It looks like the new Blockchain is quite centralized. 45% of blocks are mined by just two addresses:
https://twitter.com/santimentfeed/status/1570339602346684416...
https://etherscan.io/address/0x388c818ca8b9251b393131c08a736...
https://etherscan.io/address/0x4675c7e5baafbffbca748158becba...
Now, many people (pretty much all) follow the laws and contractual obligations of the region in which they live. Under the framework of that system, the funds at still belong to the customer that deposited them. Whether that means the customer "owns" them or is simply "owed" them by Coinbase is debatable...probably a pointless debate.
Careful. In the case of bankruptcy, you probably won't get your money back. Bloomberg Law[0]:
> An exchange going bankrupt would likely have to face Chapter 11 debtors’ rules on creditor recovery. Generally, secured creditors would be paid back first before others.
> A crypto exchange is not likely to have investor protection measures in place for cryptocurrency, though it could carry insurance policies for certain covered incidents, such as cybersecurity incident. And unless user terms specified otherwise, an investor would likely be an unsecured creditor who may not be able to recover what they’re owed.
[0]: https://news.bloomberglaw.com/securities-law/if-a-crypto-exc...
Worth adding it's also not substantially less decentralized than PoW mining was, the status quo was 41% of hash power controlled by 2 pools. At least now it's using significantly less power and is largely more non-custodial.
But from the original bitcoin paper[1] I got the impression that to verify any particular transaction you need to traverse the whole list of blocks.
Way I see it, the idea is to get your data, code, and capital into the big global ball of state by consensus where it can coexist with other code. The point is being able to co-operate with others by writing arbitrary programmable incentive mechanisms.
The tech isn't there yet though. It still needs higher throughput (sharding, layer 2s), better visibility into the mechanics, and probably some kind of privacy layer.
Seems the most likely explanation.
The idea that this isn’t true in BTC or PoW seems like a wild fiction to me.
The real question is, how much capital do you need to be a block producer. For Ethereum that's 32 ETH; with 400K validators and 12-second blocks you'll produce one every 55 days on average.
So on Bitcoin, the largest remaining PoW network, how much capital do you need to produce a block that often?
But they're saying returns are more like 6%. Where are you getting return per block? (Also I think some of the return comes from doing block attestations, on every block.)
Perhaps, it's my ignorance about this technology that makes me question and prevent me from adopting this technology.
Censoring is more plausible, though of course it still hurts you, as you described.
With less than 2/3 of the total stake active on a single partition, that partition stops finalizing transactions, meaning that the chain explicitly stops guaranteeing that it's canonical.
Notably, slashing cannot result from a partition, only from malicious validator behavior.
> Which two of the diverging blockchains get to slash the other one and take all their stake?
For a partition, which is not a slashable offense, there is no slashing. The minority partition stakers suffer inactivity leak on the majority chain, meaning that they very slowly (at first) start losing their stake until the majority partition has 2/3 stake again. It's not a big penalty like slashing, unless the chain remains in a degenerate state for many hours or days.
On the other hand, a slashing rules offender (attacker) gets slashed on all chain forks. The conflicting signed block from one gets included on all others for a bounty. This means that every staker must vote for only one fork at a time, which means the network can eventually determine which fork is canonical because it was voted for the most.
Is not just double sending in one epoch, but unlimited spending of one coin.
> Miners are replaced by validators – people who “stake” at least 32 ETH by sending them to an address on the Ethereum network where they cannot be bought or sold. These staked ETH tokens act like lottery tickets: The more ETH a validator stakes, the more likely one of its tickets will be drawn, granting it the ability to write a “block” of transactions to Ethereum's digital ledger.
https://github.com/lidofinance/docs/blob/main/docs/deployed-...