Being in the crypto industry for almost 5 years, I’ve gotten into the raging discussion (debate, argument) over decentralization. Bitcoin IS a decentralized digital currency, and that’s what makes it special, but what does that even mean? I’ve been an avid supporter of decentralization and even given talks such as Keeping Bitcoin Decentralized. But amidst it all, I’ve come to two conclusions:
- Decentralization is not a goal, it’s a tool to achieve a goal
- There’s no such thing as 100% decentralized. It just doesn’t exist
#1 causes us to beg the question, what is our goal? That may be different for different people, but if everyone steps back and asks themselves, I think they’ll find their goal is NOT decentralization. For me and some others, it’s empowering the individual with access to a resource previously restricted to the few and elite. For others it’s censorship resistance. For others it’s fault tolerance/redundancy. There’s probably a myriad of other end goals that people may have with many goals crossing over each other.
So then we should ask what are the best ways to achieve those goals. Decentralization can play a key part. Generally speaking, a decentralized infrastructure IS more accessible, IS more censorship resistant, IS more fault tolerant, but it can also hinder all three.
Picture a very decentralized messaging system like Bitmessage, fully encrypted, and peer to peer. It seems very censorship resistant and fault tolerant, but not very accessible. Each user has to see and attempt to decrypt every message from everyone else. Only powerful, well connected machines can afford to use Bitmessage. There are proposals to filter and segment the network where only major nodes see all messages but light nodes partially trust major nodes to filter the traffic. We’re now compromising censorship resistance in the name of accessibility.
Let’s talk about bitcoin again. Many say that 100% decentralization is each person running a full node. Is that even true? This does provide strong censorship resistance. You go through no one else to send/receive transactions. But running a full node requires continuous connectivity to the internet. If your internet goes down, your node falls behind on transactions, it could take hours or days to catch back up with no ability to send/receive until then. You’ve just sacrificed fault tolerance. And either way you still haven’t solved mining centralization which exists independently of full-node centralization. So was it even 100% to begin with? Queue up statement #2 above.
Speaking on the goal of censorship resistance, it’s easy to desire this through very strong decentralization. Ie. every user being a full peer of every other. But time and time again, we see that this comes at the compromise of cost and usability. It may limit the utility of the service to very few people. And if a censorship resistant network isn’t used, then it’s already been censored. Some balance is needed there.
I recently got into a discussion with a colleague that said he invests in and supports solely decentralized apps. While I agreed, I asked him to give an example of what’s wrong with centralized apps. He gave the reason of centralized institutions abusing their power like Facebook abusing our data privacy. I then brought up an indisputably more decentralized social media platform, Steemit. While more decentralized, it actually makes the problem of data privacy even worse than Facebook. Everything posted on Steemit is fully public to anyone, everywhere. For HIS goal, decentralization is actually worse. But it achieves a different and powerful goal of an anonymous and globally accessible social media platform with content monetization.
As with many idealistic technologies, crypto currencies have and will continue to introduce some level of centralization in an attempt at balancing the end-goals users want to achieve. At Edge, we utilize centralized servers to hold encrypted backups while still giving users control of their funds. Exchanges centralize funds to provide a fast and feature rich trading experience. Payment processors have centralized servers to be able to liquidate to the legacy banking system. Each has a goal in what they build and those goal may or may not align with your values.
Many argue that the internet was a failure. It was proposed to bring a decentralized, peer to peer information exchange. It’s said that we now access the internet through a small number of large companies like Facebook and Google. But from the viewpoint of accessibility, it was NOT a failure but a huge success. Before the internet we had no *access* to global information that wasn’t channeled through the worlds biggest companies of print and television media. Now, we do have the access with Facebook and Google only controlling the *discoverability* of that info. Never mind that there are also hundreds of other services we use to discover info. Medium, Twitter, Wikipedia, Snapchat, Telegram, Signal, Slack, and many others. Anyone can put up a website or blog. It may be hard for others to find, but it is accessible with just a URL. Accessibility vs discoverability is the key differentiator between the pre and post internet world and it’s brought a huge and positive impact in the decentralization of information. And with decentralized *access* comes the benefit of checks and balances on the big providers. While info discovery might be channeled through these big companies, they are kept in check with the ever present competition of services ready to take their business. If Google decided to censor a search topic, we have Bing, DuckDuckGo, and Yahoo as a quick, ready to go alternative with low friction to switch to.
Long term I see decentralizing technologies always having to make a centralization compromise. A compromise to make them adopted and usable. It might not be what absolute cypherpunk purists envisioned, but that doesn’t mean they won’t be hugely impacting, empowering, and help level the playing field between individuals and giant establishments.