The Dangers of Centralization: Analyzing the Risks of Base Blockchain
Centralized blockchains have become a popular trend in the cryptocurrency industry, especially with the rise of DeFi and other blockchain-based applications. Ripple’s blockchain, Polygon Matic, Binance Smart Chain, and Optimism are just a few of the available centralized blockchains to choose from. Some of these are Ethereum Virtual Machines (EVM), and some are not. These blockchain platforms are designed to be more scalable and developer-friendly, but they come with significant drawbacks. Centralized blockchains rely on a centralized entity to operate, which makes them vulnerable to a wide range of security threats.
One such blockchain platform is brand new. It’s called Base, a secure, low-cost, and developer-friendly Ethereum L2 built to bring the next billion users to web3. Base is incubated within Coinbase and plans to progressively decentralize in the years ahead. But don’t hold your breath for that promise. Likely, their definition of decentralization enables Coinbase to continue to have control of all of the nodes in some way. Base requires KYC, which means that users have to provide personal information to use the platform. This requirement goes against the ethos of blockchain, which is supposed to be decentralized and anonymous.
It’s important to note that the requirement of KYC on the Base blockchain could potentially dox your MetaMask wallet. KYC processes typically require users to provide personal identification documents and other sensitive information, such as their name, address, and date of birth. This information is then linked to your wallet address on the blockchain, making it possible for anyone to potentially trace your transactions and track your activity on the network. This goes against the core principles of decentralized blockchains, which prioritize anonymity and privacy for their users. By requiring KYC, Base may inadvertently undermine the trust of its users and discourage participation from those who prioritize privacy and security. All it takes is one successful hacker or one court case and you can lose everything.
The possibility of framing innocent users on such a blockchain is quite easy to imagine. Because KYC processes typically require users to provide personal information, such as their name, address, government ID, and Social Security number, it is possible for someone to create a fraudulent account using someone else’s information. In addition, if a hacker gains access to the user’s personal information and/or their seed phrase, they could potentially use this information to make fraudulent transactions on the user’s behalf, framing them for criminal activity. This is a major concern for many users who prioritize privacy and security, and it highlights the need for decentralized, trustless systems that do not rely on central authorities to manage user information. By requiring KYC, Base opens up its users to potential vulnerabilities and risks, which will likely only be realized after much damage has been done.
In contrast, decentralized EVM-based blockchains like Ethereum have a significant advantage when it comes to security and censorship resistance. These blockchains are decentralized, which means that they are not controlled by a single entity. Instead, they are operated by a network of nodes, which makes them more resilient to hacking and censorship. Additionally, because these blockchains are decentralized, they are more anonymous and private, which aligns with the ethos of blockchain.
EVM-based blockchains are more developer-friendly. Ethereum has a large and active developer community, which means that there are more tools and resources available to developers who want to build on the platform. Additionally, because Ethereum is open-source, developers can contribute to the platform and improve it over time, which makes it more robust and secure. Of course, Coinbase claims the same is true of their blockchain but given that the creators of some smart contracts on Ethereum have been arrested for their work (Tornado Cash developer Alexey Pertsev for example), I have no reason to believe that Base can be a blockchain to drive innovation.
Centralized blockchains like Base have some advantages in terms of scalability and developer-friendliness, but they come with significant drawbacks like centralization, censorship, and security vulnerabilities. Decentralized EVM-based blockchains like Ethereum, on the other hand, are more secure, private, and developer-friendly. Ultimately, the choice between a centralized and decentralized blockchain platform depends on the user’s priorities and preferences. But if you choose Base, you are embracing a banker middle man. Crypto was invented to rid the world of that scum.
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