The Worst Year in Cryptocurrency History: A Decentralization Solution

According to reports, Erik Voorhees, the founder of ShapeShift, a decentralized trading platform, stated on DC Blockchain that in terms of negative news, the past year was the “worst” year in the history of encryption, but most of the problems were caused by the underlying technology of centralized intermediaries rather than cryptocurrencies.

Founder of ShapeShift: Centralized intermediaries are the cause of encryption failure in 2022

Introduction

The year 2018 was a tough year for the cryptocurrency market. It experienced a significant market downturn, which caused a loss of $700 billion in less than a year. This year was also filled with negativity and bad press, including theft, hacks, and scams. According to Erik Voorhees, the founder of ShapeShift, last year was the worst year in the history of cryptocurrency. In this article, we will discuss why Erik Voorhees believes the past year was the worst, the causes of the negativity, and how decentralization can solve the problem.

Why Erik Voorhees Calls Last Year The Worst Year

Erik Voorhees, in his statement on DC Blockchain, explained that last year was the worst year due to the negative events that occurred. Among them include exchanges being hacked, thefts and exit scams, and the fall in the value of cryptocurrencies. These events triggered the media to parade every mishap as another fatal blow to the cryptocurrency market. This resulted in the loss of interest from investors and regulators.

The Underlying Problems of Centralized Intermediaries

Most of the negativity was as a result of the underlying centralized intermediaries’ technology, such as custodians, exchanges, and wallets. The centralized nature of these platforms makes them vulnerable to hacks, frauds, and other malpractices. This is due to the central point of failure of these systems. When there is a security breach, the culprits have access to the entire system, and frequently the funds are never recovered. The most widely publicized example of such an event was the Mt. Gox hack.

How Decentralization Can Solve the Negativity

Decentralization is the solution to the problems of centralized intermediaries. When a system is decentralized, it means that it does not rely on a central point of authority or failure. Instead, the system is run by the collective efforts of all the parties involved. This makes it almost impossible for cybercriminals to hack into the system. To hack into such a system, the attacker would have to take control of more than 51% of the nodes in the network, and this is almost impossible.

Advantages of Decentralization

There are many advantages to decentralization. First, it is almost impossible to hack the system when it is decentralized, as we have mentioned above. Secondly, there is no central authority that can manipulate the system. This reduces the likelihood of fraud or malpractice. Thirdly, transactions are processed at a much faster speed. This is because the collective efforts of all the parties involved in the system make it more efficient.

Examples of Decentralized Systems

The most popular decentralized system is Bitcoin. Bitcoin is run by a network of computers around the world. Each computer in the network has a copy of the Bitcoin software, which means that it is almost impossible for anyone to have control over the system. Another example of a decentralized system is the Ethereum network. Ethereum is a platform that is used to create smart contracts.

Conclusion

Last year was a tough one in the world of cryptocurrency, with many negative events being highlighted in the media. However, we have seen that most of the negativity was because of the centralized nature of the intermediaries involved in the cryptocurrency industry. Recognizing this issue, decentralization can offer a solution to this problem.

FAQs

1. Is it safe to store cryptocurrencies in centralized exchanges?
It is not always safe to store cryptocurrencies in centralized exchanges because they are prone to hacks and fraud. A better option would be to use decentralized exchanges that allow you to control your digital assets.
2. Can decentralization provide a solution to fraud in the cryptocurrency industry?
Yes, decentralization can make it almost impossible for fraud to occur in the cryptocurrency industry, as it eliminates the central point of failure that is commonly exploited by fraudsters.
3. What are the other advantages of decentralization?
Decentralization makes transactions faster and reduces the likelihood of fraud and malpractice.