The cryptocurrency landscape once presented itself as a decentralized, libertarian utopia. Today, it’s undermined by the pursuit of short-term profits and practices that have drifted dangerously far from the mission with which it started. Eleanor Brooks, a veteran blockchain researcher, said that we need a real paradigm shift. She advocates for fairness, decentralization, and long-term sustainability over short-lived wins. This article reviews these hazards and other perils of the crypto way. It makes the case for returning to these principles of fairness and decentralization, showcasing the value of fair launches and sustainable grant programs.

The Dark Side of Quick Profits

The appeal of easy money has unfortunately contributed to some bad practices and culture in the crypto space. These issues, if not addressed, put at risk the long term viability and credibility of the whole ecosystem.

  • Loss of access to one's own money: One of the most significant risks is the potential loss of access to one's own digital assets. This can occur through lost or forgotten private keys, rendering the cryptocurrency irretrievable.
  • Investment scams: The promise of unusually high returns with "zero risk" has become a common lure for investment scams. These scams often originate on social media platforms or even online dating apps, preying on individuals seeking investment opportunities. The consequences can be devastating, leading to significant financial losses.
  • High volatility: The extreme volatility of cryptocurrency values poses another challenge. The price of a cryptocurrency can fluctuate dramatically within a short period, even within an hour, making it difficult to predict its value and increasing the risk of substantial losses.
  • Security risks: Unlike traditional bank accounts, cryptocurrency holdings are not insured by government entities. This lack of insurance makes them vulnerable to theft and loss due to hacking or other security breaches.
  • Complexity and technical risks: The inherent complexity of cryptocurrency transactions and storage presents a significant barrier to entry for many potential users. Technical issues, such as losing a USB drive containing private keys or misplacing a hardware wallet, can result in irreversible financial losses.

These pitfalls call attention to the even more pressing need for a course correction within the crypto industry. A return to the foundational principles of fairness and decentralization is crucial to building a more sustainable and trustworthy ecosystem.

The Importance of Fair Launches

With a fair launch, no one individual or entity has an advantageous head start on acquiring a new cryptocurrency. This implies no pre-mining, no pre-allocation of tokens, and a level playing field for all participants right from day one. Several cryptocurrencies have exemplified this principle.

  • Bitcoin (BTC): The original cryptocurrency, launched in 2009 by Satoshi Nakamoto, stands as a prime example of a fair launch. Nakamoto did not reserve any coins before the launch but instead mined them alongside everyone else once the blockchain went live.
  • Litecoin (LTC): Created in October 2011 by Charlie Lee, Litecoin also embraced a fair launch. Lee himself mined the first block, ensuring that there was no pre-mine or instamine, giving everyone an equal opportunity to participate.
  • Dogecoin (DOGE): Launched in December 2013 by Jackson Palmer and Billy Markus, Dogecoin was conceived as a lighthearted alternative to mainstream cryptocurrencies. It also followed the principle of a fair launch, with no pre-mine or pre-allocation of tokens.
  • Monero (XMR): The privacy-focused cryptocurrency Monero also launched with no pre-mine or pre-allocation, ensuring equal opportunities for all participants.

These examples indicate that even a fair launch is possible. Beyond that, they are fundamental in building a more inclusive and decentralized cryptocurrency distribution.

Sustainable Grant Programs: Horizen's ZEN Initiative

Sustainable grant programs are important in helping incubate new ideas and sustainable practices so healthy development of the space can flourish. These programs not only inject funding and resources to deserving projects, but go against the grain by decentralizing power and promoting community-driven, bottom-up growth. Horizen’s ZEN Initiative provides a strong example of a sustainable grant program that encourages long-term ecosystem development.

  • Dedicated Reward Pool: The Horizen network allocates 10% of the block reward to incentivize Secure Node operators. These operators maintain compliance and run Secure Nodes, which increases the resilience and decentralization of the network.
  • Secure Node Rewards: Full node operators who meet specific criteria, such as holding a valid SSL/TLS certificate and staking at least 42 ZEN, share 3.5% of the mining rewards. This incentivizes the operation of secure nodes, further enhancing the network's security and decentralization.
  • 20% Block Reward Allocation: A significant portion of the block rewards, 20%, is dedicated to the development of the platform. This fund supports the growth and maintenance of the ecosystem, ensuring its long-term sustainability.
  • Decentralized and Community-Driven: Horizen's Secure Node system has achieved a node count rivaling that of Bitcoin in just three months, demonstrating a strong, decentralized, and community-driven approach.
  • Innovative Technology: Horizen's sidechain platform, Zendoo, enables the creation of custom blockchains with zk-SNARKs technology, promoting scalability and decentralization.

Fairness in Decentralized Learning

Cryptocurrency launches and grant programs aside, their pursuit of fairness goes even further. More recently, it’s been an important touchstone in the growth of decentralized tech like decentralized learning.

A project entitled "Fairness in privacy preserving decentralized learning" aims to explore the issue of fairness in decentralized learning. Our aim is to create a plug-and-play algorithm that produces fair models. We could pretty easily layer on other imperatives like privacy and decentralization to make it more powerful. Centralized frameworks systematically produce the highest overall bill cut (16%) and more equitable cost distribution than all decentralized frameworks. To mitigate inequity as a balance to this potential, we designed a new open-source method (FairGrad (Fairness Aware Gradient Descent)) to directly tackle fairness in decentralized learning. Here’s what it looks like when researchers actively explore the intersection between fairness, privacy and decentralization. Their goal is to guarantee fairness for models, while safeguarding sensitive information.

By prioritizing fairness in decentralized learning, we can ensure that these technologies are used to benefit all members of society, not just a select few.

The cryptocurrency space is at a crossroads. It can go the route of short-term greed and practices that ruin our common future. Or, it can double down on its original vision of fairness, decentralization, and community-controlled growth. Together, let’s push for more fair launches and help fund sustainable grant programs. Working in partnership, we can advance justice in decentralized technologies and create a more equitable and sustainable future for the crypto ecosystem.