certain crucial decisions with respect to the centralized cryptocurrencies, etc. However, one major drawback is that since the centralized cryptocurrencies are in the control of a particular organization, the future of the cryptocurrency coin, completely depends upon the organization itself.
How is centralization creeping into the decentralized crypto economy?
Generally, it is assumed that no one controls the Blockchain network but the fact is that the companies maintaining the centralized cryptocurrencies can tamper the blockchain or undertake decisions with respect to the centralized cryptocurrencies which are in their point of interest. In fact, at some point in time, all the Chinese Bitcoin mining pools accounted for 70% of the whole Blockchain network which was a very important matter of concern.
Many cryptocurrency professionals in the field like Nick Szabo, Vitalik Buterin, Charlie Lee, etc. have accepted the fact that they are in no control of their respective decentralized cryptocurrencies, but officially and subconsciously, each and every decision and opinion with respect to the Decentralized cryptocurrencies effect have a profound influence on the development of the decentralized cryptocurrencies too. Therefore, in this highly competitive world, it is highly impossible to achieve absolute decentralization of cryptocurrencies.
Bottlenecks in centralized cryptocurrencies
The centralization of cryptocurrencies predominantly means that the power is not distributed among the participants of the project network, but in reality, the decisions of the small investors are responded with shrugging shoulders. They need to raise their voice in order to be heard by the developing team in order to improve the Centralized cryptocurrencies for everyone.
There is another great drawback of centralized cryptocurrencies which needs to be highlighted. It is nothing but, the mining process. As we have been observing that due to the complex mining capabilities required by the blockchain in order to undertake the process of mining centralization has taken place as many big organizations are able to buy those types of equipment. The mining centralization might not seem to be important but it is the most dangerous and vulnerable part of the entire centralized cryptocurrencies. Imagine, if just in case, the top 3 mining pools collaborate with each other they would be able to control the complete blockchain network.
The positive side of Centralised cryptocurrencies
The Centralized cryptocurrencies also have many advantages with it. Since there is a centralized authority taking responsibility for the development or failure of the centralized cryptocurrencies, one seems to gain a sense of reliability and openness. These Centralized cryptocurrencies have also been witnessed to solve major scalability as well as security issues, which emerged with the development of the cryptocurrency domain. Terminologies like Delegates, Masternodes, Federations, as well as Witnesses, refer to the solutions proposed which are in turn centralization concepts itself.
These days it is observed that some of the cryptocurrency coins are just like the crypto counterparts of PayPal or Visa. The amount of centralization of cryptocurrencies can be witnessed here. One of the major cryptocurrency among many other centralized cryptocurrencies is listed below.
The real-time gross settlement payment system is incorporated mainly by the banks and other major Financial Institutions throughout the world. The cryptocurrency among many other centralized cryptocurrencies increases the processing capabilities by empowering the financial economy with the Blockchain Technology. Also, the Unique Nodes List is exclusively chosen by the key people of the cryptocurrency project itself.