Is the crypto community truly moving towards decentralization? Or is it just a pipe dream?

Satoshi succeeded where Cypherpunks failed [or did they?], he made it so that we would be free from the clutches of centralization and move towards something better – decentralization. The Ethos of Bitcoin or its underlying technology was to move away from centralization and censorship and towards decentralization, where transactions wouldn’t be censored, and people would have financial freedom. The birth of Bitcoin gave rise to a community with similar ideas about decentralization and created the foundation of this community, but does the community still have those values?

The following incidents in the community raise questions on whether we are going back to square one.

Binance Leads The Way

The crypto-community on Twitter faced a crossroad due to Craig Wright and Calving Ayre’s campaign of lawsuits. The campaign caused a lot of heat and led exchanges to delist Bitcoin SV [BSV]. Binance’s CEO, Changpeng Zhao aka CZ was vocal about his views on the matter as he tweeted:

This tweet by CZ was followed by the actual delisting of BSV from Binance, the world’s largest crypto-exchange. Other exchanges like Shapeshift, Kraken, BitForex, Bitrue, Bittylicious, among others, followed suit. Yes, Craig Wright’s actions were questionable, but was the delisting of BSV justified in the cryptocurrency realm?

Yes, there was also the fact that most of the community wanted the exchanges to delist it, but looking at the matter from a “decentralized” perspective, does this move raise questions on censorship? How is this not similar to banks and financial institutions which censor transactions and even people? The difference between those institutions and “us” was that we were moving towards decentralization. But are we?

BitMEX Fiasco

Not too long ago, BitMEX, the exchange famous for its Bitcoin Perpetual contracts, was accused of allegedly trading against their customers. Considering the massive contribution of BitMEX to Bitcoin’s liquidity, it was an issue when the former faced this allegation. Hasu’s Medium Blog “A storm is brewing over the largest Bitcoin exchange” outlines how there could be foul play at BitMEX. The blog explained how BitMEX allegedly hid its desk engaged in market making [BitMEX came clear that it had a market-making desk].

The blog stated:

“While BitMEX admits the desk is a for-profit operation, they claim that its profit doesn’t come from trading… According to them, the desks’ goal is to be breakeven… and that the desk instead makes money from a service fee paid by the main business… Unfortunately, there is no way for the customers to verify the desk’s business model, as BitMEX has never opened up to an external audit of their business structure.”

In addition, the blog also questioned whether the desk wasn’t being held to the same “rules” as everyone and whether it created an unfair advantage over the customers. Moreover, the blog highlighted an important implication that the desk might have access to privileged information about the liquidation points which would help the desk move markets by placing a large buy or sell order to trigger “chain of liquidations”. However, BitMEX explicitly denied providing privileged information to the desk.

Binance’s “Decentralized” Exchange and Binance Chain

Binance announced that they would be launching the mainnet of their new public blockchain “Binance Chain”, where users can migrate their ERC20 tokens to Binance Chain. Moreover, Binance DEX will be powered by “Binance Chain” and will be a decentralized exchange, but according to an individual developer and Bitcoin enthusiast, the source code or binaries for both, the Binance DEX and Binance Chain, has not been released yet.

To top it all off, The Block’s Larry Cermark tweeted how Binance had silently changed their whitepaper to remove a clause about the firm using 20% of its profits to buy back BNB.

So Are We Truly Decentralized?

Although the crypto community talks highly about “decentralization”,  its “ethos” and how Bitcoin is moving towards being a “sovereign currency” and other cryptocurrencies are “censorship-resistant”, it still hasn’t truly achieved it, considering the power that exchanges have to act like “kingmakers”. However, if the above-mentioned “incidents” recur, are we truly decentralized?

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