Proponents and advocates of cryptocurrencies always speak of decentralization as the greatest advantage they have.
This is a theme that is repeated over and over again, constantly, in the different articles that we can see on the web.
What does this mean about the decentralization of cryptocurrencies?
Well, it is as is them and their blockchain technology do not need any “central power” to operate.
What happens is that there is a lot of confusion here with the terminology, since it is one thing for a program to be decentralized and another for these currencies to be decentralized.
For example, we can find similar cases with the P2P technologies of a lifetime, in programs such as eMule that were “free”, and in which users could share their files with those of citizens from the rest of the world. However, despite being a decentralized service, this did not mean that governments could not brutally persecute these technologies, to the point that in many advanced countries it is impossible to share a film without being monitored.
This case of movie downloads may not be “blockchain”, but in the end it is something similar, especially when people downloaded through software, something not very different from the “decentralized” system from which presume the defenders of cryptocurrencies.
In many countries, internet operators know what movie you have downloaded, if you happen to do so, and they will proceed to send you threatening letters.
What are people doing?
Well, hire Netflix.
This case serves as a clear example of what is really involved with cryptocurrencies and their decentralized systems. That is to say, that the possibility of decentralization exists, but also that of total control by the State authorities and their agents, the multinationals.
Therefore, we have seen that we have gone from torrent and emulate the empire of Netflix, which increasingly increases in popularity in the tvs of the major cities of the West, and not only in popularity, but in the stock market.
Decentralization with the blockchain
The topic of blockchain technology is similar.
It is assumed that these cybernetic spaces composed of “blockchains” allow the realization of many decentralized services and, therefore, supposedly free, such as storage, buying and selling, social platforms, and so on.
However, at the moment of truth the only thing I see in the world of cryptocurrencies, today, is a huge amount of the same that are negotiated among individuals at exaggerated prices.
That is to say, after so much repetitive argument about decentralization, the only thing I see is a massive market of digital speculation, with many exchange houses and infinity of ICOs that precisely require the sale of these “cryptocurrency” in order to be viable; because in the end, for ICOs to succeed, digital currencies are being given as a means of change.
Therefore, we end up where ever: we are not talking about a “decentralized” model, because behind each project and each ICO there is an entity that can be an organization or a single individual.
I do not know an exchange house that does not offer you trading without commissions or without charging the spread. Some say that transactions can be made in the crypto network without intermediaries, but still we need someone to provide us with a wallet, because ultimately our money is in cyberspace. In addition, such systems are less safe than a straw hut in the middle of a hurricane.
Security and decentralization blockchain
Then, we have the problem of security, another of the mantras that they repeat us again and again to sell us the story of decentralization and the democratization of the crypto system.
This point is totally ridiculous, because if we start to check the number of hacks, thefts and barbarities that occur in blockchain networks, we will realize that more than a secure system we are just opposite: a system where insecurity reigns everywhere and where you can be stolen from your bitcoins in an exchange house and receive an answer: “I have no idea where they went.”
It is assumed that decentralized systems are more expensive and complicated to attack because, lacking, in theory, a central command, they are not easy to collapse.
In addition, it is assumed that being democratic systems the entire system is connected, so that a component cannot do something without the consent of others, or without others to know.
Have not you heard similar arguments about the blockchain?
Well, where is that interconnected system when thousands of bitcoins, litecoins or ethereums disappear?
When these “thefts” occur, it seems that the system is no longer “decentralized”, it stops being “connected”, it is not more a “block”.
However, I can assure you that a very centralized system like Facebook is capable of detecting any type of anomalies and “suspicious behavior”, to the point of eliminating these behaviors with a simple algorithm.
In the ultra-secure – sic – blockchain system we can find how hundreds of millions of dollars of Mt. Gox disappear and nobody knows anything.
The defenders of the same ones will say that “there is the advantage of decentralization”, that the culprits cannot be identified because the system is “anonymous”.
Well, then do not say it’s safe.
In this regard, I quote an example on the subject of the safety of Vitalik Buterin:
“Of course, four jet engines are less likely to fail than a single one, but what if all four were manufactured in the same factory and the same employee introduced a fault in them?”
Sure, here you realize that any initial developer of any cryptocurrency starts with a small advantage over the rest no. After all, we are talking about online codes, not very different from Neo or Mr. Smith. And speaking of Agent Smith and Neo, we must not forget that this blockchain-matrix system can easily “come to life” and be a threat to the system.
Then we have the issue of mining pools, which tend to combine to be more efficient. Does this sound like something familiar to you?
Do not the miners have an economic interest in mining?
Well, what prevents large mining conglomerates with an infinity of resources from doing this mining?
Smart contracts and decentralization
Is it supposed that by putting a pompous name on a system like smart contracts we are going to have a perfect decentralized system that is bombproof?
No, the pompous names sound good but they are not enough for a system to be neither decentralized nor much less safe.
The amount of scams and problems in this field is enormous, and that we are only at the beginning of the “blockchain technology”.
All this does not sound more than the stamp of the card with the difference that now you can steal digitally and you do not even realize, because your money is in the digital cloud in a supposedly secure blockchain, because you should be calm.
The truth, I prefer to know that my money is in a vault to which I can at least ask for explanations if the money is lost. The problem of the blockchain system is that everything remains in very ethereal excuses.
The cases of applications of Ethereum, like the one of CryptoKitties is not more than a clear example of a scam pyramidal disguised, that yes, of innocent game of cats online.
That is the difference of the current online world with the previous one, the real, that the pyramid schemes reach absolutely ridiculous proportions.
Where are the companies and the State in cryptocurrencies and blockain?
That is the question I always ask myself.
In the end, if there is a service that can be provided efficiently, be assured that groups of investors or very gifted individuals will end up doing things better. The world of the blockchain is not different from the real one. If there is someone who can take advantage of a competitive advantage and capitalize it, it will do so, so it is foolish to think that the organizations are not going to take over that world.
Did you think you were going to be able to trade cryptocurrencies like when you exchanged files in torrent?
You are going to pay a commission and keep your crypts in a wallet, which someone will arrange for you.
Moreover, everything is very nice but at the moment of truth, your taxes have to be paid to the State, and the State is an agent that likes control a lot.
If the P2P experience is of any use to us, with the case of the triumph of Netflix, it is that in the end, the State will end up intervening, to benefit, of course.
This is where the true use of the cryptocurrency and blockchain world will finally be introduced, which is no other than being the perfect base for the most centralized monetary control system in history: the digital monetary system.
They will tell you that the system will continue to be decentralized and such, and they will put an image with the typical nodes in the form of a mesh, where it seems that each component is the same as the other. But in reality it is not like that, because if you realize, all those nodes do not stop being connected, and that is the key that the system is the perfect machine to control a society.
If the State controls a node, it controls the others, because one node communicates with another, and so on (see the figure at the beginning of the article).
It will be at that moment when people realize that the blockchain world is, in reality, the most centralized in the world.
Until that happens people will continue to speculate with the price of Bitcoin and the other crypts, hoping to get rich in a supposedly decentralized system.
Good luck with that.
Original article: El mito del blockchain y las criptomonedas descentralizadas