Hello Patrick. It’s been a while, but this one needs the reality check big time. Let’s go through it. Or, at least, the really wrong stuff.
“Yet for all the flak and media attention that the hacking of cryptocurrency exchanges draws, breaches at big financial institutions, like the most recent one at Capital One, are statistically more common.Yet for all the flak and media attention that the hacking of cryptocurrency exchanges draws, breaches at big financial institutions, like the most recent one at Capital One, are statistically more common.”
I can promise that you can provide no such remotely credible statistic. I would like, however, to see what you have. It’s unusually careless of you to say such thing, so maybe you are just taking something someone in the space gave you without validating it. Not good.
The next problem is your statement that “blockchain technology already provides a ready solution” to hacking by being “decentralized”. You then go on to relativize the pump/dump and front-running as less of a problem than the hacking attacks on the banks.
Leaving aside the problem that the hacking of personal information from banks is not in any way comparable the problem of front-running, the real issue might be: if there’s a loss of money, the banks (and other such institutions) are regulated in a way that provides compensation to those affected. A decentralized “solution” could by definition never provide such a thing. It would have to operate perfectly forever. Not likely.
Which brings us to “decentralization”. The first problem with it is scalability. I realize you are not technical and therefore do not follow this issue, but it is central (no pun intended) to DLT’s ever being useful. Blockchains are by their nature non-scalable. HotStuff/Libra technologies (and one I’m involved with, Bitconch) along with things like Bloxroute are moving this along, but still present problems. One of these, inherent to the notion of “decentralization”, is that you need incentives for people to run the nodes. These are usually the coins. However, this raises all the other issues of mining and continually increasing valuations to keep the DLT running and supported by adequate numbers of nodes.
And this is, in some ways, just a start to other issues related to “decentralization”. WRT your article, one thing always left unsaid is what happens in the event of a hacking involving theft of coin? We have seen from the history of the space that there is no route to recovery or, at best, a very meager one.
The biggest problem with this space is the fact that most participants barely understand the real issues that keep DLTs a continually disappointing technology (compared to pretty much all other “innovations”) and keep crypto as a platform nearly only useful for gamblers, their proxies and various folks in need of hiding their financial dealings.
