Tuesday, January 16, 2018

Not Really Decentralized After All

Here are two more examples of the phenomenon that I've been writing about ever since Economies of Scale in Peer-to-Peer Networks more than three years ago, centralized systems built on decentralized infrastructure in ways that nullify the advantages of decentralization:


David. said...

"The Chinese government is reportedly planning to block its citizens’ access to centralised crypto trading platforms, via Bloomberg." reports Alexandra Scaggs at Aplhaville (my emphasis).

Anonymous said...

«In short, the illicit bitcoin ecosystem is centered around a small number of services that could be subject to scrutiny, regulation and co-option by law enforcement.»

This is really funny -- it is not easy to prove that they are not already controlled or infiltrated by one of various "law enforcement" or "security agencies", e.g. chinese or russian or indian or english etc., who have a long history of using corporate fronts.

Even very "official" financial institutions are surveillance mechanisms, for example SWIFT (from Damian McBride "Power Trip", 2013, page 124):

“In all the controversy in June 2013 over the US security services accessing people’s social media interactions through the PRISM system, it’s often forgotten that they had since 9/11 been accessing details of most of our financial transactions through the Society for Worldwide Interbank Financial Telecommunication system (SWIFT). [ ... ] But it also raised uncomfortable issues around America’s potential access to the private finances and spending records of prominent politicians and businesspeople around the world. All that made this a difficult secret for Gordon and the Treasury to be sitting on, even more so when Mervyn King, the Bank of England Governor, was informed. [ ... ] At that precise moment, Mervyn’s conscience told him that he had a duty to blow the gaff on the SWIFT deal, and tell the British people that the CIA had — with the Treasury’s connivance — been secretly accessing that financial data.”

David. said...

"In Tether’s case, the top 200 addresses out of Tether’s nearly 100K active addresses hold over 2B USDT. Yes, the top 0.2% owns over 90% of the token’s total supply. This is more than double BTC’s wealth concentration."

From a fascinating post by Alex Vikati entitled A Closer Look At Tether’s Blockchain. Its worth a visit for the graphs alone.

David. said...

Nic Carter tweets:

"The Palmer Principle: no matter the consensus mechanism, in practice, 51% of stake/mining power will be owned by at most 3 entities."

Check out the table in the tweet.