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Cryptocurrency is the key to heaven, especially financial heaven. At least, the fans think so.Greedy financial intermediaries such as banks are being replaced by smart contracts (including self-executing policies) on the blockchain (decentralized database).These processes will result in profitable and innovative financial services, commonly referred to as "decentralized finance" (DeFi).

But the foundations of this city were not firmly established in heaven.Blockchain today may be a masterpiece of programming, but it is highly complex, power-intensive (according to popular belief), and well centralized.Despite years of hard work, cryptocurrency makers are still struggling to overcome the technology shortage.

The bank can be thought of as a university that holds a large and opaque archive of information about consumers and money.Investors must rely on these organizations to protect their core values. However, banks won't for a while. Banks can fail due to investment failures and can release depositors upon government request.

Proponents argue that blockchain avoids these problems and lays the foundation for the provision of new financial services. The accounts database is not administered by the central administrator, but placed on the user's computer. Funds can only be frozen with the consent of a certain percentage of blockchain agents.

For a system to work, the public blockchain has two main components. One is consent, the way users agree to write new changes to data. There are also stimulants to keep the body moving. Many people use counterfeit products.

For the Bitcoin blockchain, the revived carrot is the new bitcoin minted.Every ten minutes or so, hundreds of thousands of specialized computers, called "miners", participate in a lottery to solve arithmetic problems. First, the computer that sees the warning responses to other miners, gets approved, then modifies the blockchain to earn money (6.25 coins for each puzzle, now worth around $308,270). This calculator also functions as a pillar. Miners need to invest heavily in hardware and electronics in order to earn.Manipulating blockchain data, such as swap breaking, requires more than half the mining power.Launching an attacker can be costly and cause physical damage.

This "proof of performance" approach is directly relevant to the blockchain and has yet to be truly stolen. However, it also has the disadvantage of not being able to expand and improve. Bitcoin can only perform 7 transactions per second and prices can be high. The system also improves certain types of integration. The solution is usually completed in a small number of "pools". This allows miners to commit their capital to maximize their profitability, but also increase their ability to influence changes (often changes (needs a means like voting). Additionally, proof of work consumes a lot of energy .Bitcoin consumption has been estimated to be close to the level in Italy.

As proof of work grows and productivity increases, support energy and performance are insufficient.This will encourage miners to continue expanding. The more computers you have, the more chances you have of winning. The bigger you are, the more money you can earn and the stronger your ability to grow.

Therefore, the blockchain must be installed. Chia, for example, is a system based on "space evidence". Like Bitcoin, carrots are coins earned by shared users. But the large pool is different. Chia no longer uses electricity, but digital storage. It is not yet clear whether Chia could be better and more honest than Bitcoin if used more.

So, smart money in digital currencies is predicted in another way: proof-of-stake.The decision to update the blockchain is not an arms competition contest, but a vote of cryptocurrency holders. Voting rights and stakes depend on the satisfaction of the holder of the bet on the event. These benefits can be eliminated if the participant is involved.The carrots and sticks of this system are themselves cryptocurrencies.

The evidence of interest in this process is actually less powerful. Avalanche, a modern form of blockchain that uses this model, can perform thousands of transactions per second, faster than Bitcoin. However, there is a big problem. Programmers have already tried to transform Ethereum, the best blockchain for the financial services industry, from proof of operation to proof of organization.However, Vitalik Buterin, one of the Ethereum developers, also claimed that proof of interest was “unexpectedly difficult”. This means that a lot of things can go wrong, especially if you want to change the budget of the app worth nearly $100 billion. After some delays, programmers hope to implement the transition in 2022.

However, the process still seems to be centralized.Higher wielders get more rewards and can upgrade their wielders. This centralizes the power of early cryptocurrency buyers, giving them control of the blockchain. New projects using evidence-based stake models are trying to find a way out of this situation. Hedera Hashgraph has chosen to manage affiliated businesses such as the Visa credit card network. Avalanche and Tezos want to be directly impacted by simplifying the management of consumer devices (participants managing the blockchain).

According to critics, although the energy is low and difficult to resolve, centralization is inevitable. Early insider David Rosenthal pointed out that the profitability problem exists with popular blockchains."I waste a lot of capital building the system, but I've found that the system is still run by less trustworthy people than financial institution employees have always been," he said.

For others, some degree of centralization may simply be the price to pay for other blockchain benefits.Emin Gϋn Sirer of Cornell University, co-founder of Ava Labs, the company that developed Avalanche, believes the main benefit is that it will be harder for the government to disrupt blockchain like most banks. Kevin Werbach of Wharton University at the University of Pennsylvania points out that open blockchain facilitates the development of new financial services.Of course, if there's one thing people get in their quest for better blockchain, it's that there's no free lunch in cryptocurrency heaven.