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Cardano’s Charles Hoskinson on countering centralization in ADA tokens

Priyamvada Singh

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Cardano [ADA] Charles Hoskinson on countering centralization in ADA tokens
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On 19th July, Charles Hoskinson of IOHK delivered a talk at the Cardano Blockchain Meetup, post the World Blockchain Summit in Singapore. He introduced the community with his personal views on multiple cryptocurrency related topics. Here, the CEO answers an extremely significant question of how Cardano can avoid the centralization of its ADA token.

Cardano uses a Proof-of-Stake [PoS] protocol called Ouroboros, which is used to legitimize transactions on a ledger. A question was asked about ‘how this system can prevent centralization whilst the existence of whales and billionaires in the industry who claim a majority and large stake pools’.

To this, Charles drew a comparison between the mentioned scenario and a plutocracy and said:

“So you have a plutocracy and at the end of the day, you have to have somebody be in control of the system and so the first question you ask is… Do the custodians of the system care about the system thriving growing and surviving or are they mercenaries?”

He further explained the great social experiment of the Roman Empire. Back in the history, the empire was fearsome because of its powerful military that was carefully designed and balanced by ‘just the right incentives’ for the preservation of the state. Hoskinson continued to explain:

 “Then somewhere along the way, the dynamics changed and the soldiers went from citizens who were really vested with the system to mercenaries who really didn’t give a shit about the Roman Empire. It was just how much money they could make. So the problem with mercenaries is they’re not loyal and when facts and circumstances changed they could be on the other side. In fact it’s exactly what ended up happening”

According to Charles, where a group of people is given control of the system, the ‘why should they care’ for the system factor should be carefully determined. Currently, the answer in the cryptocurrency space is anything synonymous with Bitcoin. Here, he cited:

“…so right now we have things like Bitcoin with the proof-of-work. Why do they care is because we pay them to care.”

Furthermore, the people of this system get their power from ‘meta’ or outside of the system, which is the mining hardware. The crypto-expert then explained the issues regarding Proof-of-Work [PoW]. In PoW, the mining hardware can be used on more than one cryptocurrency, depending on the miner’s choice. If these cryptocurrencies have almost the same values and a miner gets enough money, they can overtake the other chain.

Charles supposed the chains as A and B, and revealed the problem in detail:



“Now let’s introduce another factor called derivatives. So what if you could short sell that chain [A]. What if you could get options to crash that chain. So then you have a perverse incentive to conduct what’s called a Goldfinger attack. So what you do is you’d say I’m going to short. I’m going to double spend and destroy [A]. I’m going to basically shut that chain down.”

He added that in this way, the miner trying to manipulate the market will make a windfall profit. Moreover, they are also possessing the incentive to use the same miners and the same technology that kept the chain originally secure to destroy one of the two chains.

On the other hand, the PoS protocol does not allow one to manipulate the system as one could in PoW. This is because one has to first buy the tokens to have any control over the system. Ironically, in that process of attempting to control the system, one is actually destroying the tokens for that same system. According to Charles:

“It’s like saying you can make good money by burning your own house down.”





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Priyamvada is a full-time journalist at AMBCrypto. A graduate in Journalism & Communication from Manipal University, she believes blockchain technology to be a revolutionary tool in advancing the future. Currently, she holds no value in cryptocurrencies.

Bitcoin

John McAfee says he will reveal Nakamoto’s identity, Coinbase expands to 11 countries, and more

Priya

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John McAfee says he will reveal Nakamoto's identity, Coinbase expands to 11 countries, and more
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Daily Crypto News – April 18

1. John McAfee on Satoshi Nakamoto: The Founder of McAfee Associates stated that he would narrow down on the identity of Satoshi Nakamoto until he reveals Satoshi himself, otherwise he would reveal his identity to the crypto community. He also spoke about how he knows about Satoshi, to read about it, click here!

2. Coinbase expands its services to more countries: The leading exchange platform announced that it expanding its services to 11 more countries, which includes India, South Korea, and New Zealand. People in these countries can avail services provided on Coinbase.com, Coinbase Pro and its app on iOS and Android.

To know more about the countries Coinbase has expanded to, click here!

3. Craig Wright says the crypto-community want to silence him: Craig Wright, the self-proclaimed Satoshi Nakamoto, stated that the majority of the community was against him as they “desire to silence” him because they see someone who would bring an end to scams and pumps and dumps.

He also spoke about the next steps he would be taking in terms of the legal action concerning his defamation case. To read about it, click here!



4. Binance “marks the birth of a new genesis block”: The largest cryptocurrency exchange in terms of trade volume announced the launch of its Decentralized Exchange, and also stated that the mainnet swap would take place on 23 April 2019.

To read more about Binance DEX, click here!





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