Decentralization & Its Purpose

Bitcoin was created as an answer to the outcry of the 2007-2008 financial crisis caused by the subprime mortgage problem. The problem was caused by several select organizations (banks and the related financial organizations) which were taking advantage of “smaller” people and putting the profit in their own pockets.

Bitcoin was created with decentralization at its core. Why? Because Bitcoin was created to bring the control of money back to our hands, the majority. Bitcoin was not supposed to be controlled by a certain government or a certain select group, or at worst, a certain individual. Thus it was created as distributed “money,” decentralization at its core. It’s an open source project and distributed to all people around the world using mining technology.

Current fall of Bitcoin’s price is caused by single entity

However, what we can see from the news right now is the opposite of decentralization. As reported by CoinTelegraph, one guy, the Mt. Gox trustee, sent Bitcoin’s price to its low—although it can be considered a consortium fund of the last Mt. Gox case, not only a single human being. What makes it worse, he was only releasing around 9% of his fund. He still has 91% and can repeat this incident ten more times with the same scale, or one more time with ten times the scale. The power of one man/one consortium, could single-handedly move the price of BTC to the bottom. This is the opposite of decentralization, this is centralization.

Why is this happening?

Is Bitcoin not decentralized enough? Actually, it’s not. The problem, if I may guess, would be with the hodlers. Bitcoin holders are still the majority, and it’s distributed randomly. However, holders don’t help in this kind of situation. Why? Because they are holding, it means their “power” is rendered invalid on the floating market. The market is the accumulation of all the buying and selling at the exchanges around the world. Those who are holding did not put their Bitcoin on the market. The ones on the market are the whales and other smaller players, newcomers to the crypto world who are easily swayed. Thus, the big portion of Bitcoins are not making a defense barrier for Bitcoin price movement.

What can we do about it?

Well, basically, there is nothing we can do. This will happen on the open market. What we need to understand is that this condition has and will happen as a normal market movement. Do not spread or give in to the F.U.D (fear, uncertainty, doubt). Stay calm.

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