Most Cryptocurrencies are actually Centralized; 3 coins leads the way.

6개월 전

The blockchain and cryptocurrency industry rides on the surfboards of decentralization as much as that of its cryptographic security. However, by the end of 2017, the world had a different view on the ‘decentralized’ nature of projects in this space as XRP gained the media spotlight due to Ripple Inc.'s massive ownership (60%) of the total supply of the token.

This raised the question of whether the blockchains and the associated cryptocurrencies are decentralized. A research carried out by Cryptocompare on over 100 cryptocurrencies across the field showed that only 18% of the projects were truly decentralized.

Centralized vs Decentralized systems

More critics doubt the actual use of blockchains in today’s global economy in providing decentralization to various sectors of the economy. In this article, we focus on the features that make blockchains centralized and the top five most centralized cryptocurrencies in the industry today.

Reasons leading to a centralized cryptocurrency

This section explains the degree of centralization of existing cryptocurrencies and the reasons leading to it.

A. Mining Centralization

One of the most common ways cryptocurrencies are centralized arises from the mining constraints faced by the user base.

Despite the ability for any participant to validate the blocks, your channel may not be able to download the created blocks fast enough. This causes the available nodes on any blockchain to be centralized to those who can afford the expensive mining rigs and equipment.

This is a clear barrier to total decentralization of the blockchain.

Proof of Stake mechanisms also have centralization problems as the cost of maintaining a node is unprofitable. This leads to users to delegate their hash power to selected nodes.

B. Governance (Development) Centralization:


The governance of most blockchain is left to the community as “no-one actually controls” blockchains. However, the development of these protocols is dependent on a few core developers as they are able to accept the code changes or understand the development protocols on the blockchain.

The development structure also ignores some opinions from external parties on the blockchain which may end up being useful.

Furthermore, the industry is currently filled with stans of “blockchain celebrities,” such as Vitalik Buterin (ETH) and Justin Sun (Tron), who easily lead change on platforms once they push an agenda. This limits the decentralization and independence of the platforms as well.

C. Centralization of Blockchain Services

Given the work-intensive nature of processing a block, most users prefer a trusted centralized institution to carry out the process. Block explorers are centralized between two or three trusted services such as Myetherwallet.com and blockchain.info.

The problem arises if any of these centralized services were to be hacked or compromised. The users will go on their businesses without a clue of the happening as they represent the truth to the investors.

Top cryptocurrencies that are Centralized in 2019

The three reasons stated above are the most common among most centralized coins and digital assets. We list below the 5 biggest cryptocurrencies that exhibit centralization and how each is working (or not) on becoming more decentralized.

1. XRP

The king of centralized cryptocurrencies.

Ripple Inc. owns 60% of the total XRP supply. There is no better example across the big cap cryptocurrencies that shows centralized properties than XRP. As mentioned before, Ripple Inc., XRP’s custodian, holds 60% of the pre-mined coins. Furthermore, Ripple Labs, controls a large share of the development on the XRP protocol given the huge interest the company has in XRP.

While decentralization may be a key factor in most crypto projects, XRP is controlled by the Ripple Inc. team. The team has scheduled periods in the future to release the pre-mined assets to investors in a bid to reduce their holdings and raise capital.

2. NEO


The sept of centralized nodes.

While XRP’s centralization arises from developmental issues, NEO’s centralization problem is hugely influenced by governance procedures.

The blockchain is known as the Ethereum of China has grown in ranks since inception, and currently places as number 16 on CoinMarketCap.

NEO is governed by seven fixed nodes that are chosen by the NEO Foundation and, in case one node fails, then the blockchain fails as well. Current efforts by the team to push for decentralization have born fruit as two nodes have been left to the community to run. The Foundation is working towards having a completely decentralized platform by the end of the year.

The NEO Global Development team released a guideline on “How to Become a NEO Consensus Node” to increase awareness of decentralization on the NEO platform.

3. EOS

Only 21 block producing nodes on the platform.

EOS blockchain suffers the same problem as NEO since it too has a limited number of selected nodes that control the system.

“EOS runs on only 21 nodes that check and validate new transactions. Every 126 blocks, 21 new nodes get elected by the stakeholders, which means every round an elected node ‘mines’ 6 new blocks. Blocks get produced every 0.5s, which makes 1 round last ~63s.”

However, the system remains centralized as these 21 nodes are usually voted in through and through, increasing their power and position in the system.

Despite Satoshi having a vision of a decentralized and public network on blockchains, centralization has taken root in most major projects. This has caused a rumble in various communities with some supporting the motive and others criticizing it.

There are, however, some benefits to having a centralized community running the development, governance and services provided on the blockchain, but we’ll leave that topic for a future article.


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The battle for control of the future is the control of the blockchain!

So, and which are the top 3 decentralized coin?

As always, very well written article..
Thank you! :)

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Banks control to XRP and many coin developers are using NEO algorithm for developing coin for the ICO. I am not familiar with EOS.

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Bitcoin, ETH and I think monero. You can find a list by googling arewedecentralizedyet.

But its more about the speed at which new nodes are being added to the network. There are some interesting new coins that have been very active with adding new nodes.

You can check out some of them at icodog.io

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Ethereum seems plan PoS, so maybe centralize too. But must specify terminology. PoS lead to centralize emition coins, but transaction can stay normal. "Crypto coins" without blockchain are simply not crypto, they are only better fiat version and in future will be probably easy hack or generate.

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i would say, we can consider electroneum too

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dogecoin, digibyte, decred

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In the beginning, you said you were introducing 5 centralized coins but you only mentioned 3.
I would personally nominate Cardano and Lisk.

I don't like Delegated Proof of Stake because it puts power in the hands of an elite group. This is no different from our current fiat system.

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well, cardano is not even in testnet, shouldnt be in that list.
DPoS makes cartels everybody knows that, look at steem. I think in 2019 we will see a lot of innovation

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I hope so. So far, nothing has really worked

really interested to see what happens at NEO Devcon next weekend! I will be there with bells on and taking some serious notes.

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well we already spoke about this once before. Not a big fan of neo, in my opinion its quite the joke that quickly grew mainly because of the city of zion guys. Both technically and personally they are amazing guys, but otherwise is neo very weak. The biggest thing they have going for them was the whole ETH of China thing.

But tbh so far most projects out of asia have been very underwhelming or straight out scams.

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Oh I know your opinion for sure, and totally get it as they are valid points. And that is why I engage you, I appreciate your opinions. Yet I still have hope for the project. Honestly I am just excited about the crypto conference as a whole, lol.

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Eos has more meaningful nodes than 95% of cryptocurrencies - Bitcoin, for example, has less than half. The issue at hand is this: the decentralization of power. Eos, in terms of power, is the most decentralized. Most of the articles discussing it's centralization are FUD from people invested in Eth, but that's not to say it is without flaws. Like all cryptocurrencies, it is an experiment that is still in development.

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The only reason why people are talking at all about EOS is because Dan is an genious in game theory and instead of using his knowledge to improve his existing projects like steem, he invented a genius game theory model that caused the EOS ICO to raise 4B USD. By letting early investors speculate on the end raise.

If it wouldn't be for that simple model, nobody would care about a blockchain with 20 Nodes.

Excelente Post! Felicidades :D Porfavor dame un voto o pasa por mi blog y sigueme @karitosgroming Te lo agradecería mucho!

I think there is a place for both, the most decentralized will be the medium of value to place everything else by, and then tons of goverments and busniesses will have centralized currencies they can control, and u just transfer bitcoin to amazon bucks and then buy, just like an in game currency people by vbucks then spend them at that store, and consider that it will be an ecosystem that is familiar to the new generation and they can simply accept it as normal no matter how weird we think it is, they already do it! tho this is purely my opinion

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yes, there is a good chance things will turn out to be going that direction. With an app that will do this automatically

cryptocurrency is the world wide currency but can use some countries same as Europe

Decentralization is not always good imo.
It's one of the reasons why banks don't switch over to crypto. They want to be in control themselves.

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oh well I say fuck them

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I would say the same, but governments have a monopoly on violence. So what are you going to do about it? I mean, they are not going anywhere.

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Banks don't = Government
Often times they're separate entities.
They have a solid reason for it though...
So that the Government doesn't screw up it money. Countries where Gov controls Banks they're fiat pretty dead...
But those banks are than corrupt due not being part of the Gov and as such don't need to take care of people.
The banks job is to make money.
But replace the money with a Decentralized like Bitcoin and one part of the equation is gone.
Money controls the world and if you free the world into a decentralized system, the world can slowly like more decentralized gov or alteast Federation based ones.
Hence why people say if Bitcoin fails the market is dead and dream is pretty much dead. It may recover but after a long time and the energy of hard money of it gone

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kings and the church also once wanted to be in control :D

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Everyone wants to be in control. The nature of law is survival of the fittest. Things haven't changed this is still true today. And it's not about muscle power anymore but about who has the biggest military etc.

It's like with the Palestina Israel conflict. To who does that land really belongs to? The one with the most power because he will take it.

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Yes decentralization is a big handicap in many regards. But the main reason for Crypto to exist is because we need to radically change the way we form society and companies.
Tech giants are now more powerful then most governments and most of these companies are run by dictatorships. We need to completely rebuild society according to the new problems of our generation.

Crypto is the industrial revolution of the 21st century and decentralization is the key aspect of this revolution.

Bitcoin is only a very small part of the entire process.

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Imo it depends. Blockchains are very useful for things where you need to have trust and security.
You could use it for example for: financial transactions, supply chain management, decentralized gambling, decentralized exchanges, insurance, ...
It's also handy for different criminal activities.
The thing is a normal database is much faster and scalable than blockchain at this moment. You can't have high speed and scalability, high security and a cheap system. You will always have to sacrifice on something.

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Well we maybe found the first project that managed to get a fast and decentralized blockchain :D

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Is it really that decentralized? Steem is dominated by whales ... I mean, they can decide in the end what gets flagged and what goes trending.
But that's the case with most things in life. Bitcoin is also pretty much dominated by the people that got in early.

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Most of them are exchanges,lost but yes they're whales/
The holders don't control the chain nor do Miner nor do Dev nor do full nodes.
Each control part of the chain in diff ways.
It the very reason why Bitcoin took so long to upgrade.
Any scaling is done using that one upgrade segwit which is actually really amazing!

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Each control part of the chain in diff ways.

Indeed @sames. I love this convo you guys are having here :)

Your post has been great and I like it. Most Cryptocurrencies are actually centered; 3 coins increase the way. If you come to this post we will also benefit. Thank you

Upvoted and resteemed!

Come on really... then we were being swimming in a big lie since btc found by satoshi b4 15 years back ...hmmm

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bitcoin is 10.... and yes those are the facts

Congratulations @icodog!
Your post was mentioned in the Steem Hit Parade in the following category:

  • Pending payout - Ranked 4 with $ 159,58

Thanks.
I wanna gain knowledge about coin.

Thank you for the info.

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woooooooot wooooooot!

A human being naturally wants to be at the center, not only to himself but also to his possessions.

In cryptocurrencies, blockchain technology seems to be decentralized but the minds and intentions of the creators are quite different.
Total decentralization will always be a myth.

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Dear @ronel

Total decentralization will always be a myth.

I dont understand this fascination with full decentralization. It seem to be more HYPE than anything else.

Until there are better rules in place I feel like the market is still a complete wild wild west, manipulated easily by companies and whales pushing their agendas to attain financial gain in the end. Yes there are really good projects out there and their development teams do an excellent job but staying decentralized without set rules and user exchange agreements too many loopholes....look at bnb, trx, btt fiasco....

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yes IEOS are the biggest scams to date

Nice post, thanks for the

How’s is EOS’s method any different Steem’s top 20 method?

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they are both shit

Good article, seems that it works

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