The Benefits of Decentralization

In the previous article, The Drawbacks of Centralization, I discussed issues like concentrated power and hacking risks. This article explores how Frankencoin tackles these challenges and more.

In the previous article, I discussed the problems that come with centralization. These problems include a single point of failure, lack of transparency, and the concentration of power in one entity, which makes systems vulnerable to things such as hacks, data breaches, and misuse of authority. Decentralization, on the other hand, eliminates these risks.

First of all, decentralization doesn’t leave a single point of failure as governance is distributed. This also addresses the issue of potential hacks. If there is no central point collecting data and concentrating power, there is no single point of vulnerability that can be exploited. Hacking a decentralized system is far more difficult and often nearly impossible. Phishing and other methods like keyloggers and viruses are much less effective in decentralized networks.

A decentralized approach naturally promotes transparency. When governance is decentralized, the project's architecture must be fully transparent. In practice, this means that rug pulls and scams are nearly impossible. With open access to the underlying smart contract, anyone can examine the code. This principle is embodied in Frankencoin: the entire smart contract is public, and anyone is encouraged to verify its code.

Of course, control of the Frankencoin is also decentralized. The Frankencoin Association takes care of all activities that are needed to promote the Frankencoin. This includes introducing Frankencoin as a payment method to potential adopters, marketing Frankencoin, maintaining the website, and various other efforts to push the Frankencoin – but the association does not have control over the Frankencoin protocol. The Frankencoin smart contract exists, regardless of the actions of the Frankencoin Association. Anyone can interact with the Frankencoin smart contract, even without the Frankencoin frontend maintained by the association.

Lastly, decentralized projects are private by design, meaning they do not collect any user data. The absence of data collection is a significant difference to centralized systems, which often require private information for things like account creation and verification of transactions. Of course, no account is needed to interact with the Frankencoin smart contract through the Frankencoin frontend.

To mint new ZCHF, the only data required is a wallet address and the type of collateral to be used. An approach like this enables the user to stay anonymous if they wish so, as the wallet address used is not linked to any other personal information. The lack of data collection reduces the risk of exposing private information and thereby increases privacy.

These are the reasons why decentralized protocols are safer and superior to centralized protocols. By eliminating single points of failure and making things more transparent, decentralized systems clearly offer a safer and more private choice for the future. As cryptocurrencies develop, decentralization will become even more crucial.

We encourage you to explore decentralized solutions like Frankencoin, which embody the principles of decentralization. In the end, decentralization aligns with the core principles of crypto: Individual financial freedom and real privacy.

Join us in supporting a decentralized future!