Well…Can Blockchain be Centralized?

People wonder if blockchain can be centralized. The truth is that any Blockchain can be centralized. It depends on the underlying ledger system. Distributed ledger technologies (DLTs) cannot be centralized save for 51%. Single ledger systems and semi-distributed ledger technologies are significantly centralized.

 Can Blockchain be Centralized? 1

Blockchain be Centralizied

This notion has led to the confusion of two different terms. Distributed Ledger Technologies (DLTs) refers to technologies where each node has a separate record or ledger. 

Blockchain technology refers to the mechanism of storage. There are a few projects that are employing blockchain technology with possibly centralized ledgers.

In parts, they deploy blockchains that can be centrally controlled. It is what makes such blockchain systems to become centralized. 

China as an Example

One example of a partially centralized blockchain is the Chinese Blockchain Service Network (BSN). Last year at the Chinese politburo President Xi Jinping encouraged his countrymen to seize the opportunities that blockchain technology offered. It led to various projects within the Distributed Ledger Technology (DLT) space. 

China’s projects have gone so far as allowing for the integration of its Blockchain Service Network (BSN) with six other public blockchains. The Chinese have also gone ahead with their Central Bank Digital Currency (CBDC). The digital Yuan project has gathered steam. 

There are Concerns about Blockchain Centralization

It has led to concerns about the centralization of blockchain systems. There is also the issue of enterprise blockchains. Technology giants are developing their enterprise blockchains. These blockchains are issuing tokens. One major issue that these blockchains have is that there are very few nodes that exist on such enterprise blockchains. 

It is one reason for the centralization of enterprise blockchains. For a blockchain to be decentralized, ownership must be widely varied. This disparity between node owners is what gives the principle of trustlessness its basis. For a blockchain to be centralized, the majority of the node owners always have some form of commonality. 

Some of these forms of commonality include but aren’t limited to centralized authority, clustering of nodes, similar corporate interest, and so on. 

People Don’t Trust Blockchain Technology

It is why most people still distrust blockchain technology. For a blockchain to work effectively, it must obey the 51% rule. Most of the blockchains today haven’t followed this rule. The Bitcoin (BTC) blockchain has a majority of its miners and nodes based in China. 

It has led to concerns and accusations of control or influence by the Chinese government. Voting on the Bitcoin (BTC) blockchain has been hard to implement. So, the Bitcoin (BTC) blockchain remains relatively free from control for now. Other cryptocurrencies (the altcoins) are facing several challenges.

Ethereum (ETH) is robust at the moment. Challenges to its ETH 2.0 upgrade are coming. The shift from Proof-of-Work (PoW) to Proof-of-Stake (PoS) will come with its problems. The transition has been slower than expected. The popular thinking among many is that the proof-of-stake will have some form of centralization. 

In reality, this may not occur as the mechanism that determines the stakes requires no more than one-third of the total number of nodes. It ensures that no single transaction can “bully” the others. It also helps as this increases the distributed nature of the new blockchain. 

Advantages of Blockchain Technology

Blockchain technology confers several advantages over legacy systems. The problems that the technology faces have more to do with the human interactions with it than with the technology itself. 

In terms of security, blockchain technology and other DLTs have beaten others hands-down. Scalability is another distinct advantage that blockchain technology offers. Blockchains undergo upgrades in forks. Forking or upgrade implementations are faster to implement than those of legacy systems. 

Efficiency in data storage is also another plus for blockchain technology and other DLTs as opposed to legacy systems. The big problem lies with how users on a blockchain interact with it. 

In a perfect scenario, these individuals have nothing to do with each other except their involvement in the algorithmic process. They must fulfill the terms and conditions set forth else they disperse. It is the fundamental function of trustlessness. Trustless scenarios may not play out fully in centralized situations. The role of a central authority in a unitary sense or several authorities in a feudalistic sense plays out. 

 In theory, we have perfect blockchains as envisioned by the builders. On paper, they do what they say they do. In practice, we have Rulers and Feudal lords who try their best to govern these blockchains. 

Emotions Can Make Blockchains be Centralized

While DLTs advance into the future, human beings are still left with the same things that make us human: our emotions. 

We mostly do things because of how we feel. Subjective reasoning rules over logic. It is why people do things based on a “gut” feeling.

It is the very thing that can make a blockchain be centralized. 

 

 

 

About the author

Christopher is the Blockchain/DeFi Editor for E-Crypto News he also writes frequently about Crypto Gaming and Gambling. He is the author of the book "Profitable Cryptocurrency Gambling and Gaming: A Complete Guide." A content developer, Crypto-Enthusiast, and tech-savvy individual. He is also a Superstar Content Developer, Strategy Demigod, and Standup Guy.

Related Posts

E-Crypto News Executive Interviews



Automated trading with HaasBot Crypto Trading Bots

Crypto Scams

Millions in Cryptocurrency Stolen by Scammers in the Last Month According to Tenable Research
November 24, 2021
Behind The Scenes: How this Crypto Community Responded to + $50m Hack
October 18, 2021
Crypto Scams
Crypto Scams Still Persistent In 2021, SEC Warns About Red Flags To Watch
September 9, 2021
Poly Network
Here’s How Hackers Stole Over $600 million in the Poly Network Attack
August 12, 2021
The World’s Most Infamous Crypto Hacks and Scams
July 31, 2021

Blockchain/Cryptocurrency Questions and Answers

Crypto casinos
How Does Bitcoin Casino Work + 2021 Beginner’s Guide
November 8, 2021
Cryptocurrency
How to Buy and Sell Cryptocurrency
November 8, 2021
What Are Bitcoin Futures And How Will They Work In 2022?
November 4, 2021
Ethereum
The Unconventional Guide to Ethereum
October 28, 2021
ICo Presale
The Science Behind ICO Presales…
October 14, 2021


CryptoCurrencyUSDChange 1hChange 24hChange 7d
Bitcoin56,809 0.29 % 0.58 % 1.63 %
Ethereum4,554.3 0.92 % 1.52 % 4.57 %
Binance Coin621.50 1.02 % 0.25 % 4.72 %
Tether0.9986 0.03 % 0.08 % 0.23 %
Solana223.76 1.06 % 5.04 % 0.75 %
Cardano1.550 0.77 % 1.20 % 11.73 %
XRP0.9885 0.31 % 1.06 % 7.33 %
USD Coin1.000 0.14 % 0.20 % 0.17 %
Polkadot30.87 2.19 % 17.29 % 10.73 %
Dogecoin0.2215 0.68 % 1.42 % 7.23 %

bitcoin
Bitcoin (BTC) $ 56,703.00
ethereum
Ethereum (ETH) $ 4,552.24
binance-coin
Binance Coin (BNB) $ 621.20
tether
Tether (USDT) $ 0.999893
solana
Solana (SOL) $ 221.77
cardano
Cardano (ADA) $ 1.54
xrp
XRP (XRP) $ 0.982717
usd-coin
USD Coin (USDC) $ 0.998237
polkadot
Polkadot (DOT) $ 36.43
dogecoin
Dogecoin (DOGE) $ 0.206549