Decentralization or centralized exchange? After the Binance hack, CZ weighs the pros and cons

Decentralization, or centralizations? – Ultimate aspiration of any network? Is decentralization just wishful thinking, an oasis in the desert, an illusion destined never to be achieved? According to CZ, having just recovered from BNB Chain hack, this pillar of the blockchain trilemma, is a step-by-step process. Neither all white nor all black, and that’s what we’re going to see.

Decentralization, the holy grail of blockchains?

This nagging question of decentralization comes back to every AMA (Ask Me Anything) of CZ, with each emergence of a new blockchain. And rightly so, because this point is essential to allow us to achieve our ideals of a much sought-after freedom. In order to extract us from the very real risk of censorship which weighs like a sword of Damocles on our financial acts, on the savings of a life.

As CZ mentions, you have to see decentralization as a color gradient. To strive for more decentralization is a iterative process. Because we must not lose sight of the other two pillars of this good old trilemmasecurity and scalability, i.e. the ability of the network to operate smoothly and efficiently.

Decentralization, security, scalability, the three sides of the same trilemma

The primary vision of decentralization is often associated with the now iconic phrase that any crypto-savvy cannot ignore:

“Not your keys, not your coins”

If we got used to this maxim, holding one’s own keys would be synonymous with decentralization. While an exchange like Binance would be the emblem of centralization. In reality, the situation is a little more complex.

Even once your cryptos are held on a hardware wallet, they are dependent on the blockchain on which they are located. This can itself be particularly centralized. If only because too few nodes or validators would be in charge of running it. But even on seemingly flawless blockchains, CZ remember only points of failure can be found. These defects limit this sacrosanct decentralization which is revealed in truth, although hard to reach.

>> Come and take your first steps in the Bitcoin universe on Binance (commercial link) <<

Decentralization, a matter of perspective?

Because we can also find arguments against the Bitcoin network, supposed to be the most decentralized of all. Typically the top 2 or 3 mining pools hold more than 51% of overall hashrate. An argument to put into perspective, because a minor can change pool at any time. However, in bitcoin, a small number of entities hold a large portion of all bitcoins in circulation. Isn’t this also an element of centralization? On the other hand, as democratization progresses, these entities distribute them to new entrants who wish to obtain their first satoshis.

The thorny question of centralization concerns all blockchains

Ethereum also has aspects of centralization such as the significant influence of Vitalik Buterin on the long-term vision of the network. CZ, for his part, highlights his weak involvement in the technical development of the BNB Chain. In essence, he supports the fact that his disappearance would in no way lead to the shutdown of his blockchain.

CZ agrees with the line of thought that centralized entities should not be able to limit our fundamental right to dispose of our money as we see fit. Nevertheless, giving back to individuals their monetary freedomit does not happen in a day.

Is it better then to hold your cryptos on a decentralized wallet at the risk of losing them due to improper handling? Or leave them on a centralized exchange until more intuitive and secure tools emerge? This is the whole question for novices who very often choose the second option. A easy way out sure, but reassuring. For the binance bosscentralized exchanges actually form a bridge between a dying centralized world and the decentralized world of tomorrow.

You have the right to understand nothing about decentralization. On the other hand, not being interested in Bitcoin is unforgivable! Don’t wait any longer to prepare for the future en going to register on the Binance platformTHE absolute benchmark in the sector (commercial link).

John R. Zepeda

I have extensive experience working as a content writer in the areas of cryptocurrencies and finance, where I create interesting pieces that both inform and engage their audiences.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button