Cryptocurrencies have not come from heaven.
Cryptocurrencies are real-world fintech use cases using blockchains under a decentralized distributed computational network.
Cryptocurrencies have not arrived from heaven or a fictitious space in the blue sky.
All goodies in cryptocurrencies come from the real world.
The blockchain computational infrastructure of cryptocurrencies is developed using resources available within the real-world market.
Cryptocurrencies are fiat money digitized and decentralized on blockchains.
The first cryptocurrency, namely Bitcoin, came into existence in 2008.
The first transaction of Bitcoin is written on the blockchain, and the first block is known as the "genesis block."
The initial value of the digital assets associated with the Bitcoin blocks (say the "genesis block") comes from the real-world fiat currency.
The resources of fiat currency are digitized, encrypted, and written on distributed ledgers or cryptocurrency blockchains over a decentralized computational network.
What are the sources of funding for cryptocurrency projects?
From where do the cryptocurrency investments come into the decentralized distributed computational network?
Centralized financial institutions, such as centralized fiat banks and credit cards, provide financial services to the people for running daily living.
All cryptocurrency projects used centralized fiat resources to develop typical cryptocurrency networks.
The adopters of cryptocurrencies buy and invest in cryptocurrencies using their fiat bank accounts and or credit cards.
Are cryptocurrency projects truly decentralized as they are claimed to be?
A cryptocurrency network maintains decentralized ledgers spread inside the distributed computational network infrastructure.
However, it is not true that a cryptocurrency network can't be controlled at all.
Cryptocurrency networks are controlled using associated blockchains and consensus protocols, hashing power delegated to the cryptocurrency mining nodes, and different layers of distributed computational networks.
At some point, the decentralized power of cryptocurrencies may turn out to be trivial and vulnerable in the hands of the people running top mining nodes with more than ninety percent of the total hashing power.
A question arises: Is the decentralized power of cryptocurrencies trivial?
Complete decentralization and non-custodial fintech applications are impractical.
Anybody who understands cryptocurrency knows that "Cryptocurrencies and Custodial Wallets are Self-Contradictory."
Non-custodial cryptocurrency wallet systems may be used only for peer-to-peer transfer of digital assets, making cryptocurrency payments, and buying real-world items from online/offline merchants that adopt cryptocurrency payment features.
Centralized exchanges and their custodial cryptocurrency wallets have become a common practice for most expert cryptocurrency traders and enthusiasts.
Complete decentralization and non-custodial fintech applications are impractical for most real-world utilization.
Cryptocurrencies are decentralized use cases of blockchains under a distributed computational network.
The value inscribed inside the cryptocurrency ecosystem comes from traditional fiat economic resources.
Almost every cryptocurrency project has initially been built with inputs from traditional fiat currencies.
It seems that complete decentralization and non-custodial fintech utilities of cryptocurrencies are impractical.
Acknowledgment: This article is based on cross-discussions in the comment section of an article published a few days ago. I am grateful to Igor for his insightful comments and replies to comments on this article.
I am a researcher and contribute to the overlapping areas of STEAM (Science, Technology, Engineering, Arts, and Mathematics). I am an active user and promoter of GNU/Linux, Free and Open Source Software. I develop cybersecurity and information security solutions, specifically graphical authentication security.
The article was initially posted on ReadCash.
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Nov 28, 2023