A new release by investment manager Morgan Stanley says the crypto industry is getting less decentralized.
Related: Morgan Stanley Finds Crypto's Use as a Currency Can Grow
According to it, although blockchain technology may be decentralized, the potential risk is that while regulations toward crypto develop, there is a need to implement most of the operations on a small batch of cloud providers.
Morgan Stanley mentioned that 65% of Ethereum's nodes rely on cloud technologies, and half of them rely on Amazon Web Services. The bank added problems can appear in a case when some services choose to ban particular participants of a product, or in a case of long system blackouts. Commenting on decentralization, Morgan Stanley noted that the world of crypto has advanced with many apps, code, products and firms. According to the bank, this causes parts of the market to be more vulnerable to separate services.
The report noted Ethereum’s update happened in September, when the blockchain started using the Proof of Stake mechanism. Currently, transactions are confirmed by validators, and 60% of them are run by 4 companies.
MS noted that the Ethereum team knows about the risks and is working to find solutions.