4 MINUTES

2022 - Centralization vs Decentralization

2022
06 Jan 2023
Sree
SelfKey 2022

We’re at the beginning of yet another year. While we may have seen several setbacks in 2022, it has probably cemented crypto’s position in the wider mainstream financial industry. Despite unprecedented, adverse market conditions, crypto is still here, living to fight another day.

2022 was a good year for SelfKey, carried by growing discussions and attention toward the importance of identity verification on Web3.

In this article, we take a look at some of the major events from last year that have shaped SelfKey and the crypto industry.

SelfKey Updates

SelfKey has continued its focus and vision on the decentralized identity ecosystem for Web3 and the Metaverse.

Products like the Metaproof Platform (formerly known as the POI Platform) and Living Avatar NFTs – utilizing the innovative technology of Soulbound NFTs governed by LOCK DAO – now make up the vital cogs of a decentralized, user-powered identity verification ecosystem that includes the SelfKey identity wallet. Users who actively contribute to secure the network can earn the work token, LOCK.

SelfKey believes that this ecosystem can be widely used and adapted by Web3 platforms to securely verify the identity of users on these platforms – and to effectively distinguish real users from bots.

Furthermore, the decentralized identity ecosystem envisioned by SelfKey and LOCK DAO can help the crypto industry in its transition toward regulatory compliance. Several events during the course of last year have led to increased discussions surrounding regulations and a greater understanding of the need for effective compliance with the crypto industry and its products.

SelfKey believes that policymakers should consider a decentralized and user-centric approach when creating regulatory frameworks: implementing the same centralized policies used in the legacy financial industries might very well be counter-productive for crypto and its products.

SelfKey views the discussions surrounding regulatory policies as a positive and necessary change that will help users take more responsibility and control over their digital assets. This evolution bodes well for bringing the crypto community closer to a decentralized future.

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ETH 2.0 & Merge

The much-awaited ETH merge – which marked the transition of Ethereum from a Proof-Of-Work (POW) to a Proof-Of-Stake (POS) network – also happened last year.

The merge and the subsequent transition – dubbed ETH 2.0 – was a major event that the crypto industry and enthusiasts watched closely. This was probably the biggest update to date for the world’s second-largest cryptocurrency.

Due to the fact that $KEY, the native token of the SelfKey ecosystem, is an ERC-20 token, SelfKey was also excited to see the impact the upgrade could bring to the Ethereum network.

Celsius, BlockFi & FTX

Along with all the great things that have happened during the course of 2022, some unfortunate events also made it to the headlines. The biggest of these was when Celsius, BlockFi, and FTX froze withdrawals for their users and filed for bankruptcy.

Although on first impressions this may have felt like a squarely negative series of events for the crypto industry, the most important takeaway is that all these failed platforms were centralized.

Crypto and the underlying blockchain technology were developed to help rectify the flaws of the centralized financial industry. Yet, a majority of the crypto industry still relies heavily on centralization – and that’s where we are still continuing to see major failures.

Even though the industry still has a way to evolve toward being decentralization positive, it is evident that the industry is on the right path – the purge of incompetent centralized platforms and products is evidence of this trajectory. In parallel, more products are being developed with a focus on decentralization.

Conclusion

2022 has been an eventful year for SelfKey and the crypto industry. We have witnessed clear signs that the community is evolving toward a decentralized future.

We saw the failure of centralized platforms that gambled with user funds, which has led to serious discussions and recommendations for regulatory compliance in the crypto industry. Proper regulations that will offer clarity and security for users and platforms alike are a necessity.

Decentralization is a cycle and an ever-evolving process, and the community will have to continuously work toward achieving more decentralization as we move through 2023. Similarly, regulations need to focus on the pain points of users and aim to be more user-centric. Combined, these goals can further ensure more user participation in the space, making the industry more decentralized.

SelfKey and LOCK DAO aspires to help the community during this crucial period of evolution. SelfKey hopes that 2023 will be yet another year filled with new challenges and new opportunities that will help the crypto community thrive.

Happy New Year!

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