Centralization is dangerous

People have bad habits because they use traditional banking. Therefore, they do not need to own their money and entrust it to banks. People believe that when they need money they can use it through credit cards or internet banking. In most cases, this works well. The problem is that people apply the same pattern of behavior to cryptocurrencies. They trust centralized exchanges to own the coins if they have them in their account. People assume that the legal system will protect their cryptocurrency wealth in a similar way that it would protect them in the case of fiat money. There are several problems with this thinking.

Centralization offers people convenient and easy-to-use services. However, this is probably the only advantage. Everything else tends to be disadvantageous for users. Centralized services represent a single point of failure. Remember when Facebook stopped working for a few hours? People basically couldn’t communicate with their environment. Exactly the same thing can happen with your money. You don’t have to have it available when you need it. Many exchanges may not be as well protected as banks. Hackers can attack them and steal cryptocurrencies. If this happens, the exchange will probably go out of business, but you may never see your cryptocurrency. In the past, we’ve seen cases where the exchange owner himself has stolen cryptocurrencies and disappeared. Let’s not forget that regulations are still not completely friendly to cryptocurrencies in all countries. There could be a black scenario where cryptocurrencies are seized by the government. It is common for an exchange to unexpectedly announce maintenance and not allow you to send coins from the exchange. Or they charge fees that are more expensive than the current ones on the blockchain. Losing user data, misusing it, or even selling it on purpose is also not uncommon, and we’ve seen this with the aforementioned Facebook.

In addition to these technical problems, there is also an ideological problem. Cryptocurrencies are here to rid us of these centralized centers of power. If we are serious about cryptocurrency adoption and paradigm shift, we must first and foremost change our established patterns of behavior. People need to educate themselves, install their own cryptocurrency wallets, and actually own cryptocurrencies by holding private keys. Simply put, anyone who does not have coins on their hardware wallet is not a cryptocurrency user but a speculator.

People must learn to own and use their wealth without relying on middlemen. Decentralized networks allow you to send coins and tokens anywhere in the world. Cardano will soon allow you to own not only coins and tokens but also your identity with all the associated data. It will even allow you to trade, take out loans, insurance, and use other financial services. All in a completely decentralized way. You won’t be able to take advantage of any of this unless you learn to own coins.

The decentralization of the Cardano network is based on the distribution of ADA coins among users. Whoever owns an ADA coin also owns a proportional part of the Cardano network. Coin ownership is thus quite crucial. A portion of the coins will always be on centralized exchanges because people want to speculate with them. That is what is counted on. People who want to hold coins for the long term should withdraw their coins from the exchanges to their own wallets. The important thing to say is that you can stake ADA coins from your own wallet and you don’t need the exchanges to do that at all.