Why crypto-currencies will not deprecate central banks

This was the original promise of Bitcoin — completely decentralized monetary system with no borders, and many people are still believers, but it will not happen.

And the reason is not related to conspiracy theories, like the central banks will spend billions to prevent this outcome, neither is the low transaction rates and the transaction fees. The reason is more fundamental, and is very simple — the flow of the money is not symmetrical.

In every transaction a small amount of crypto-currency is send to the miner as fees for his/her job, and this is fair, but exactly this is the problem. Miners are not equally distributed, they are consolidated in big farms. Also most of the crypto-currencies have finite number of tokens that will be generated. So as result of this two facts, is simple to deduce that over time, a huge amount of “capital” will be in the wallets of couple of miners. And they will become the “central bank” for this crypto-currency.

This is a natural process that cannot be avoided, unless big miners start putting there profit back in circulation, but every one of you know what HODL is. They have no incentive to put them in circullation, because if they HODL enough and continue to collect more and more from fees, then they will be able to control the price, dictate the evolution of this crypto-currency and many more.

Central banks are known, and there decisions, in general case, are aligned with the political activities in the country where they operate, but this new “central banks” will be controlled by anonymous individuals or organizations, and there motives for doing something will not be clear.

Is there a solution for this? Yes, there is, and if you are interested I may write a post going in more details, but for now, with current crypto-currency this is the sad truth — a system designed to remove centralization is bring it back as side effect.