In centralised cryptocurrencies, a single authority oversees making decisions on the development of the currency. The success or failure of centralised cryptocurrencies is entirely its fault. The company oversees the operation of centralised cryptocurrencies since they offer security, servers, collect feedback, make certain important choices regarding centralised cryptocurrencies, etc. If you decide to invest in cryptocurrency you have to know more the details of bitcoin mining and to know how it works.
It is widely believed that no one has control over the Blockchain network, but the organisations responsible for maintaining the centralised cryptocurrencies have the power to alter the blockchain or make decisions regarding those centralised cryptocurrencies that are in their best interests. In fact, at one point, the entire Blockchain network comprised seventy percent of mining pools, which was a major cause for concern.
Examples of centralised cryptocurrencies
Tether, one of the top five assets, and USDC, one of the top fifteen assets, are perhaps the best examples of centralised cryptocurrencies. These two stablecoins are the largest in terms of market cap and trade volume, and they are both governed centrally. It implies that they can freeze accounts and transactions for USDC and Tether.
Tether has frequently responded to law enforcement requests and frozen transactions and accounts in accordance with the law. While this may give you some peace of mind if you are concerned about a breach, it also implies that there is nothing you can do to prevent them from stopping you from transmitting your money.
Below are a few examples of centralised cryptocurrencies:
1. Ripple (XRP)
Ripple is a distinctive cryptocurrency that cannot be mined and used for exchange rather than wealth storage. It was intended to make cross-border money transactions easy, faster, and less expensive. The foundation of Ripple is a shared public database, whose integrity is guaranteed by a consensus mechanism between the validating servers. Anyone can own one of those validating servers, including people and banks.
Ripple Labs has complete control over the disbursement. They decide how much of XRP's reserves are released into circulation each month. Many are uneasy about the significant number of tokens that Brad Garlinghouse and Chris Larson, the executive team behind Ripple, own because they might easily impact the market if they sell their holdings. However, to minimise their holdings and raise money, the team has set aside time in the upcoming to transfer the pre-mined assets to investors.
The creation and use of decentralised applications (dapps) as well as accessibility to smart contract functionalities are all possible on the blockchain-based platform called EOS.IO. Thanks to the usage of the consensus over events method, EOS aims to become a network with the ability to handle millions of transactions in a second.
The asset is having trouble making progress due to a lack of development, low engagement, and a variety of other problems. The fact that only twenty-one nodes can control the entire network at once has not helped the situation. In addition, the same twenty-one nodes are generally always elected. Owing to its network architecture, EOS serves as the best illustration of a centralised cryptocurrency.
The governance processes have a significant impact on NEO's centralization issue. Since its launch, the blockchain, also referred to as the Ethereum of China, has risen the ranks and is currently ranked 16 on CoinMarketCap.
The seven static nodes that make up the NEO network were selected by the NEO Foundation, and if any one of them goes down, the entire blockchain collapses.
The centralised cryptocurrencies come with a lot of benefits as well. One seems to obtain a sense of reliability and openness because a centralised authority is responsible for the success or failure of the centralised coins. Major scalability and security challenges that arose with the growth of the bitcoin industry have also been seen to be resolved by these centrally controlled cryptocurrencies. A cryptocurrency can be classified as centralised in a variety of ways. It is true that the original design of cryptocurrencies was based on the decentralised ethos, and any deviations that depart from this ethos will be seen adversely by the community.
A centralised solution has advantages in terms of performance, scalability, and stability. Although they merit careful examination, the inclusion and involvement of the community is ultimately a crucial feature that cryptocurrencies and blockchain technology offer.