3 ms·

A few points: - some pegged currencies are still decentralised (e.g. MakerDAO) - they rely solely on smart contracts - even with a centralised peg, you have to

A few points: - some pegged currencies are still decentralised (e.g. MakerDAO) - they rely solely on smart contracts - even with a centralised peg, you have to trust an organisation to keep the collateral, but the contract can state that anyone can move the funds around, so the managing organisation cannot just remove funds at will Also, compared to a centralised database, you have an interoperability aspect - if it's just an organisation keeping everyone's balances, it's hard to make those balances interact with the rest of the blockchain ecosystem (e.g. how do you participate in an ICO, if the crypto balances are stored in one system, and token balances are stored in another? implement APIs for every single one of them?)

wz1000 7y ago
> Also, compared to a centralised database, you have an interoperability aspect - if it's just an organisation keeping everyone's balances, it's hard to make those balances interact with the rest of the blockchain ecosystem (e.g. how do you participate in an ICO, if the crypto balances are stored in one system, and token balances are stored in another? implement APIs for every single one of them?) I'm pretty sure its much easier to make a single request to a single well defined server, as opposed to connecting with a swarm of peers, downloading the entire blockchain, verifying it, and computing your balance by traversing the entire history. Its not like there is some universal "blockchain API" that computers come from the factory ready to understand. Specialised code has to be written to deal with every new cryptocurrency.
lowracle 7y ago
MakerDAO is not decentralised, simply because the ETH/USD price feed isn't decentralised. If the servers providing the feed get hacked, say goodbye to your ETH collateral.
- mbrock 7y ago
  Stakeholder vote elects a smart contract that takes the median of dozens of price feeds controlled by various independent parties, so it's decentralized to some extent, and decentralization is not a clear-cut binary attribute.
- momentmaker 7y ago
  They might integrate with ChainLink, a decentralized oracle network: https://chain.link https://chain.link
  - kbody 7y ago
    That's just "decentralization" by obscurity. (emphasis on the quotes) That aside, the main problem isn't centralization but rather the trust level. The point is to not have to trust someone isn't serving you the false data. Contracts must be created and ran only when the data can be cryptographically verified to be true. There are no trustless oracles if any of the required data are outside of the settlement system (e.x. blockchain). Even when the data are inside, you still have cases of collusion that make things problematic. People are trying to sell something that's close to impossible. Especially when they try to add infinite flexibility on it. Even with the currently low stakes there have been incidents of "oracles" getting compromised. There are several strategies to try and camouflage a centralized oracle to a faux decentralized entity but eventually if stakes get high enough, your entity will become a target and it'll become once again obvious what's happening.
xchaotic 7y ago
I'm sorry but you're just muddying the water here - Facebook's currency is centralised by both Facebook and peg to USD and there's no need for interoperability at the currency level - Facebook will provide the APIs for working with the currency. As envisioned by Facebook, the whole 'crypto' aspect of it is pointless.
granaldo 7y ago
they are struggling to keep the peg. indeed how much magic central banks are using to maintain a stable currency
Hermel 7y ago
You are exactly right and it’s astonishing how most of the commenters here are confident about their views despite not getting it. To provide another example besides the ICO: you can use a pegged blockchain-based coin to trade on Uniswap or any other decentralized exchange. This would not work with the database based coin. The idea is not to gain efficiency, the idea is to gain interoperability with the blockchain ecosystem.

wz1000 7y ago

> Also, compared to a centralised database, you have an interoperability aspect - if it's just an organisation keeping everyone's balances, it's hard to make those balances interact with the rest of the blockchain ecosystem (e.g. how do you participate in an ICO, if the crypto balances are stored in one system, and token balances are stored in another? implement APIs for every single one of them?) I'm pretty sure its much easier to make a single request to a single well defined server, as opposed to connecting with a swarm of peers, downloading the entire blockchain, verifying it, and computing your balance by traversing the entire history. Its not like there is some universal "blockchain API" that computers come from the factory ready to understand. Specialised code has to be written to deal with every new cryptocurrency.

lowracle 7y ago

MakerDAO is not decentralised, simply because the ETH/USD price feed isn't decentralised. If the servers providing the feed get hacked, say goodbye to your ETH collateral.

mbrock 7y ago
Stakeholder vote elects a smart contract that takes the median of dozens of price feeds controlled by various independent parties, so it's decentralized to some extent, and decentralization is not a clear-cut binary attribute.
momentmaker 7y ago
They might integrate with ChainLink, a decentralized oracle network: https://chain.link https://chain.link
- kbody 7y ago
  That's just "decentralization" by obscurity. (emphasis on the quotes) That aside, the main problem isn't centralization but rather the trust level. The point is to not have to trust someone isn't serving you the false data. Contracts must be created and ran only when the data can be cryptographically verified to be true. There are no trustless oracles if any of the required data are outside of the settlement system (e.x. blockchain). Even when the data are inside, you still have cases of collusion that make things problematic. People are trying to sell something that's close to impossible. Especially when they try to add infinite flexibility on it. Even with the currently low stakes there have been incidents of "oracles" getting compromised. There are several strategies to try and camouflage a centralized oracle to a faux decentralized entity but eventually if stakes get high enough, your entity will become a target and it'll become once again obvious what's happening.

xchaotic 7y ago

I'm sorry but you're just muddying the water here - Facebook's currency is centralised by both Facebook and peg to USD and there's no need for interoperability at the currency level - Facebook will provide the APIs for working with the currency. As envisioned by Facebook, the whole 'crypto' aspect of it is pointless.

granaldo 7y ago

they are struggling to keep the peg. indeed how much magic central banks are using to maintain a stable currency

Hermel 7y ago

You are exactly right and it’s astonishing how most of the commenters here are confident about their views despite not getting it. To provide another example besides the ICO: you can use a pegged blockchain-based coin to trade on Uniswap or any other decentralized exchange. This would not work with the database based coin. The idea is not to gain efficiency, the idea is to gain interoperability with the blockchain ecosystem.