Ethereum's Vitalik Buterin Sounds the Alarm on Crypto's Centralization Crisis

Ethereum co-founder Vitalik Buterin isn't holding back—he's calling out the crypto industry's dangerous slide into centralization!

Decentralization is the heart and soul of blockchain tech, but the industry's losing its way, fast. At the Ethereum Community Conference on June 2, Buterin dropped the hammer on the growing trend of centralization in crypto.

The early crypto dream was all about privacy, freedom, and transparency, but Buterin's warning that we could be headed down a dark path. He's drawing a chilling parallel to Web 1.0, the internet's early days, which morphed into something totally different from its original ideals.

"And I mean, a lot of the ways that the internet turned out in general ended up being very different from the early types of web 1.0 visions. That happens, right, both in terms of government control and also it serves as corporate control," Vitalik Buterin, Ethereum Foundation.

This shift isn't just about losing user power—Buterin's sounding the security alarm too. A ton of startups are building so-called "decentralized" apps with centralized frontends, like websites and mobile apps. Buterin's calling these dApps "straw houses," warning that attackers can easily take down these centralized weak points.

Decentralization standards need to get higher: Buterin

Buterin's not messing around—he's saying decentralization isn't just about having a bunch of validators or DAO voting. He's pointing to the "walkaway test" as the real deal—that is, if an app's core team vanished, would it still keep running?

"Basically, if your company in all of its servers suddenly disappear, do your users still have their assets? This is like the most baseline thing that you should be trying to get out of your assets," Buterin explained.

What's wild is that this idea vibes with the SEC's Howey Test, which they use to figure out if a financial instrument, like a crypto token, counts as a security.