The vast majority of cryptocurrency and blockchain projects on the market today are centralized in one way or another. In total, 85% of the development teams have the opportunity to make changes to the protocols at their discretion. This is the conclusion reached by analysts of the research unit of the portal CryptoCompare in its annual systemizing report covering cryptocurrency industry.
They analyzed hundreds of crypto assets to compile the appropriate classification. Among other things, when analyzing the market, they used a “decentralization thermometer”, which pointed to the centralization trend, primarily due to the existence of utility-tokens in a controlled environment.
A classification of crypto assets was also carried out in accordance with the presence of securities traits. To reach this, analysts used recommendations provided by the Swiss Financial Market Supervision Authority (FINMA).
They found that Bitcoin “is almost certainly not a security due to the absence of a single enterprise (counterparty) with which asset holders could associate expectations of a profit.” The same goes for Ethereum. Such projects are decentralized and based on open source principles. However, their share in the total number is only 16%.
In contrast, centralized projects often depend on a certain central issuer. According to analysts, 55% of public crypto assets are centralized and meet the definition of a security, and therefore risk to come under the review of the US Securities and Exchange Commission (SEC).
Among payment tokens, the situation is slightly better than among the rest: 37% of them can be considered decentralized. However, the code of 85% of crypto assets is written in such a way that developers can make changes to their platforms at their own discretion.
For reference, in order to make significant changes to the principles of Bitcoin, Ethereum or Monero, developers will have to update using a hardfork, which implies the participation of a wider cryptocurrency community.