Binance CEO Changpeng Zhao (CZ) opined that decentralization is merely a means to the goal, and not the end goal itself. While the term is as old as crypto itself, CZ believes that it is misinterpreted on many levels. CZ’s remarks come in the wake of last week’s BNB chain hack worth half a million dollars.
In a Sunday blog published on Binance.com, CZ noted that with the help of decentralization, the crypto industry aims to achieve a three-tier goal—freedom, security, and ease of use.
Nevertheless, the Binance chief executive pointed out that in order to achieve this goal, the industry has to understand the gray zone of what decentralization is. He wrote, “In essence, I believe the first thing to understand is that decentralization is not binary, and not single-dimension. There are multiple aspects to decentralization. Every aspect is a gradient scale, not simply black-and-white.”
Elaborating, CZ referred to the popular crypto phrase — “not your keys, not your coins” to compare two Binance entities as contrasting. CZ pointed out that if decentralization is like holding your own private keys, then TrustWallet, which is a Binance portfolio company, will be considered decentralized. However, Binance.com, the crypto exchange platform, will be a centralized organization.
Furthermore, CZ asserted that the number of nodes or validators on a chain is a gradient scale to deem it centralized or decentralized. This is because while a lower number of nodes or validators makes the blockchain more centralized, there is no absolute number as a benchmark that everyone agrees on.
CZ compared the Bitcoin network to Ethereum, explaining how both are perceived to be centralized entities. On one hand, people say “Bitcoin mining is too centralized because the top 2 or 3 mining pools control more than 51% of the hash power.” Taking cognizance of this aspect, the market favors Proof of stake (POS) blockchains. However, people also say that “Ethereum is centralized because Vitalik can heavily influence its direction,” which can also be true since blockchains with clearly associated founders have this drawback.
Following upon Vitalik’s close ties with the Ethereum network, CZ highlighted how the BNB Chain is often associated with him. But the chief executive noted that he is far less involved in the technical developments of the BNB chain and its ever-growing ecosystem. CZ also explained at length which aspects of the BNB Chain could be considered decentralized. Nonetheless, with BNB chain’s recent overnight hack and the token’s price returning to normal in no time, the crypto market is abuzz with speculation of BNB being centralized at the end of the day.
