If you have been concerned about the latest encryption currency, you may have noticed a recent trend is a large traditional financial institutions to enter the field of general exciting prospect.
We saw a wave of traditional institutions to enter the field of encryption currency news, the subordinate from the New York stock exchange Bakkt launch managed and trading infrastructure, to the new bitcoin ETF approval, and large 401k retirement plan providers, such as fidelity (Fidelity encryption to counter offer. At the same time, like Coinbase was born in the era of encryption currency start-ups are more and more business to institutional investors, hope to be able to compete with these giants of Wall Street.
Although the positive impact of the prices of many lovers of money inflows and encryption of these funds related concepts exhibit blind passion, but it is important that we should see the analysis at this stage of the life cycle of the crypto currency actually represents what? And set it with the initial encryption currency is gradually deviated from the.
Why create encryption currency?
To analyze the changes of encryption currency pattern, we can divide the current state and decentralized digital currency first 3 main benefits link:
1. review of resistance.
2. no trust transaction.
3. verifiable history.
Encryption currency to be successful, the ultimate goal is to ensure that all of these core principles remain unchanged.
If you are from the point of view of these principles is happening in the world of akkts, Fidelitys and Coinbases, there will be a worrying trend.
– review of resistance
Review of resistance means that the ability of users and monetary interaction should never depend on a single point of failure potential. In bitcoin, the public node may collapse, but many nodes exist in order to quickly fill their positions. Because the work that decentralized consensus is not a single entity can review your trading ledger at.
Relying on a single company (actually return bank) as the change password money network window, a single point of failure will bring obvious. If the Coinbase.com hijacked or offline, depending on the provider users basically lost the dispersion of the bitcoin network access.
In addition, if the Coinbase or any centralized service providers found only one account found “suspicious” account in their standards, they can prevent or restrict user access to their accounts, or review whether the transaction is broadcast.
No trust transaction
In order to make the digital currency in essence is “no trust”, the user should not in order to secure transaction was required to trust the central custodian, coordinator, or even other users. In such bitcoin system, if the user holds his own private key, so they have complete ownership and the power of their own funds.
However, Bakkt, Fidelity and Coinbase, a common theme is that they promote to provide hosting services to users, allowing them to store encrypted currency, this is the premise draw further apart the lack of trust in financial transactions.
In providing hosting services, these companies seek centralized control and management of the large institutional clients and retail customers wallet (including coins, coins, etc. in order to facilitate the etheric) the name of the private key of the concept of fuzzy.
When the user through the encryption currency backed ETF or Fidelity 401k and bitcoin network transactions, they only have the encryption currency on paper, but not in reality, because the balance of mobile provider only in a centralized database. Broadly speaking, if you do not hold the private key will not hold a crypto currency.
In addition, as we saw in the Mt. Gox disaster, a large number of central management crypto currency offers a tempting target for hackers.
– verifiable history
Bitcoin initial success, largely due to the reaction of people alleged corruption behavior on 2008 led to the financial crisis. The blockchain commitment is through a publicly verifiable account, the user will be issued and the flow of money supply is full of confidence, even if the bank does not interfere with the secret of new economy. The use of bitcoin, users can safely verify the ledger balance and the state of current transaction history at any time.
But with a large number of digital money supply mechanism to start collection service provider vaults, trading more and more in the public area outside the chain, but the use of private database offline processing.
Although many companies extend this method to provide faster speed and lower transaction costs, but its side effect is to return to a state that most owners move between bitcoin or Ethernet square is not encrypted authentication.
What currency is encryption give up?
Institutions to enter the crypto currency challenge is that it undermines the technology to all 3 core value proposition provided.
If the user through a centralized web access to their account, their private key entirely to a trusted third party custody, and can not verify the ledger how the third party with their money, so they really use encryption currency?
In the debate on this point, many people think that the crypto currency provides a core interest, but there is no clear overview here. Crypto currency is a representative is not issued by the government or regulatory asset classes. Although objectively speaking, this is true, but we can draw a picture, some people might think that this picture is a digital currency issued by the government more terrible.
With the mechanism of encryption currency intervention continues to expand, which will undoubtedly attract bankers and companies that operate with billions of dollars in managed services issued its own cryptographic token, they can control these tokens, collect fees from in and around these token set monopoly.
In view of the crypto currency user group seems to be on the technology to centralized response, people are very worried, we are heading for a future Wall Street bankers not only controls a currency service, but also focus on the issue and management of the money itself.
Although this prediction sounds far fetched, but it has begun to issue a highly centralized “stable currency” cryptographic tokens, such as we have already discussed the company’s management USDC.
What will happen next?
Here is a good news, in addition to the spotlight, protocol level work continues to resist the dominant mechanism of encryption currency to a certain extent. From non Managed Extensions (such as Lightning or Plasma) plans to secure hardware wallet growing popularity, to support user privacy (such as Zcash and Grin) of the project, people want to fight back and stick to its encryption monetary base.
The real question is whether the industry will give priority to the resistance, rather than further concentration may market expansion and wealth attraction. Unfortunately, the situation may not be so. At the macro level, can not be denied these institutions are coming, but for a previously described as “the occupation of Wall Street” movement, now sadly crypto currency is similar to the one to be occupied by Wall Street’s own community.
The | ackson Palmer
The | Diar
Special statement: block chain industry ICO project investment risk is extremely high; Dragons and fishes jumbled together, all kinds of digital currency false ones, requiring the user to prudent investment. “True” chain is only responsible for the sharing of information, does not constitute any investment advice, users of all investment behavior has nothing to do with the station.