The biggest myths in cryptocurrency investing today and what would cause a new all time high part 2

All decentralized systems are more secure than centralized ones

Yes, calling this a myth would likely make you call into question how much about bitcoin I really understand. But consider this regarding bitcoin specifically:

a) Bitcoin is vulnerable to a 51% attack of miners

b) Decentralization comes at the expense of scalability

Both points above could be solved with a new proof mechanism (but so far, there does not seem to be one that will truly work, POS is certainly getting a lot of technologically advanced naysayers) and the lightning network. Except, not really.

The lightning network is not that different from centralization on the blockchain. It would mean that we all have a pay channel with Amazon that we can just keep open and where we can transact in nanoseconds, but after all that paychannel is still a centralized paychannel that will provide a point of attack. Before you write it on the blockchain, it will not be decentralized. So if Amazon is the point of attack and stands the chance to lose its lightning network transactions by being “forced” to close the channel without confirmation from the other side in the event of a hack, then Amazon is unlikely to opt to take part in this system as they will perceive that they have more control over their own servers. I admit I am not technically adept enough to fully make this point. Let’s just say I can see how lightning can scale bitcoin, but I do think it is a step back from decentralization that could be rivaled my other systems just as well. Luckily it is not a necessary part to dispel the myth so I can happily be wrong about lightning.

More worrying is really the specter of a 51% attack — that sort of attack certainly seems viable on a huge list of altcoins (https://www.crypto51.app) and when this gets exploited it will at least show to the world that not every blockchain is made equally. On bitcoin itself, the fact that c. 65% of bitcoin hash power are located in China should at least give you pause. I do not think for one second that China has an interest in destroying bitcoin, but if they were to arrest the heads of most mining rings and order them to carry out a 51% attack, do you really think they’d have a zero chance to succeed. Note that I am not saying this would definitely work, but I am saying that maybe bitcoin is not as immutable to government action as many people would like you to believe. That begs the question whether a server farm at Apple is more secure or bitcoin. I know the outcome for now would clearly swing in bitcoins favor. Just remember that nobody thought the WiFi standard used by Intel could be hacked either. Until it happened.

Let’s just say that I can at least see the possibility of a semi-decentralized network owned by numerous very large parties (for example a blockchain run by Apple, Amazon, Goldman Sachs, Siemens and Petrochina) as more robust or at least similarly trustworthy as a fully decentralized one that can be under a 51% attack. But maybe I am wrong.