Key facts:
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The existence of a person or organization linked to a Cryptocurrency is a point of failure.
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Bitcoin is resistant to these types of vulnerabilities thanks to the disappearance of Satoshi Nakamoto.
The collapse of the price of Toncoin (TON) following the arrest of its co-creator, Pavel Durov, highlights one of the dangers that exist for cryptocurrencies: the link with its founder.
Although the brothers Pavel and Nikolai Durov no longer have official relations with TON (and Pavel’s arrest was not for anything related to Toncoin but for his activities as director of Telegram), the mere association of his name with the cryptocurrency has been enough for the recent legal problems he faces to directly affect the price of the currency.
In the following graph, provided by TradingViewwe can see how the price of TON has behaved after the news of Pavel’s arrest was released:
Toncoin (TON) price plummeted following Pavel Durov’s arrest. Source: TradingView.
This episode is a stark reminder of the dangers inherent in any cryptocurrency that has a living and identified founderThis applies even to cryptocurrencies that depend on a company, organization or foundation that promotes their development.
While proponents of these cryptocurrencies often highlight the visionary qualities and leadership of their creators, the reality is that Dependence on certain individuals introduces significant risk in the ecosystem.
Investors may thus find themselves in a precarious situation, where external events such as legal problems can cause an abrupt drop in the value of their investment.
An example of this risk is Ethereum/” target=”_blank” rel=”noreferrer noopener”>Ethereumwhich, despite being one of the most important cryptocurrencies in the world, remains closely linked to its creator, Vitalik Buterinand the Ethereum Foundation.
The Ethereum Foundation is the organization charged with leading the development and direction of the project. But what would happen if this foundation were subject to a judicial onslaught? What would happen if the authorities decided, for whatever reason, to intervene in its operations or arrest its leaders? The impact on Ethereum would be undeniable.
If that were to happen, the network, its value, and its community could be severely affected, not necessarily by technical failures, but by the inherent vulnerability of having a centralized organization behind it (even when the network and its accounting are decentralized and distributed across thousands of nodes).
A similar case occurred with Ripple and its cryptocurrency XRPThe U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Ripple Labs and its executives, accusing them of allegedly conducting an unregistered securities offering. This legal process had significant impacts on the price and market confidence in the cryptocurrency.
The reason for this is clear: by having an identifiable and centralized entity behind them, Ripple and XRP have become an easy target for regulatory authorities. Investors who had their funds in XRP have seen its value fluctuate dramatically, not because of flaws in the underlying technology, but because of legal pressure on the founders and the central organization.
It’s worth noting, of course, that this isn’t an infallible rule or an attempt to cause panic among investors. TON could, perhaps, still be a successful project even if Pavel Durov remained in prison for many years. And, perhaps, Ethereum would continue to attract users even if Buterin was forced to step aside. Bitcoin SV, for example, was not affected when it was ruled that Craig Wright is not Satoshi NakamotoBut it cannot be denied that there is a high risk if a cryptocurrency is closely linked to a person or organization.
Who is Satoshi Nakamoto? Better not to know
Everything described so far contrasts greatly with bitcoin (BTC), whose creation is shrouded in mystery.
The founder of Bitcoinknown under the pseudonym of Satoshi Nakamotodisappeared from the public scene in 2010leaving behind a truly decentralized network.
This lack of an identifiable leader has been one of Bitcoin’s greatest strengths. With no central figure who can be pressured, controlled, or arrested, Bitcoin has been able to withstand the onslaught of governments, regulators, and malicious actors, maintaining its position as the most secure and resilient digital currency.
Returning to TON, the cryptocurrency that has been much talked about in recent days, it has become clear how the dominance of a leading figure can be the downfall of a cryptocurrency.
Pavel Durov, the genius behind Telegram, is undoubtedly an influential and respected figure in the world of technology, and a defender of freedom of expression. However, that same influence is a double-edged sword. When an individual is (even unwittingly) the face associated with a project, any problem they face, however fair or unfair, directly affects the perception and value of that project in the market.
Pavel Durov, founder of Telegram. Source: Wikipedia.
Bitcoin, on the other hand, is immune to these types of vulnerabilities.What if Satoshi Nakamoto was or is a mobster, a drug dealer, a pedophile, or the reincarnation of Adolf Hitler himself? It is irrelevant, since we will probably never know his identity.
The absence of an identifiable leader means there is no single person to target or attack. There is no office to close down, no centralized server to shut down. Bitcoin is the embodiment of the concept of decentralization.
Therefore, every investor should remember this maxim: If your favorite cryptocurrency has an identified founder, your money is at risk.
The future of such currencies may be uncertain and their value may fluctuate wildly depending on the vicissitudes of those in whom trust has been placed. In an ecosystem that is supposed to promote independence and decentralization, dependence on a charismatic leader or a centralized organization is a dangerous contradiction.
Those seeking financial security would do well to heed this lesson: When there is no visible head, there is no easy target.and in that anonymity lies one of Bitcoin’s greatest strengths.
Disclaimer: The views and opinions expressed in this article belong to the author and do not necessarily reflect those of CriptoNoticias. The author’s opinion is for informational purposes only and does not constitute investment advice or financial advice under any circumstances.
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