Blockchain will reshape society only if it is used in a decentralized way

Cryptocurrencies have been invented to make the world a better place for living. The crux of the improvement lies in the ability to avoid middlemen and their services that we often need to use for a variety of reasons. Blockchain technology offers an alternative that is able to connect people without middlemen that can and often misuse their position. High fees, censorship, collection of data, refusing to provide a service, providing information to third parties, poor quality of services, weaker position when you negotiate about conditions of service are the main disadvantages of using middlemen. The goal of the Cardano project is to eliminate named disadvantages and create a world that will be more transparent, people will enjoy higher privacy, nobody will be able to censor transactions, collect data about you and commercialize it, or make a big profit for low-quality services. It is a great idea but there is a catch, though. Technology itself is not able to realize it. Users must understand the decentralization concept and change their mindsets.

It can sound a bit weird but decentralized services can be used in a centralized way. Centralized services can help you, protect you, and facilitate manipulation with decentralized services. People behind centralized services use decentralized services and stand between them and you. It is the old-fashion concept that decentralization wants to disrupt. Why understand why it happens. We are used to trusting banks and institutions. We know that it is relatively safe to have money in a bank. Life is easier for us if we do not need to protect our money and a card with a PIN can manage nearly everything. It is time to change it. Do you know how much you pay for a bank account, the card, and ATM withdrawals? Do you know which information a bank knows about you? Many of you can be happy with bank services and never had any troubles. We understand it. Anyway, decentralization brings a new paradigm and it is time to learn new skills. When you are going to adopt decentralized services you should use them in a decentralized way as much as possible.

If you use decentralized services and your friends will do the same, then centralized services will have to accommodate. They will either fundamentally change their business and start using decentralized services or disappear. It will be beneficial for everyone. In the end, many centralized services might simply disappear since there will be no business for them any longer. But it is probably a distant future. The first step must be done by the users. Decentralized technology without users will have no impact on the world. It will be very similar if many users adopt decentralized technologies but they will use them in a centralized way. Only the combination of technology and the way of their usage can have a significant impact and initiate changes. If you think that banks can disappear or work fundamentally differently then it is possible only when users will not need and use the current services.

Do not undermine decentralization by supporting centralized services

It is needed to realize that the Cardano protocol needs responsible users. PoS consensus mechanism is about the distribution of the consensual power via ADA coins. Thus, every single holder of ADA coins is directly responsible for the decentralization and security of the Cardano protocol. It is true only in the case that these users keep ADA coins on their wallets and are owners of the private keys. When somebody keeps coins on a centralized exchange then the exchange becomes the real owner of the coins. It is dangerous since many people keep coins on exchanges. Thus, one centralized entity has a big say in the network consensus.

Centralized exchanges can hold your coins or even offer you a staking service. Both are bad. Exchanges are profit-oriented companies and they will always think about how to operate a business in a way that they will be profitable. They will not do business for free or for the common good. If you hold your ADA coins on an exchange and do not stake then you can be sure that the exchange considers staking instead of you and it is very probable that it will do it. You could have an annual profit of ~5% and you just give the profit to the exchange. If it is your case then consider buying a hardware wallet Trezor or Ledger and store your coins by yourself. Staking on an exchange is nearly the same. You can think that it is easier to stake on the exchange since you do not need to care about the complexity of staking and the profit is guaranteed by the exchange. Well, it is a very bad way of thinking. The exchange does just the same thing that you can do. It just creates its own pool and uses the stakes of all users to saturate it. The exchange will get the pool operator fee and it can take a small part from your reward as well. It is very probable that you would get the same or higher profit if you delegate your coins to a pool with a fair fee structure and with middle-size saturation. Exchanges might hold a big number of ADA coins so they can operate more pools. It will probably never happen that one exchange would have the amount that would allow her to commit an attack. Anyway, it is smart to prevent it. Moreover, regular pool operators can do something more for the Cardano community and it is wise for the whole ecosystem to support these people. Exchanges might not care about the ecosystem and nobody cannot force them to do it.

If you hold your ADA coins you can be part of the ecosystem and support a small pool of your choice. Pool operators would like to reach the saturation point in order to make the business profitable. You can directly support decentralization by delegating your coin to a small pool. If somebody else decides what will be the destiny of your coins then you cannot naturally do it.

Keeping your coins in your own wallet has another advantage. You can always spend your coins even if you stake them. In case you stake coins from your wallet, you will get the reward every 5 days. Nobody, even the Cardano protocol, can prevent you the spend your coins. It might not be the case when you stake your coins on an exchange. An exchange might require you to lock your coins for a longer period if you allow the exchange to stake them instead of you. Moreover, you can get the reward less often.  There is no advantage to stake with an exchange. 

ADA coins should be distributed as much as possible. The higher the distribution of coins is the more secure and decentralized Cardano is. Decentralization is the key feature of the public networks and other people will take it into account when they want to use Cardano or invest in it. If you want a higher price of ADA be smart and try to decentralize it as much as possible. If all holders behave responsibly then Cardano will be easily the most decentralized network. Do not forget that your decision influences the wealth of other holders of ADA coins. You can find many articles on the internet about Cardano staking. There are a few community tools that help you to make a smart staking decision. For example, ADApools and PoolTool.

Centralized exchanges are honeypots for hackers and they often succeed in breaking the security and stealing coins. We have seen cases when owners of the exchange disappear together with the coins that have been held on the exchange. It is generally dangerous to keep coins on exchanges and it can happen that you can lose your wealth. In the decentralized world, you can trust yourself and do not rely on middlemen. Exchanges are middlemen. They are definitely needed for buying cryptocurrencies and significantly facilitate it. Once you buy it, you should send coins to your wallet. It is the smartest decision you can do.

Conclusion

Blockchain is a nascent technology and it will need centralized services for a while. However, just temporarily. As we said, exchanges are needed for buying cryptocurrencies and it is also the case for ADA coins. Find a good exchange you trust and buy cryptocurrencies. Once you do it, send the coins to your wallet and guard your private keys. You can be responsible for storing, sending, and staking your ADA coins and you do not definitely need centralized services for that. It is safer for your wealth and it also makes the Cardano network more decentralized and secure. It is also beneficial since it will attract other users and also investors. Do not give people a chance to say that Cardano is centralized since many coins are held by exchanges. Be responsible and smart. Do not trust centralized services if you do not need to. You can be part of the decentralized future and help to reshape the world by holding ADA coins in your own wallet.