One of the main benefits of cryptocurrencies is their transparent nature. Essentially, the code is openly verifiable which ensures trust and integrity.
Not only has this created an honest system, but it has also prevented the collapse of certain tokens by highlighting bugs and malicious code. Overall, open source software creates a democratic community that focuses on collaboration.
That is why in this article, I will be covering what exactly open source cryptocurrencies are and the benefits they bring. So without further ado, let’s jump right in.
Cryptocurrencies rely on coding that is open source. This provides a trustless and transparent ecosystem with verifiable smart contracts. In essence, the code is viewable by anyone which highlights any malicious activity and bugs.
What does open source crypto mean?
Open source crypto refers to tokens that rely on code that is freely shared. Generally speaking, anyone can contribute to the code, and therefore it is more of a community-focused approach.
Rather than a company that shapes the development and sells a product, open source software is distributed and developed among a vast network. This removes any choke points and creates a more democratic system.
Some widely known examples in the cryptocurrency industry include both Metamask and Ledger. Both of these wallet providers utilize open source software to some degree.
Now that you know the basics, let’s look at some of the benefits and disadvantages of open source software.
Benefits of open source cryptocurrencies
Encourages collaboration – the most successful open source platforms foster collaboration. Rather than a centralized company coding the protocol a community of individuals contributes.
In turn, a vibrant ecosystem of like-minded individuals is created. Moreover, it changes the dynamic between creators and the community. Rather than the users remaining as consumers, they can work together with the creators.
Highlights bugs & redundant code- Unfortunately due to the complexity of blockchain coding bugs are common. However, open source technology highlights these bugs while also allowing developers to view and simplify overly complicated and redundant code.
Combats fraud – there is no denying that hacks are rampant in the cryptocurrency space. Oftentimes, bad actors write malicious code that can be exploited.
However, thanks to the open source nature of cryptocurrencies this is all viewable and therefore actions can be taken to prevent fraudulent activity.
Cost reduction – as anyone can contribute to open source cryptocurrencies it reduces the cost for creators considerably. Now the development and maintenance costs can be dispersed among a network of participants. Moreover, on the users’ end, it is generally free.
Democratic – as there is not a centralized company that solely shapes development it creates more democratic development. If we take Bitcoin as an example it does not have a CEO or board of directors.
As a result, development is more robust and fair as consensus is reached by a large network of participants. Rather than a single point of failure, the power is distributed.
Higher quality – generally speaking, only the developers who want to work on the project will contribute. They do not have a contract to abide by rather they are motivated by a personal need and their passion. In turn, this leads to higher-quality content.
Disadvantages of open source cryptocurrencies
Security – as the code can be freely edited it allows bad actors to implement malicious code. Smart contracts can be designed to steal users’ funds or personal information.
Lack of support – when developing and using open source software there is often little technical support. This is mainly due to the lack of funding. After all, the software is usually free.
Bad user interface – open source cryptocurrencies are often criticized for not being user-friendly. They can be difficult to develop and the user interface is not intuitive.
Is Bitcoin an open source project?
Since its inception Bitcoin has been an open source project. Simply put, developers update the code, and the community vote on whether it should be implemented.
Once implemented the code is viewable on the blockchain.
Is Ethereum an open source project?
Ethereum is completely open source. Based on the solidity programming language anyone can participate in the development of the protocol.
How to contribute to cryptocurrency code?
The majority of cryptocurrency projects allow users to contribute via GitHub. Essentially, it is an open source platform that allows cryptocurrency developers to store and manage their code.
Not to mention, it facilitates collaboration by allowing developers to share their files and edit other people. On the website, you can find software feature requests, bug tracking, and general queries.
Are Coinbase and Binance open source?
Coinbase and Binance are not open source. The software is proprietary and as they have invested millions in development they do not want to share this information with competitors.
If you want to view this article in video format then check out my video below:
As you can see, open source software is a key component of the cryptocurrency space. All in all, it facilitates a community-centric approach that is honest and transparent.
That being said, it is not without its difficulties. This includes poorly written code and a lack of support to name a few. However, as technology continues to improve these issues will become less apparent.
I hope you found this article useful and thanks for reading it.