On Tuesday, 10 May 2022, Coinbase, the publicly listed cryptocurrency exchange, filed its 10-Q Quarterly Report with the SEC where it stated the following:
“Because custodially [sic] held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold (Coinbase) in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors,”
Clearly, this is a red flag when it comes to the centralised retention and protection of any assets held by third parties.
For centuries, people have trusted third parties to “safely” store and protect their assets with varying degrees of success. Financial institutions, like banks, have historically tried to help consumers by protecting their hard earned savings (with or without Government guarantees), undertaking transactions as specifically instructed and providing direct access to funds as and when required.
However, the harsh reality is that consumer reliance, faith, and trust in these third parties has been waning. Institutional global de-banking, unethical practices, illegal behaviour, and unilateral decision making against the consumer’s interests have simply eroded all confidence in centralised third parties.
However, the financial world is rapidly changing. With the invention and revolution of decentralised digital finance, people can now store and transfer digital value without ever relying upon third party trust. Algorithms are now the norm.
Decentralised finance, or “DeFi” for short, is the dawn of new digital trust that is punishing the inefficient layers of established middlemen. It is based on new technologies such as blockchain and cryptocurrencies, which allows for peer-to-peer transactions devoid of third party trust mechanisms, or any other central authority. Real, accurate, secure and uninhibited by any human intervention.
Since the first release of Bitcoin on 9 January 2009, many other cryptocurrencies have been created with differing features and functionalities.
We at Zucoins, truly believe in a decentralised network bringing together the power of direct financial interactions between Peers without third parties, reducing the risks as disclosed by Coinbase in its Q-10 Quarterly Report.
Built on the ground-up native Splitchain protocol, Zucoins is a next generation blockchain that has solved the Blockchain trilemma of security, scalability and decentralisation.
Splitchain is a truly distributed ledger technology, whereas traditional blockchains are incremental blocks that rapidly expand in an ever-increasing chain, awaiting a congested agreement consensus process with tons of competing nodes—a very inefficient process. SplitChain however, utilises a novel approach of fragmenting the ledger across multiple peers on the network to maintain high throughput, security and decentralisation of data.
Essentially, Zucoins are the modern digital equivalent of cash. Allowing anyone to take control of their money and to be responsible as their own bank.
But why would someone choose decentralisation over centralised banking?
First, we’ll tell you why Zucoins provides some clear benefits.
- Users remain in complete control of their funds:
With Zucoins, no one else has possession of your property. Only the owner controls it. Unlike banks or centralised institutions, which can freeze your funds or block transactions with no warning.
Best of all, Zucoins are accessible from anywhere in the world.
- Better security of data:
When you use the Zucoin Wallet, you manage your own wallet’s data in our PWA app, on your phone. This is because the primary principle of Zucoins is the fragmentation of data through the network.
Each wallet can also be backed up and is provided with a unique public key so that your wallet is safe even if you lose or break your phone.
In contrast, banks and centralised services require a substantial amount of personal data which is stored on their servers. This opens up the potential for hackers to access your personal information or even your money.
- Wave goodbye to fees:
Unlike other DeFi solutions, Zucoin transactions are completely free! Because the ledger is updated autonomously through a new, efficient P2P settlement method, there is no need for costly fees from Miners or third party verification.
However, this is not the case for banks and cryptocurrencies. The conventional blockchain approach needs enough willing participants to agree on each transaction, then retain copies of all other historical transaction data, resulting in slow network transactions and higher costs as the number of participants increases.
On the other hand, banks have high fees and overheads, which are then generally passed down to customers. Transactions also typically take days to settle.
- Minimal environmental impact:
Zucoins are an eco-friendly crypto due to the minimal additional energy consumption due to the Peer-to-Peer fragmented storage and no mining process.
Because cryptocurrencies like Bitcoin rely on proof-of-work to validate transactions, they cause major harm to the environment due to the high energy consumption output used to validate a transaction.
It’s reported that Bitcoin mining consumes around 91 terawatt-hours of electricity annually. That’s more annual electricity consumption than all of Finland, which is a country of 5.5 million people.
These are just a few of the main benefits of switching to a decentralised solution and being in control of your money.
However, it is important to note that when using crypto, it can be held in both decentralised and centralised environments, with some blurring the lines between.
A common form of a centralised system in the crypto space is exchanges like Binance, Coinbase and Bittrex. Centralised cryptocurrency exchanges like these act as third parties between a buyer and a seller, holding a ledger, executing transactions, securing user data, and the other responsibilities that come with managing a financial system.
Decentralised exchanges, on the other hand, don’t rely on any bank, company, or other centralised authority. Instead, they are a system of users and their devices, distributing the network to each user without third party involvement, in an open marketplace.
Just like banks, centralised exchanges run the same risk of being hacked for data, collapsing or freezing assets. This removes a person’s own ability to manage and control their assets in these circumstances. Hence, Coinbase’s statements in their Q-10 Quarterly Report.
Luckily for Zucoins Buyers, we’re giving people their power back. As mentioned above, Zucoins is decentralised and enables users to hold their Zucoins directly in the PWA app on their own phone, not beholden to third parties or even app stores. So you’ll control your money, safely store your data and have the freedom to be your own peer bank.
But remember, digital freedom comes with much greater responsibility.
For any questions, suggestions, feedback or comments, please reach out to us here.
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