The Challenges of Decentralization: From Wall Street to Ethereum

Bitcoin and Ethereum, as the two largest decentralization projects in the world, provide important ideas for humanity to explore new development paths. From the moment of their inception, they have been committed to eliminating the need for third-party guarantees. Recently, a popular online forum encountered a server ban incident, which has sparked renewed attention to decentralization. Although Ethereum is considered highly decentralized, there are still significant centralization risks.

Reflections Triggered by Stock Market Turmoil

Recently, a group of retail investors joined forces on a popular forum and successfully countered the institutional investors shorting a certain company's stock by buying in large quantities. This action caused the stock price to soar from $3 to over $300, resulting in massive losses of billions of dollars for the short-selling institutions.

However, the victory of retail investors did not last long. Some trading platforms immediately took restrictive measures, prohibiting users from buying relevant stocks and only allowing sales. Moreover, the forum's server was banned, causing retail investors to lose an important communication platform.

The deeper meaning of this event lies not only in its surface drama, but more importantly, it reveals the questioning of the reliability of "third parties" and the necessity to rethink the concept of "Decentralization."

Potential Risks of Ethereum

Ethereum, as the world's second-largest decentralized protocol, offers vast possibilities for the open financial market. However, due to its complex operating system, the storage requirements are much higher than that of Bitcoin, which increases the difficulty of running a full node.

Many developers have to rely on third-party servers because they cannot run a full Ethereum node. This server processes about 13 billion code requests daily, providing developers with a way to connect to the Ethereum network without having to run a full node. However, this server is operated by a single vendor and relies on servers from a large cloud service provider, which introduces two layers of centralization risk that could become a potential single point of failure for the Ethereum network.

It is worth noting that many decentralized applications using a popular cryptocurrency wallet actually rely on this third-party server. This dependency may lead to a decrease in the number of full nodes supporting the network, increasing the network's vulnerability. Furthermore, it may also pose a risk of privacy leakage, as service providers can collect sensitive information such as users' wallet addresses and IP locations.

Future Outlook

Recent events have sounded the alarm for us. When market interests are large enough, and the influence of secondary market speculation and regulation is significant, we must be fully prepared for the worst-case scenario. This is an issue that all decentralized protocols, especially applications developed on Ethereum, should take seriously and study in depth.

The road to decentralization is still long, but it represents a new possibility with the potential to change the way we interact with finance and technology. As this field continues to evolve, we need to remain vigilant and constantly improve and optimize decentralized systems to ensure they truly deliver on their promise of freedom and security.