You can't regulate what you have nothing to lose and gain from

Crypto regulation by a centralized entity is about the dumbest thing I've ever heard.

But this is what many people are waiting for.

It makes sense, for people out there looking in to wait for this before coming in. The fear of what one doesn't understand is quite normal, but when people who are already in the system, with at least the basic understanding of how it works, it's insane to have them anticipate such regulation in any form.

Satoshi Is A Genius

Bitcoin is just great, I mean, it has its flaws but the Bitcoin blueprint is quite great, it's something we can build so many value structures atop, I mean, we have billions of dollars flowing through this ecosystem to back this.

Now when I say bitcoin, I am not referring to the coin, but the network. BTC is only a product of a “self-regulated” network and it's kinda wild how most people miss this.

Every blockchain network out there regardless if it is centralized or decentralized in nature functions as a self-regulated network.

The difference between blockchain networks and regular centralized systems is that blockchain employs tokenization as a means of attaining data integrity and security. On centralized platforms there lies no need for a token present in their operations; this is because every action taken on the network or every data passed onto the network is designed to benefit the centralized system that powers it.

As such the network has no reason to post unauthentic or manipulated data because this would in turn lead to a negative effect on their business. Given that this systems are centralized in nature and hosts millions of data of individuals across the world for example a social network like Facebook hosting data of billions of users posted to its system monthly, it becomes crucial that centralized authorities like the government need to step in to regulate their use of user data and every other associated business activities.

But, This Is Blockchain, Not Facebook

Centralized systems like Facebook require government regulation because it's essentially managed by a single entity, a small body having access to billions of user data. It is in its very nature a significant amount that poses a threat in ways one cannot fathom.

Blockchain eliminates the need for this centralized regulation with tokens designed into incentive protocols set up to ensure that a network is not centrally managed.

Think about it for a second. Why should a system that has been designed with both risk and reward layers so as to force each participant to operate with the general interest of other participants have to submit to centralized external authorities?

The very design of incentive protocols is to govern each of these networks. At the fundamental level the only way for a centralized external body to gain influence over a blockchain network is to become a part of its governance body. This may include buying a couple millions of tokens or less or buying some set of hardware depending on the network's consensus algorithm. Otherwise the centralized system would have to somehow be able to buy off the heart of a significant amount of the existing governance body.

With most existing blockchain networks this is difficult to achieve and it is also highly risky as every other participant may decide to fork off the chain and operate with the initial design on a new network.

Incentive Protocols Powered By Tokens - It Works, It's Self-regulated

Now one might think why does it even work? Can this be taken as regulation ? I think that the problem with this question is that they ignore what it takes to be part of any blockchains governance body.

Using proof of state blockchains as an example, an individual typically has to buy a specific amount of tokens in order to become a validator. These tokens are usually committed to the network through staking whereas it is locked up and risks being slash if the validate is caught being malicious.

Looking at this, the system doesn't exactly need any external regulatory body because every participant understands the risks and rewards available so they commit to the network knowing fully well that they could either lose or win by their actions. It makes absolutely no sense for a centralized external authority who has absolutely nothing to lose or gain from a system to be in position to regulate it.

It has been proven through history that when people have little to lose or gain the oftentimes act in the opposite direction so similarly, if we allow centralized authorities into the ecosystem to regulate it on top the very governance body of each of these blockchain networks, we effectively create a centralized system while deceiving ourselves that we are the decentralized in nature because whilst the execution is carried out by the various governance bodies, the orders of this executions effectively comes from a centralized body at the top.

Posted Using InLeo Alpha