Crypto Wash Trading

Centralization is a continuum, not a binary condition. I don't think that Bitcoin is centralized in absolute terms—it's just more centralized than it should be—which is a normative opinion I have, not a statement of fact.

Bitcoin would be less centralized if ordinary people could mine it successfully with their home computers, rather than needing to buy specialized hardware. As it stands, mining activity is performed almost entirely by people and entities able and willing to spend the money to buy mining rigs. Not a bad thing per se, but it results in fewer people mining than I might prefer.

I think your explanation is a good one.

> This is not how it works.

That's exactly how it works. That's not how you want it to work, but that's how it plays out in practice. You might want to ideally live in a world where a frictionless public debate occurs and people assess the value of a law and decide democratically whether to follow it, and then follow it whether they like it or nor and adhere to the rule of majority, and ideally I'd agree a democracy should work like this. But how it actually works is people disobey laws they don't like. People smoke weed if they want to, regardless of the legality. That is how it works.

And the reason is because changing laws is not in practice frictionless and the result of majority sentiment. There's inertia, there's entrenched interest, there are deliberate roadblocks to the will of the people put in place by the powerful. Democracy doesn't work as well as you are imagining it should, and people deal with that by giving up on it just a little and making decisions for themselves.

The only convincing argument I require is that if people want to use it they will. I don't need your permission, and frankly I don't care if people take me seriously. I understand this means that democracy will fall apart, but if democracy were working for people as the sales pitch said it would it wouldn't be falling apart in the first place.

> The larger the volumes an exchange publishes, even if fake or gamed, the more relevant an exchange appears.

Only to unsophisticated traders, since past volume (liquidity) isn’t worth anything right now. What you really want to look at is market depth, ie. the quantity of outstanding open orders in the order book.

> Users must blindly trust whatever data exchanges can manufacture.

Contrary to past volume, open order book orders need not be trusted. Users can test this figure by executing a market order against it and observing the execution price. If there’s always a discrepancy between the two then either the exchange is lying about its order book depth or is susceptible to front running.