ŪŗÁ‚ŗŪŤŚ

Centralized Cryptocurrencies Dominate Market, But What About Bitcoin?

A new report reveals that the majority of cryptocurrency and blockchain projects are centralized.


Majority of Cryptocurrencies Can Be Classified as Centralized, Securities

Cryptocurrency research firm CryptoCompare released its annual Cryptoasset Taxonomy Report, and their findings reveal that only 16% of cryptocurrencies are fully decentralized. The remaining cryptocurrencies reviewed are either centralized, or only semi-decentralized, suggesting that the development team behind the projects have some leverage to influence the protocol underlying the asset.

While the original cryptocurrency that started it all, Bitcoin, was designed by the mysterious Satoshi Nakamoto to focus on decentralization and removing the control governments have over existing fiat currencies, the industry he or she created is increasingly trending toward centralization.

The report outlines how the trend is largely driven by the rapid growth of new utility tokens running on private servers. Only 9% of all utility tokens were found to be sufficiently decentralized. Cryptocurrencies that function primarily as a means of payment, such as Bitcoin, Litecoin, Stellar, and others are among the most decentralized types of crypto assets.

Financial assets such as those born from initial coin offerings (ICOs) are only 7% decentralized, and are more often than not classified as securities, according to the report. CryptoCompare classified the assets using guidelines set forth by the Swiss Financial Market Supervisory Authority (FINMA).


But What About Bitcoin, Ethereum, and XRP?

Which crypto assets are properly decentralized or what assets can be deemed as securities are a hot button issue for cryptocurrency investors.

Bitcoin was recently ruled a commodity by a U.S. district court judge, and Jay Clayton, chair of the U.S. Securities and Exchange Commission (SEC), has gone on record stating that Ethereum is no longer a security, even though it may have started its existence as one.

XRP, the native crypto token of the Ripple protocol is often used as an example of a crypto asset that claims to be decentralized, but is arguably not. Investors fear that Ripple Labs ownership of the bulk of the XRP supply puts the token at risk for being deemed a security.

Ripple executives have repeatedly refuted claims that XRP is centralized, and often point to Chinas dominance over Bitcoin mining as a way the number one cryptocurrency by market cap has become increasingly centralized. Recent reports conclude that as much as 74 percent of Bitcoins hashpower is derived from Chinese mining pools like Bitmain. However, given the fact that the mining pools controlling much of Bitcoins hashpower are separate entities, Bitcoin remains sufficiently decentralized.

Bitcoin was created by Satoshi Nakamoto in 2008 in the wake of the global financial crisis. Nakamoto designed Bitcoin to be decentralized in an attempt to remove the control over the worlds finance that banks and governments have long enjoyed.


Featured image from Shutterstock.

The post Centralized Cryptocurrencies Dominate Market, But What About Bitcoin? appeared first on NewsBTC.

17.10.2018 / 15:40 25
Majority of Crypto Assets Are Highly Centralized, Research Finds Majority of Crypto Assets Are Highly
One of the central pillars of Bitcoin and cryptocurrency in general is that the system is decentralized, ensuring no single point of failure for
Is Decentralization Really the End Goal? Is Decentralization Really the End Goal?
Its no secret that vast majority of the cryptocurrency world has been in favor of decentralization over centralization. In fact, thats one of the
Vitalik Buterin, Binance CEO Zhao Agree Decentralized Exchanges Should Lead The Way Vitalik Buterin, Binance CEO Zhao Agree
During an interview at†Tech Crunch Sessions: Blockchain 2018,†Ethereum Founder, Vitalik Buterin hoped†ďcentralized exchanges burn in hell as much as
New Research Finds Backdoor ĎCentralized Controlí in Many ICOs New Research Finds Backdoor
Researchers from the University of Pennsylvania have found that a significant number of ICOs retained centralized control through undisclosed code.
Dozens of Decentralized Exchanges Making Their Mark on Cryptocurrency Industry Dozens of Decentralized Exchanges
The world of cryptocurrency exchanges will undergo some big changes. Centralized services remain popular, but decentralized solutions are gaining
Bank For International Settlements Distances Itself From Centralized Digital Currencies Bank For International Settlements
European banking bigwigs appear to be underwhelmed by the idea of digital currency, either decentralized or bank-issued. A new joint European banking
Comments (0)
Add a comment
Comment on