http://luvcrypto.com/top-centralized-cryptocurrencies/
A Trustless Environment is the foundation of the blockchain revolution. We trust that there will only be a maximum of 21 million Bitcoins ever. We trust that the witnesses are on the up-and-up. This trust and security comes from decentralization. When you are required to trust a centralized authority the blockchain is no better than fiat currency, because that centralized authority can change the rules whenever they want to.
Temporarily embarrassed Coins
There are many coins out there like NEM, NEO, IOTA, and Cardano that are centralized as a necessary evil. These teams have plans for decentralization later when they can be better supported by their respective communities. I'm not worried so much about this kind of centralization. I'm excited for all of these projects and I wish them the best. I may not personally invest in them until they become more decentralized, but whatever.
Judas Coin
Oh, I'm sorry, did I say Judas Coin? I meant Ripple, Tether, Cloud, etc. These coins are controlled by the foundation that created them. You have to trust the foundation in order to trust the currency. These coins aren't much better than the fiat currencies they are trying to replace.
For now, Ripple has something to prove. This makes them a bit more trustworthy. They are on the outside looking in; trying to merge with the establishment via huge bank and government deals. Regardless, they can print Ripple out of thin air whenever they want to. They answer to no one but themselves, just like the Federal Reserve. If they do become mainstream they'll simply be an extension of the previous system if left in their current centralized state.
Coins like Tether and Cloud are even worse. These coins are simply extensions of USD in the form of crypto. We have to trust that Goldman-Sachs isn't going to create money out of thin air that it can't pay back? No thanks. However, these USD extensions have great short term value. That's why it's so tempting to use them.
There are very big conveniences in not having to deal with fiat currency. When I swing trade on GDAX I swap from Litecoin to USD and back again, over and over. This attracts a lot of attention and has a lot of weird convoluted laws and regulations surrounding it. People who trade on Binance simply move to and from Tether. Fiat currency is indirectly cut out of the situation and no one has to worry about it.
Seriously though, am I reading this correctly? The 24 hour volume of Tether is way higher then the entire market cap! That is insane. This ranks Tether as the number 2 coins in terms of traded volume right under Bitcoin. Very impressive!
It's no secret that crypto is extremely volatile in these infant stages. Obviously, it's nice that a coin exists that's pegged to a stable asset. However, it would be much nicer if we didn't have to trust a centralized authority in the first place. This notion is obviously impossible, because even if Tether was totally decentralized and trustworthy the asset that it's backed on is not.
For now, we have to view these Judas coins as a necessary evil, but at the same time, we need to see them for what they are. Their value will be short lived. Once cryptocurrency is mainstream they'll be used to buy goods and services on the regular. At this point, the top market cap coins will no longer be volatile because there will be much more consensus about which coins are worth how much. The traded volume will also be much higher which will further keep price variance in check. At this point Tether and Cloud will be worthless. These coins bound to fiat currency will be liquidated. Everyone is going to ask for their money back. Are they going to get it?
Threat to the crypto web.
I often refer to cryptocurrency as a web. There is a lot of perceived competition in the space that doesn't exist. Everyone is helping everyone. If there is any competition with crypto it is mostly pointed toward fiat currency and the establishment (although I would argue that our unsustainable establishment will bring itself down).
These centralized coins are a threat to the entire space. People are dumb and crypto is complicated. A threat to one coin is a threat to all of them. If a centralized coin crashes and burns it looks bad for all of us. There isn't anything we can do about these problems. We should simply be aware of them and try to educate the masses to mitigate damages.
At the same time this is what makes the blockchain web so strong to begin with. A few coins could get fully decimated but the crypto web will still remain with all the functionality it had before a few strands got pulled out. The web is very robust and resilient.
It's hard to see which way this Trojan Horse is rolling. Are Ripple and Friends a Trojan Horse for fiat currency, or vice versa? If the cryptosphere can wrest more control over the establishment than the establishment can over crypto, I'll take that as a big win. Either way, hedge your bets and diversify your portfolio to avoid getting burned.
Coins becoming centralized
A lot of people understandably claim that even Bitcoin is centralized. When you see the majority of hashes coming out of China and mining pools in general, it's hard to disagree. You might say Steem is centralized because 37 whales control a huge percentage of inflation and witness votes. That may be so, but these new systems are still much better than the ones we have in place.
The evolution of this arena is constant. Already we're about to have EOS that has engaged in a year long ICO phase just for the purpose of decentralization. Soon™, coins will be coming out left and right that start out as universal basic income just to get distributed to as many people as possible. The progression of blockchain evolution and its trustless environment is still in it's infancy. There is still a long way to go before we have a fully developed ecosystem. Therefore, we need to be aware of the dangers we face along the way. Stay frosty, Steemians.
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