Decentralization: Which Crypto’s Aren’t Centralized?! Let’s Find Out!

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📺Essential Videos📺

Polkadot Updates 👉 https://youtu.be/H7S5k5jWp48
SEC’s Views Of Cryptocurrency 👉 https://youtu.be/uPBR3mn6wKU
Wyckoff Method Explained 👉 https://youtu.be/ltcnTTeDFjY
Energy Costs And Crypto Mining 👉 https://youtu.be/rex-h4vkELs
Coin Bureau Conference Stream 👉 https://youtu.be/_8AZKJ__XrE
Mina Protocol Potential 👉 https://youtu.be/Zj6rNewnbrw
Helium Peer To Peer Internet 👉 https://youtu.be/cTWv_lv5dG4
Blackrock Owns Everything 👉 https://youtu.be/qs_mWvf6yRI
Bitstamp Crypto Report 👉 https://youtu.be/65QgI_Kzq38
Gemini Crypto Report 👉 https://youtu.be/J6-LCwPRJWo

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⛓️ 🔗 Useful Links 🔗 ⛓️

► Andre Cronje Quits Crypto: https://cointelegraph.com/news/defi-godfather-cronje-quits-as-tvl-and-tokens-tank-for-related-projects
► Uniswap Governance Controversy: https://thedefiant.io/uniswap-proposal-stirs-up-controversy-in-defi-on-dao-fund-management/
► Ethereum Infura Outage: https://decrypt.co/98457/metamask-ethereum-apps-down-infura-outage
► DyDx AWS Outage: https://cointelegraph.com/news/aws-outage-hits-dydx-raising-concerns-over-decentralization
► Uniswap Delists Tokens: https://cointelegraph.com/news/uniswap-delists-100-tokens-from-interface-including-options-and-indexes
► Most Decentralized Cryptocurrencies According To Experts: https://cointelegraph.com/explained/which-blockchain-is-the-most-decentralized-experts-answer

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– TIMESTAMPS –
0:00 Intro
1:31 What Is Decentralisation?
4:36 Developer Decentralisation
7:42 Coin or Token Decentralisation
10:19 Infra Decentralisation
12:52 Blockchain Decentralisation
16:01 External Decentralisation
18:49 Which Cryptos Are Decentralised?
21:17 Outro

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📜 Disclaimer 📜

The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading cryptocurrencies poses considerable risk of loss. The speaker does not guarantee any particular outcome.

#Decentralization #crypto #bitcoin #Ethereum #blockchain

The biggest difference between cryptocurrency and traditional Financial Technologies is that the former is decentralized and the latter centralized now decentralization has therefore been a Hot Topic ever since the first Bitcoin block was mined in 2009 and with Regulators around the world turning their sights on cryptocurrency it’s more important than ever

Today I’m going to explain what decentralization means take you through the different layers of decentralization in cryptocurrency and consider which cryptocurrencies are the most decentralized Before we Define any terms I need to make sure I don’t get burned make no mistake I am not a financial advisor so I can’t help you earn what I am is an Entertainer and educator who can help you learn please contact a financial advisor if your portfolio has you concerned

If this is your first time in my Abode my name is guy and many consider me to be a crypto Pro that’s because I create some of the highest quality crypto content you will ever know coins tokens news reviews and other valuable knowledge that will help you grow

If you want to make sure you don’t miss a video subscribe to the channel and ping that notification Bell down below so now that you have that information it’s time to discuss decentralization so let’s start with what decentralization is and why it’s so important according to the Merriam-Webster Dictionary quote decentralization is the

Process by which the activities of an organization particularly those regarding planning and decision making are distributed or delegated away from a central authoritative location or group I reckon that sums it up pretty well now believe it or not but decentralization is a political philosophy that emerged in the aftermath of the French Revolution

Decentralization fits under the broader umbrella of libertarianism another political philosophy associated with the French Revolution which puts Liberty Above All Else Liberty is arguably what cryptocurrency is all about hence why the blockchain networks which underpin it are often designed with decentralization in mind as you’ll soon see however it’s not just

Decentralization at the blockchain level that matters and in many cases being centralized at other levels makes decentralization at the blockchain level irrelevant it’s also important to note that decentralization is a spectrum and there’s bound to be some disagreement about where that line lies for each of the layers of decentralization I’ll be

Discussing for example if a cryptocurrency has 1 000 validators is it decentralized what if they’re all based in the same region what if they’re based in different regions but are all operated by the same entity what if it’s different entities in different regions but the hardware they’re using is all manufactured by the

Same company food for thought if you’re wondering why decentralization is so important it’s mainly for two reasons the first is the most obvious and that’s security when a cryptocurrency is decentralized from top to bottom it’s almost always extremely secure because there’s no single point of failure it also creates censorship resistance as

There’s no Central Authority that can decide what you can and can’t do with your digital property the second reason why decentralization is important is the one I hinted at in the introduction and that’s crypto regulations this is because a truly decentralized cryptocurrency is next to impossible to regulate as there’s no

Identifiable individual or institution that can be coerced or sanctioned in other words if a cryptocurrency is truly decentralized it’s very difficult if not impossible for a central authority to shut it down this is why polkadot founder Gavin wood is a huge fan of crypto regulations regulations will destroy the crypto

Projects that are not truly decentralized the ones that are really not all that different from existing Financial Technologies if that didn’t give it away polkadot is one of the few crypto projects that’s starting to take decentralization very seriously and you can learn more about it using the link in the description

Anyways the first layer of decentralization in cryptocurrency is what I’ll call the developer layer as you might have guessed the developer layer is the individuals and institutions that create a crypto project what decentralization means at this level is Up For Debate but I reckon it’s safe to say that the more unaffiliated

Individuals and institutions a cryptocurrency has the more decentralized its developer layer is note that the key word here is unaffiliated and I’d go as far as to say that individuals and institutions with the same backers or investors are affiliated even if they don’t know each other decentralization at the developer layer

Is important for a few reasons and the first reason is again regulation if you’ve watched any of my videos about the SEC you’ll note that it uses something called the Howie test to determine which crypto projects to go after the short explanation is that if the SEC can identify an individual or

Institution that’s creating the expectation of profit you have when you invest in a particular coin or token then that cryptocurrency is a security which must be subject to strict regulations this begs the question of what the SEC thinks about cryptocurrencies that have multiple individuals and institutions creating expectations of profit for a

Particular coin or token unfortunately the best answer we have comes from a now famous 2018 speech by SEC director Bill Hinman who said that ethereum wasn’t a security because it’s quote sufficiently decentralized because Bill never really defined this term nobody really knows what sufficiently decentralized actually means

If there are say 12 dozen individuals and five institutions that can be identified as the primary drivers behind a crypto project is it sufficiently decentralized more food for thought now the second reason why decentralization is important at the developer layer is the longevity of the cryptocurrency in question this is

Simply because relying on a small group of individuals or institutions for development means there’s a high risk the crypto project will go under if this core team disbands retires or you know dies a good example here is the departure of D5 developer Andre cronier earlier this

Year many of the crypto projects he left behind now face serious uncertainty and I believe a few have gone bust already the third reason why decentralization is important at the developer layer is the security of the cryptocurrency this is simply because relying on a small group of individuals or institutions for

Security means it’s much more likely to be compromised by either internal or external actors a recent example here is the hack of axi Infinities Ronin sidechain where the hacker managed to take control of the private Keys belonging to ronin’s validators by hacking Sky Mavis the company behind axi infinity and Anne Ronan

This ties into the second layer of decentralization in cryptocurrency which is the coin or token layer specifically the distribution of a particular coin or token now the coin or token layer is where the definition of decentralization becomes extremely nuanced because it varies from cryptocurrency to cryptocurrency along with the effects of centralization at

This layer on stuff like a cryptocurrency’s market cap its governance structure and the security of its blockchain for all cryptocurrencies it’s important that the distribution of a coin or token is decentralized I.E evenly spread out because if a handful of whales hold most of the supply they can easily manipulate the price

Some would argue that there’s already an absence of decentralization at the coin or token layer with most cryptocurrencies including BTC and the sum evidence which suggests this is in fact the case check out my video about the Wyckoff method to find out more about that I digress

For coins or tokens that are used in voting for changes to a cryptocurrency Project’s blockchain or protocol centralization at the coin or token level means that a handful of token holders can easily monopolize major decisions about the project some of you might remember the controversial proposals for uni swap

That were tabled and passed by uni Wales in 2020 and 2021 and uni swap wasn’t the only crypto project that was put in this kind of Spotlight during that time for coins belonging to a proof-of-stake cryptocurrency blockchain if a handful of wallets hold most of that coin Supply

Then they pose a security threat to that cryptocurrencies blockchain I can’t think of a proof-of-state cryptocurrency that’s been corrupted in such a way but I know that many have come close and some like Solana actively monitor how much its largest validators are staking to make sure their blockchains remain secure

Note that decentralization at the coin or token layer is also extremely important for proof of work cryptocurrency coins because of the price manipulation factors I mentioned a few moments ago if too much of a proof of work coin Supply is being held by a handful of whales they could crash the

Price below the point where it would still be profitable for miners to process transactions on its blockchain the possibility that minor profits could be squeezed is one of the reasons why I’ve been keeping my eye on energy costs and you can find out how they could affect the crypto Market using the link

In the description anyways the third layer of decentralization in cryptocurrency is the infrastructure layer this refers to the different Technologies you use to interact with or access cryptocurrency blockchains although the first thing that comes to mind here for many is cryptocurrency wallets I would put centralized exchanges first in any cryptocurrencies

Infrastructure this is because it’s very difficult and sometimes impossible to get your hands on a coin or token without using a centralized exchange of some kind I know it sounds a bit paradoxical but for a long time centralized cryptocurrency exchanges were surprisingly decentralized this is because many of them didn’t have an

Official headquarters and sometimes even the company that ran the exchange didn’t even really exist it was just a series of subsidiaries registered in countries with little to no regulation sometimes these subsidiaries were established by different individuals or institutions and both the people who worked at these exchanges and the

Physical infrastructure which made them work was spread out around the world in mostly unknown locations this isn’t the case today as most cryptocurrency exchanges have been forced to register with regulators and impose kyc on their users now not saying that this is necessarily a bad thing but it is

Leading to centralization as Rogue exchanges are shut down the scary thing is that we’re starting to see something similar happen to crypto wallets notably the Wasabi wallet which recently announced that it would be making its mixing Services inaccessible to select wallets decentralization at the infrastructure layer has also been a pain point for

Some of the largest crypto projects the elephant in the room here being ethereum this is because many of ethereum’s applications rely on infuror for infrastructure to interact with the ethereum blockchain including the metamask browser extension wallet as a result many of ethereum services go offline whenever infuria has an outage

And though this has happened only twice in the last few years it continues to serve as a wake-up call to the ethereum community another big wake-up call has been infurora’s recent decision to begin blocking access to any services using its technology where the end user is living in a sanctioned country I

Actually discussed what this could mean for defy at the coin Bureau conference last weekend more about that in the description anyhow the fourth layer of decentralization in cryptocurrency is the blockchain layer again this is often the layer that’s being referred to when you hear or see anything related to decentralization in cryptocurrency

Similarly to the coin or token layer decentralization at the blockchain layer can look very different depending on the cryptocurrency in question in some cases the number of nodes doesn’t necessarily matter an excellent example here is algorand whose blockchain has thousands of participation nodes which participate in consensus however all transactions on

Algorand are processed by a smaller group of just 120 relay nodes most of which are run by the entities behind algorand and its affiliates some would argue that algorand is still technically decentralized because its relay nodes don’t participate in consensus but others would disagree it’s almost the exact same story with

Solana the Solana blockchain has over 1700 validators yet all transactions are processed by significantly smaller clusters of up to 150 validators if you think other cryptocurrencies are better think again almost every cryptocurrency uses centralized Cloud Computing Services like Amazon web services for their blockchain operations case in point decentralized exchange

Protocol dydx went down during the AWS outage last December and a handful of other cryptocurrencies were affected as well some crypto projects like near protocol took the AWS outage as a sign that they need to make sure all their validator nodes aren’t all relying on the same centralized infrastructure and others

Have gone as far as integrating with decentralized Cloud providers like a cache Network now if you watched my video about Mina protocol you might recall that another centralization Point that’s present at the blockchain layer for many crypto projects is the storage of their full transaction histories you could have a blockchain with

Thousands of validators leveraging all kinds of Computing Services but if only a handful of them have access to the full transaction history it’s hard to say that this blockchain is decentralized that’s because if anything happens to that handful of validator notes that are storing the full transaction history it could become

Possible to seriously manipulate transactions on that blockchain assuming it doesn’t collapse altogether when an issue inevitably arises while validators on some cryptocurrency blockchains store the full transaction histories this isn’t always the case come to think of it I’ve only come across a few crypto projects that have been transparent about how exactly their

Full transaction histories are being stored one of the few cryptocurrencies that makes this distinction is Bitcoin whose full nodes store its full transaction history there are currently around 15 000 Bitcoin nodes around the world and I believe this makes it the most decentralized at the blockchain layer the fifth and final layer of

Decentralization in cryptocurrency is what I will call the external layer as the name suggests the external layer is everything cryptocurrencies rely on that isn’t necessarily exclusive to cryptocurrency now this is where the definition of decentralization gets really messy because the external layer includes things like websites internet service

Providers and in some cases financial institutions as far as I know the website for almost every crypto project in existence is hosted on a centralized service this might not be a problem for most crypto projects but it is a problem for decentralized applications and other interactive web3 Technologies recall

That uni swap was forced to delist certain cryptocurrencies from the front end of its decks Last Summer this is why some D5 protocols like Ave have since migrated their front ends to decentralized storage solutions like the interplanetary file system or ipfs internet service providers are where things get interesting because so far

The extent of this effect has been limited to select countries Banning internet service providers from allowing their users to access cryptocurrency related websites even though this is extremely unlikely to happen elsewhere it’s been proven that it’s possible and in a worst case scenario we could see governments decree that isps stop serving cryptocurrency

Miners and validators luckily there are cryptocurrency projects like helium that are hoping to decentralize the internet itself using peer-to-peer signals on open source infrastructure more about that in the description now if you’re wondering where Banks fit into the external layer I’ll give you a hint de facto digital dollars stable

Coins like usdt usdc and busd have some of the largest market caps in cryptocurrency this is because there’s always demand for stable coins regardless of market conditions most of the trading volume in the crypto Market involves stable coins as well and that means they are one of the core

Technologies that make most of crypto possible in its current form this is why a stablecoin Crackdown is one of the biggest threats to the crypto industry and all Regulators would have to do is restrict access to the reserves backing the stable coins in circulation which are of course held by centralized financial institutions

As a matter of fact most of the reserves backing the usdc stablecoin are being custody by the one and only BlackRock and you can learn more about how it became the largest asset manager in the world using the link in the description and now for the moment you’ve all been

Waiting for and that’s which cryptocurrencies are the most decentralized so to quickly recap there are five layers of decentralization in cryptocurrency the developer layer the coin or token layer the infrastructure layer the blockchain layer and the external layer I’ll start by saying that there’s no crypto project that scores perfectly on

All five criteria but the top spot seems to belong to bitcoin this is because there are dozens of individuals and institutions building on bitcoin btc’s Supply is broadly distributed there’s no shortage of infrastructure available to interact with the Bitcoin blockchain and the Bitcoin blockchain has over 15 000 full nodes

The only thing Bitcoin is missing is true decentralization at the external layer but this is where every cryptocurrency fails and I suspect not everyone would agree that this even counts as a layer in any case according to a survey of various crypto experts by cointelegraph last November there aren’t any

Cryptocurrencies that come close to matching bitcoin’s overall decentralization ethereum and Monero seem to be the runners-up but as I discussed earlier ethereum’s decentralization still seems to be lacking on some layers as for Monero XMR is constantly at risk of getting delisted from centralized exchanges due to unreasonable crypto regulations

There’s also Litecoin and to some extent Dogecoin to consider but we all know these cryptocurrencies are also lacking decentralization at some layers to put it mildly by now you’ll have noticed that most of the more decentralized cryptocurrencies have been around for a while and many believe that It ultimately time that has

Allowed Bitcoin to decentralize so much what this means is that it might still be too soon to say what the most decentralized cryptocurrencies are but I have a feeling that cardano polka dot and possibly even Solana will be the next runners-up at this rate it looks like we will only

Find out for sure when The Regulators come around and given the exponential rate of crypto adoption it’s only a matter of time before they come a knocking you can learn more about just how much crypto adoption has been by watching my videos about Geminis and bitstamps crypto reports those will be in the

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