Cypherpunks are ecstatic about the decentralized economy. This has been the dream since the early days. And –oh– how we wish we could decentralize everything.
But beyond us romantics, “decentralized” is today often presented as just another meaningless and vague technological buzzword like “Web 2.0”. Worse yet, usurped by less than responsible enterprises after the ICO boom of last year, it is used to attract investment without substance or necessity.
It is clear that the essence of decentralization is not understood. In 2016, Bettina Warburg gave a TED talk about blockchains, introducing the concept of decentralization by incorrectly comparing it to Wikipedia, a centralized encyclopedia. Her talk is a great introduction to blockchains and I would highly recommend that you watch it. Is her analogy to Wikipedia, which she used rhetorically yet successfully to approach a less accessible audience during a short talk, our best explanation?
Vitalik Buterin has written extensively and excellently on decentralization, dispelling many of the myths. Based on his classification, I am talking about systems which are architecturally decentralized, in that they run on multiple physical computers, as well as politically decentralized, in that no central party has authority over them. It is imperative to have them both to call a system decentralized.
A system with architectural but not political decentralization is ran by a centralized person, corporation, or committee. It is not decentralized, because the committee is a closed perpetually unalterable source of truth. Facebook is a system which is architecturally decentralized but politically centralized: If a server goes down, the system can continue functioning and be fault-tolerant. But if Zuckerberg and a couple of his investors decide that they want to shut it down, they can do so in an instant.
A system with political but not architectural decentralization, while not ran by a single committee, is in principle and in practice based on technology that is susceptible to centralized intervention, even though the politics may mandate that intervention shouldn’t happen. If you run an Internet forum in which decisions are always taken by its members, but you own the server in which it runs, you can always shut down the forum by your own decision whenever you feel like turning into a dictator, bypassing the political will of the rest. This is why governments, despite being democratic, are susceptible to coup d’états.
Wikipedia stands close to both political and architectural decentralization. If one of its servers goes down, the rest will continue running the service. Decisions are taken by the people through consensus and committees are elected through direct democracy online. Better yet, it is open source and anyone can set up their own wiki and even download a copy of the whole encyclopedia to reproduce. Yet, it falls short in achieving the status of being decentralized. A malicious system administrator of Wikimedia is given access to control the servers in which the system runs and can, under one of his authoritative commands, bring the whole system down instantly. If such an incident were to occur, Wikipedia would be back up and running very soon, on its old domain or a brand new one. Yet it is remarkable that this is even possible, and setting up a new Wikipedia would still require a central individual or committee to take the effort to redo it.
This brings us to the nature of true decentralization, in which a system’s properties are maintained despite the will of individuals or particularly powerful committees acting not only in error but also maliciously. A decentralized system self-enforces its own properties regardless of what the will of a closed group of people believes. We can now give a complete definition of decentralization.
Decentralization is the ability of architecturally and politically decentralized systems to self-enforce their autonomy when confronted with adversarial committees.
Of course, systems always consist of people and the people using them can take decisions to modify them. The important distinction to make here is that the people who use a system as a whole can, naturally, always threaten the autonomy of a system, as they are the system itself. Decentralization is achieved when such decisions cannot –cannot and not simply would not– be taken by closed trusted groups which do not necessarily represent the users.
The Internet is a country, literally speaking. It has all the attributes of a real country, but only exists online. It has a population: those with Internet access. A language: its programming languages used to built it and the text language used to type in chats from IRC to Facebook Messenger. It has its native citizens: us Internet addicts, who have spent all of our lives online and are netizens. It doesn’t have land or physical borders or an army, but doesn’t need any, as, to its benefit, it cannot be engaged in war. It has an economy and cryptocurrency is its currency. It has its own laws, written in smart contracts. It enjoys sovereignty: its existence cannot be destroyed by a political decision of another country. To maintain this sovereignty, its elements need to be decentralized.
Given the remarkable resilience of decentralized systems based on the above definition, are they really even achievable? The answer is a resounding yes. Cryptocurrencies are perhaps the first truly decentralized systems. Satoshi Nakamoto, the original creator of bitcoin who, in a very suitable manner for the never-ending drama of cryptoland, disappeared never to be seen again after he sowed the seeds for the creation of a decentralized economy, does not hold the keys to the castle. Even if he resurfaced from the long dead still holding his bitcoin and GPG keys, he could not shut down Bitcoin at his whim. Even if a government decided to issue a law claiming that Bitcoin is now illegal, that law is irrelevant to the system itself. While it may scare some people away from using it (and we should all advocate for its legality), the system will survive. If a government issued a subpoena saying that Bitcoin must be shut down, this subpoena can have no effect, because there is no one to service it to. The current Bitcoin developers can try all they want to destroy the code and never associate themselves with it again. They could be massively murdered. GitHub can be asked to banish the code repositories out of existence from their website. The various bitcoin websites maintainers can be put in jail and the servers seized and burned. Despite all of this, unlike any old website or Wikipedia, the system will remain online and usable for the rest of the users who wish to keep using it. It would be similar to the Chinese government declaring that fishing is now illegal in Greece — while they can do it, the law is irrelevant.
Were the Internet itself to be shut down by a government asking its ISPs to stop providing service, it would still survive, and these decentralized systems would survive along with it. Much like what happened during the Arab Spring, hacktivists engaging in informational warfare were able to maintain Internet access despite what the government wished. And while mesh networking techniques have not yet been applied to cryptocurrencies, the technology is there to create connections between individual devices such as mobile phones without a service provider at all, like the Catalonians are doing. The network cannot be shut down unless all of its nodes have been shut down.
As such, decentralized systems are an emerging form of life. While designed and not evolved, each of them strives for its own self-preservation. They don’t consist of flesh and blood, but of information transmitted on a cable or over the air, yet life is substrate-independent. They don’t reproduce like meat organisms, but they form a hive mind, with interconnected nodes jumping in and out of existence as people join and leave the network, each contributing their own little bit in the self-enforcement of the rules of the system, making it impossible to track where the system truly is or how big it is. Could it be that we were expecting from the field of artificial intelligence to produce artificial life, but all of a sudden it surprised us by springing into existence out of the field of cryptography?
Granted, this form of life is not conscious. Despite this, it is able to do a lot of things that even a decade ago would be considered unthinkable. Bitcoin is an autonomous system that cannot be shut down by governments. As a system, it owns money and it is able to hire humans by paying them to work for it. These humans are called miners and are given a salary by the autonomous system. No single human committee can control these salaries, ban them or regulate them, because the system will continue operating in the manner it operates despite the regulation.
Ethereum is itself an autonomous system that operates without human ability for intervention. Even more powerfully, the smart contracts contained within can be their own autonomous entities, owning money, paying salaries for services and having no owner if their creators choose to build them that way. These could one day constitute autonomous “corporations” with no investors and no stakeholders, simply servicing the public good. An example could be a decentralized Uber. Living in a smart contract, this entity owns a fleet of cars, services customers, makes money which it stores in their blockchain account, pays for gas using it, has the car drive itself to a mechanic whenever it needs to be repaired (paying them using their earnings) and keeps expanding their fleet. The cars could be driven by humans that are hired by the smart contract, or be self-driving in the future. Unlike Uber, if a government tries to shut down this entity, it would be very difficult, as they would have to physically seize every car currently in its operation individually, which they may not be able to locate, and prevent the smart contract from buying new cars with its existing earnings, money which they cannot seize. Whether this is a desirable situation is a question of great controversy.
Creating such new decentralized systems and having them operate without owners in the world will allow us to evolve useful services that can serve humankind in abundance. Among these, those services which are useful will survive, because more people are going to keep using them. Those which are useless will die out, as they won’t have nodes to run on, in a peculiar survival-of-the-fittest game in the country that is the Internet. The use of any particular service would be voluntary.
In this post-capitalist structure, the entities will not have to pay their shareholders as they won’t have any owners, and so will be cheaper to operate. Bitcoin is doing this with currency. Ethereum is doing this with parts of the court system and civil law. OpenBazaar is doing it with marketplaces, rightfully destroying middlemen vultures such as eBay. Autonomous –and not just self-driving– cars may still be far away in the future, but it’s not out of the realm of possibility. And on a lighter note, CryptoKitties are doing it with collectible card games. Perhaps decades away, it’s regardless a matter of time until services such as banking, insurance, AirBNB, social networking, messaging, Internet searching, physical package delivery and a multitude of other services are delegated to autonomous entities. Once these systems are created, they will serve our children in perpetuity for free. It only takes a team of benevolent developers to put them out there. They will be a gift to the world, a service of economic value that can be used by everyone by paying only for its exact cost. In this endeavour, it’s up to us to build the technology to create the backbone of the economy that will support this future; secure decentralized blockchains that can be used as a scaffold for the new economy. Once we’ve built this backbone, the applications on top of it will follow.