Can Centralized Ownership be good for Crypto?
The word centralized, in crypto, can sometimes seem like blasphemy. After all, Crypto was intended to be decentralized in nature and remove all middle-men, governing bodies and banks. Instead, we have Centralized Exchanges popping up all over the internet, providing users with fiat on and off ramps. Instead, we have a large portion of the top coins having 75%+ ownership by a small percentage of wallets.
When it comes to the ownership of cryptocurrencies, it seems that fully decentralized cryptocurrency ownership are few and far between that are successful. More often than not, the coins or tokens that have done the best in price performance have moderate to highly centralized ownership.
Shiba Inu, has 73.0961% of the supply in the top 22 wallets. Bitcoin has 94.58% of its supply held by 2.01% of the wallets. Ethereum has slightly less, but still has 39.37% of its supply controlled by the top 100 holders, 32.80% controlled by the top 50, 26.77% is controlled by the top 20 and 22.89% controlled by the top 10. So it seems that centralized ownership may have some correlation to long term price protection or price appreciation.
So why is it that when certain cryptocurrencies have a similar or less supply to any of the crypto's listed above, They get labeled as scams?
Well unfortunately, Centralized ownership has been used time and time again to do was is classically known as a "Rug Pull". This means that the developers or owners of the majority of supply just sell off the 90% or so and cash out, leaving investors holding the worthless bag at the end. So what are some commonalities among these scams?
Anonymity, low engagement, public team infighting, claims of large investments for funding, lack of audits or fake audits, incomplete projects, and many more are common across the board with scams. One of the biggest tells can be its utility or what it is intended to do or what problem it is trying to solve; however, just because you don't understand what the value proposition is, or what problem it is solving, or what new technology it is, does not make it a scam.
Since January 2020, Hex, the Cryptocurrency developed by Richard Heart, has seen nothing but scrutiny and labeling as a "scam". One of the main points many online crypto influencers tout when speaking about Hex as a scam, is that it is a rug pull. In the beginning of Hex, an Origin Address or OA(an unknown developers address) held upwards of 80% of the coins, kind of like when Satoshi Nakamoto held a similar percentage of Bitcoin, if not more; today that is worth 5.79% of the total supply over 12 years later.
While an 80% supply ownership from developers could be a flag, we have to investigate other areas of the product to see if other elements to Hex support the flag. Is the founder anonymous?
Well no, Richard Heart has been posting self-help content, called out a Satoshi Nakamoto imposter at a conference, spoken at numerous live events, regularly makes posts about scams in the crypto sphere and sometimes emergency streams to alert the crypto community of major hacks going on before they happen to them. He seems to never sway from any of his ideals and is one of the most consistent people in crypto. I could go on but you get the point.
Ok so that doesn't seem like someone or his team, whoever holds this OA, who would scam people out of billions of dollars. An intelligent person would utilize that foundation to build more, so that that more people would invest and create an even higher net worth with each project built. And that's just assuming that in 10 years, the OA still has the majority of the coins.
Also, why would someone who is know by many prominent figures, who has many public social connections, who has met with politicians, suddenly ruin their reputation and ability to live freely, for money? Especially when by 25, he was retired as a multi-millionaire and has been consistently posting self help as well as a self published book. Yep, seems like a scam artist.
So now that it doesn't seem like a "rug pull" in the conventional sense, let's address a few more aspects of centralized ownership that are beneficial to price.
When a majority of a crypto is held by one holder, how can it benefit price? A few ways, especially given Hex's unique staking functionality. First, simply by holding the majority of the supply and not having a large amount available in exchanges, price can take less of a hit when larger sell-offs happen.
Second, is if the OA never sells, the price is never hurt; which, we are over 2 years into Hex and not a single Hex has been sold by the OA address.
3rd comes from actions overall. During "Big Pay Day", which was the last day of launch(Day 351 where: The Big Pay day is paid out like every other daily interest, the only difference being the sum will be much larger from bonuses. The percentage of total coins staked will also influence the price.). During this, some holders were attempting to take advantage of the system and its bonuses, which would have dramatically impacted the price, possibly even dumping it. The OA, in order to protect the price in the long term, staked a large portion of its majority and not allow those trying to take advantage of the system to do so.
4th comes in from the unique staking function within the Hex Smart contract. Because a large portion of supply is controlled by the OA or in a recent PulseX sacrifice wallet(currently 17% is owned by OA and 43% is in the PulseX Sacrifice wallet after the OA sacrificed more than half of what it owned) and the OA has only staked in extreme situations, this keeps the Yield % for stakers high. That's 4 Major wins in my book.
It seems that whatever or whoever is in control of this OA, is a benevolent figure who has the best interest of the holders and themselves in mind for the long term. We also have two more key components to this investigation: Audits and whether or not the project is incomplete.
Hex has 2 Security audits and an economics audit for the functionality of the smart contract. 0 flaws were found. This leads us to our last point.
The Hex Cryptocurrency does not have a road map. It is not a project. It is a complete, immutable, unstoppable financial product. Not the OA, nor an atomic bomb could stop the code.
When you have something that is this well developed, tested and launched without any hiccups in now 819 days of operation, it should probably have been figured out that it is not a scam anymore. Right?
Centralized ownership, when done correctly has the power to accelerate price performance and stability. It has show over the last 818 of Hex's life, that Decentralized assets can remain decentralized in nature while benefitting from benevolent centralization.
There may be other cryptocurrencies out there that also showcase the power of centralization, however I have yet to come across one that shines like Hex does.
I hope you've enjoyed this write-up, and please share it with those still stuck in previous ways of thinking or those who heard it from somebody on Youtube. @RichardHeartWin knows a thing or two about crypto and if you aren't paying attention to what he is creating you just might be missing out on the biggest potential event in crypto to date.
Drop a comment and let us know what you thought.
Sources:
https://www.coincarp.com/currencies/ethereum/richlist/
https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html
https://bscscan.com/token/0x1ce0c2827e2ef14d5c4f29a091d735a204794041#balances
https://blog.shrimpy.io/blog/how-to-avoid-scams-with-these-24-cryptocurrency-red-flags
https://etherscan.io/token/0x2b591e99afe9f32eaa6214f7b7629768c40eeb39#balances