Most Blockchains Are Extremely Centralized
This is one of the main problems as far blockchains are concerned. 70% of all blockchains are centralized excessively. They operate with the main objective of scamming investors, while talking about decentralization, freedom and other such high-flying buzzwords. However, in reality most of them are back-stabbers and they care a hoot as far as decentralization is concerned. The problem lies with most new market cap issues. They raise billions by way on investor money. They talk about scalability but not many understand that the cost of decentralization is huge and not many new players would be able to afford it. It would be pertinent to mention here that new entrants like NEO, Ripples, EOS, Dash, Stellar and Tron are totally decentralized.
Are There any Decentralized Currencies?
There is no doubt that most CTOs and CEOs who are piloting multibillion dollar cryptocurrency firms are totally in the dark when it comes to the various facets of decentralization. They may believe so but it actually is not that way. They make investors to believe that because they hardly have any ways and means to judge the technology. In fact the blockchains that are decentralized and scalable are not blockchain any further. A few examples are Nano, IOTA and Holochain. Hence, it is quite likely that the concept of blockchain will become unviable and obsolete in the next few years. We need to look at this from the statistical view point. There were 902 cryptocurrency ICO in 2017. Of these 142 failed even before they started raising funds. Another 276 failed to function properly after fundraising. Around 113 ICOs may have fallen under the partially successful category. This contributes to a staggering 59% of total ICOs that failed and the bad news is that they may have raised around $104 million of investor money. Hence, it is quite obvious that cryptocurrencies have a very high failure rate.
The Successful Ones Are Few & Far Between
When we look at the whole picture of 2017, there are some interesting figures that come out. Only 50 out of around 900 ICOs in 2017 made a return of 5 times or more. 800 of the 1600 coins or token perhaps ended up as dead coins. It is likely that 7 out of the top 10 coins will end up dying soon. However, the sad part is that they continue to mislead investors that the investors have put their money in a great coin. Hence you will end up with failures rates hitting the so-called top 10 crypto coins if one goes by market cap. This clearly indicates that most ICOs are likely to fail
Why Do They Fail?
There are a few reasons for the failure of the blockchain market. The most important and obvious reason is perhaps the fact that the entire market is controlled by whales. They are the ones who own around 40% of total Bitcoins in circulation in the market today. The overall market capitalization of Bitcoin should be close to $70 billion. However, the interesting part is that it is possible to increase the market cap from $70 billion to $100B and even to $1 trillion within the shortest period of time. They do not do it in a jiffy but wait for the market cycles to play it out and then pump the funds and move the market cap up.
What Are The Pit Falls
The reason why the decentralization efforts fail is because of centralization issues and algorithms that are flawed. However, it would be impossible to detect the flawed issues till such time the damage has already been made. These include names like NEO, Ripples, EOS, Stellar, Tron and Dash. They have failed for the simple reason that they are totally decentralized. If you are a person without the best knowledge and background, you are likely to fail miserably in your effort to even understand decentralization, leave alone implementing it. You will not be able to identify the problems areas till is becomes too late. In the process the scan investors will continue to have a field day. This can be resolved only with a big emphasis on training and knowledge. This will only possible when you are able to remove personal biases and this does not happen in most of the cases.
It Is Riddled With Tribalism
Finally, we also need to understand that crypto is something that is riddles with tribalism. Any criticism or negative talk is censored and in case users talk about flaws, they are banned and shamed.