1 Level
6 Review
7 Karma
Review on BitShares by Huu Nghi
Centralization Compromises Privacy In order to have even the slightest bit of…
Centralization Compromises Privacy
In order to have even the slightest bit of privacy, the exchange functionality needs to be divided among hundreds of parties who are unlikely to collude to compromise identity. This is not economically practical today, because the exchange order book creates market incentives that naturally tend toward centralization in just a few exchanges with the vast majority of market share.
Pros
- Decentralization gives BitShares robustness against failure. When a centralized exchange is compromised, millions of dollars and thousands of users are impacted all at once. In a decentralized system, any attack or failure impacts only a single user and their funds. Users are in control of their own security, which can be much better than any centralized entity. There is a fixed cost associated with attempting to hack an exchange or an individual user. The difference is the size of the reward. If you place a multi-million dollar bounty on attacking a specific exchange, then you can expect a lot more effort to be put into compromising that exchange than would be put into attacking your individual account. Within a given company, multiple people usually have access to customer funds. You may have heard the expression, “Three can keep a secret if two are dead”. Currently, all centralized exchanges end up depending upon multiple people who share the responsibility of guarding the secret key that controls the funds. If any one of them is compromised, everyone’s funds are put at risk. Because of this, being individually responsible for maintaining your own secrets is the only safe option.
Cons
- I do not see any defects.
