Is Bitcoin Becoming Centralized?

Many people want to buy, own, or trade Bitcoin because it’s decentralized. Satoshi Nakamoto created this virtual currency with decentralization as one of its primary draws. Essentially, decentralization makes this virtual currency trustworthy. A decentralized cryptocurrency is likely to survive longer. As such, it can allow miners to profit from it than less distributed and centralized cryptocurrencies. What’s more, a decentralized virtual currency is more stable.

In the crypto world, decentralization is a term that people throw around like an absolute. Ideally, a cryptocurrency system is either decentralized or not. However, this is not always the case. People thought decentralization is a spectrum with many aspects falling on different parts of the range.

The ability to spin up the node and participate in the network equally with other participants is a primary aspect of a peer-to-peer blockchain-based system. Some people argue that some cryptocurrencies are willing to sacrifice decentralization or security for speed. Although fast transactions are good, some people wonder whether efficiency is worth sacrificing personal information for when transacting with Bitcoin. What’s more, such a move could go against Bitcoin’s very nature.

Decentralized Finance

Bitcoin is a form of decentralized finance. And this was Satoshi’s primary goal when creating this virtual currency. Ideally, Bitcoin’s objective is to give people the power to control their finances. That’s why this digital currency doesn’t operate like a conventional financial system.

For instance, a standard bank can say “no” or “yes” when deciding to provide services to a customer. When opening a savings or even a checking account or looking for a new debit or credit card, the bank has the final say, not the customer.

Without a stellar credit or a good job history, the bank might not approve your request. Thus, you can go through the paperwork process and eventually go back to where you started. And your dilemma might not bring anything but more mayhem and misery.

However, Bitcoin won’t require your job history or credit score to determine whether you can use it. Getting Bitcoin is also a straightforward process because you can purchase and trade it using a web-based bitcoinsystem.app. Many crypto exchanges have a simple account opening process and low entry fees.

Once you have a crypto exchange account, you can buy Bitcoins and send them to your crypto wallet. After that, you can receive and move funds to and from your crypto wallet or a crypto exchange.

Bitcoin Centralization

Bitcoin centralization is contradictory to digital money’s essence. However, the rising popularity of digital money popularity was bound to affect the financial incumbents. Some financial institutions and experts were skeptical about Bitcoin and other virtual currencies. However, private banking and central institutions are now looking for ways to embrace the technology behind Bitcoin and other virtual currencies.

But this doesn’t necessarily mean that these institutions will favor Bitcoin. Instead, these institutions are pioneering their digital currencies to overcome the decentralized virtual currency risks. What’s more, some government organizations are participating in the crypto revolution. For instance, Ecuador was among the first countries to use a government-sponsored currency. Other countries keen to develop their centralized virtual currencies include Russia, Mexico, and the United States.

Final Thoughts

The increasing value and popularity of Bitcoin have sparked effects in different conventional and centralized institutions like governments and banks. What’s more, some centralized crypto exchanges want to become cryptocurrency banks. And this indicates that an eventual merger of the conventional banking system and cryptocurrencies could play out. Central banks and governments could use blockchain, Bitcoin’s underlying technology, to redesign the inefficient and antiquated global financial system. While centralization could be a good thing, uninformed guesswork and knee-jerk regulations could threaten the growth of Bitcoin and other virtual currencies.