I am not sure how many people are falling for this inevitable outbreak of GAMFAM pseudocrypto development, however I am sure that most people are skeptical of whether or not they should trust these coins/tokens. There is a difference between the word “coin” and “token” when applied to cryptocurrencies, however for convenience and ease of read the term token will be used. Disclaimer: this whole article is the author’s opinion and is not meant as financial advice, nor to replace your own research, nor to endorse or not endorse any product mentioned or implied by this article! This is to make you think a bit more carefully about cryptocurrency and centralisation and decentralisation.
Decentralised Ledger Technology (DLT)
Very briefly Decentralised Ledger Technology (DLT) is another term for Blockchain technology. I think DLT is a better term because it includes hashgraphs, Lightening Network, IOTA’s Tangle, and COTI’s Trustchain. A DLT is very disruptive to the old, largely unchanged data based structure.
Decentralisation has many advantages. The security it offers from 51% hacks and other attacks might not be full-proof, but it does rival the internet. We often forget how many hacks the internet has had and continues to have to this day. So I think it is fair to assume that quality DLT systems offer secure data base solutions. Aside from security, there is transparency. For some companies transparency is a disadvantage for their competitive edge, however most DLT systems can be made more private and anonymous. There are programs, like Dandelion Protocol. COTI has an integrated anonymity feature that protects the KYC and AML information while making transactions private. So there are “ways around the transparency” to some extent, making the privacy element of DLT an advantage also. The most obvious and important advantages of DLT is its decentralised nature itself and immutability, which makes it impossible to delete the ledger, or part of it, because of the number of copies of the ledger.
Triple Accounting Innovation
Triple accounting is an innovation that DLT allows. When accounting started the single entry system was the first way of making ledgers. The double entry system took over as the accounting standard. Now the triple entry is possible. This provides yet another advantage to the DLT. This is truly revolutionary.
Cryptocurrency
For a cryptocurrency to be a cryptocurrency it has to be decentralised. Most solutions are centralised at some point. Wherever there is a centralised point, there is no cryptocurrency, but there could still be a DLT.
Centralisation and Decentralisation Systems and Systems Inbetween
Centralised data bases or ledger systems have advantages. A data base or ledger system is not better or worse solely because it is decentralised or not. With a continuum of systems, centralised and decentralised being the two extremes and the range in between, all options have different advantages and disadvantages. Therefore some businesses or organisations, governmental and otherwise, are more suited to centralised systems, others to decentralised systems, and yet others to some mixture of the two systems.
PseudoCryptocurrencies
Remember I told you that I am going to use the term token because of convenience. Well, the same need for expedience dictates the use of the word cryptocurrecy to refer to any DLT. I think it is crucial that we use the correct terms, or be clear what our terms are and how we are using them. This is really the point of this article. We have to call a spade a spade or a cryptocurrency a cryptocurrency. The tokens, such as JP Morgan, and others are centralised. They are specifically made by the company in order to transport funds and data at lower cost. Will any of these tokens become cryptocurrencies? At the moment they are being called cryptocurrencies, even though they are actually PseudoCryptocurrencies because they are not decentralised.
Conclusion
There are other aspects to this debate that need to be brought in, but the basic point is that all cryptocurrencies are not created equal when some are running on a decentralised system and others on a centralised system or something in between. Just be aware that advertising and marketing can be misleading. Do your own research and do not invest more than you can afford to lose.
