Weiss Ratings Hints at Weak Point in Binance Chain: Centralization

The cryptocurrency and market analysts over at Weiss Ratings just gave Binance the old ‘good cop, bad cop’ routine.

In a backhanded compliment to Binance Chain, the Weiss team suggested centralization was the project’s biggest strength – and the reason for BNB’s growth in 2019 thus far.

A few hours later, the Weiss team sent out a warning call to government officials the world over, reminding them that there’s no way to shut down a decentralized operation.

So, where exactly does the apparently centralized Binance Chain?

Binance Chain is Centralized

Thursday’s tweet from the Weiss Ratings team claimed Binance Chain’s centralization is what contributed to the growth of the project. The tweet read:

“Because #BNB is centralized, its creators are constantly creating new use cases for it, which increases its market cap and keeps the asset going. BNB is successful BECAUSE it’s centralized. Interesting.”

The Binance team is known to be one of the smallest in crypto land. If humblebrags from the team itself are anything to go by, then most of the progress thus far was made by a handful of people in an office in Malta.

Are the Weiss team suggesting that the spirit of innovation is more pronounced on Binance Chain precisely because the creators have a larger stake in it? The team said no more on the subject, but a tweet a couple of hours later spelled out the negative side of Binance’s purported centralization.

Only the Decentralized Will Survive

What followed was an impassioned reminder to government officials on the power of decentralized technologies. The Weiss team tweeted:

“If you’re a member of Congress or Parliament, and one of those who still think they can shut down #Bitcoin, #Ethereum or other decentralized cryptocurrencies …Then we have a simple message for you: It can’t be done.”

An accompanying blog post lays out many of the reasons why Bitcoin, Ethereum, or other decentralized cryptocurrencies would be near impossible to shut down. With no central figurehead to take the fall, these projects leave nothing for prosecutors to sink their teeth into. You can’t arrest open-source code.

The only way that will change is if the laws surrounding computer code themselves are changed. But for projects with a central figurehead at their forefront, their worries are much more pressing.

Just look at the grovelling language used by Justin Sun in his apology to the Chinese government for evidence of the danger surrounding well-known, easily-identifiable project leaders.

This may also partly explain why Binance hasn’t registered its operations on American soil. Out of all the major cryptocurrency exchanges, Binance is the only one not to have done so.

Self-Sustained Growth

Binance Coin’s growth in 2019 has been nothing short of spectacular, and congratulations to anyone who bought in January.

Binance Coin (BNB)

But if what the folks at Weiss say are true, then Binance Coin’s value might end up with a natural cap on it. Centralization in a decentralized world is akin to a virus, as it affects every other aspect of the system. One major red-flag for BNB believers is the fact that most of Binance’s numbers come from Binance themselves. The majority of BNB’s trading is conducted on its own exchange – and those numbers have never been regarded as trustworthy.

While projects like Ethereum may be decentralized, that doesn’t stop Binance from deciding which coins can be traded against it, and which can’t.

Read: The Ethereum Killer is Already Here…And It’s Name is Binance.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. Chart via CoinMarketCap.

Author:
Greg Thomson is a freelance writer who contributes to leading cryptocurrency and blockchain publications like CCN, Hacked, and others.