What is Decentralization?
Is it the ultimate freedom?✌️
Decentralization is fundamentally about shifting power and authority in a community away from one central entity and making that power available to the members themselves, making community members self-sovereign.
A good example is BitTorrent. BitTorrent is a peer-to-peer file-sharing protocol that doesn’t rely on any one server, company, or entity to work. Bitcoin works somewhat the same way: it doesn’t require a bank to act as a central arbiter between two people who want to exchange value. The protocol empowers them to do it themselves.
Decentralization also has concrete tangible benefits for networked systems. For one, systems are less likely to fail if they rely on separated redundant components. They’re harder to attack, and it’s harder for malicious entities to exploit the system’s users who may not all be gathered in one place. A blockchain with 100 nodes is highly resistant to attack because let's say if five nodes go down, the system can easily continue operating with the other 95 remaining nodes.
Decentralization is a phenomenon or a paradigm shift that planet Earth is waking up to. Right now, the database and Internet structures that we, as a species, have created thus far, have typically been driven by Internet service providers. The history of the Internet and the history of the database grew up distinct from each other. And when the first Intranet was created and evolved into what we are now in the world of Online, basically we would log in to those intranets to access databases. And those types of intermediaries were the ones that would house our information.
Generally speaking, centralization of power can result in companies like Facebook, Amazon, and Google finding ways to monetize user data and habits in ways the users may not like and may not even know about.
Users of popular free online services may think of themselves as the customer and the service that they’re using the product. But that’s actually backward. It’s the users themselves and their information that is the product being sold.
It’s their data that is valuable. But if it’s your data, why are other people profiting off of it?
Fast forward to the last decade. The world on the Internet has essentially become an oligopoly of a handful of Internet service providers that access and serve as a thin line of intermediation to us. You can take Facebook, Twitter, and retail banking accounts. And basically, we pay those intermediaries tremendous sums of money, or in many cases, we are the product, where we have quotes, unquote, and free access, but then our data is shared and monetized.
Another benefit of decentralization is that it can put that value back in the hands of the user. This is a significant shift in thinking about how systems can operate, and its potential impact is difficult to overstay. Decentralization gets us part of the way to understanding the blockchain.
And now we’re going to a place where rather than having centralized intermediary custody, our digital assets, and our digital personas, we will have that self-sovereignty. The individual user will be in control of their data, their assets, and their reputation, and we will have essentially peer-to-peer transactions. In so much Bitcoin was the opening act, where I was able to send a cryptographic token peer-to-peer without an intermediary or a bank in the middle. And now what we’ve got with these next-generation blockchains is anything that we can dream of in a peer-to-peer fashion. One example of this is the notion of triple-entry accounting. So planet Earth as we know operates on double-entry accounting standards. Where if you and I were counterparties and I sent you a dollar, there would be credit in your books for the dollar and debit in my books for the dollar. Going forward, there will still be the credit and the debit, but we’re going to have this third immutable ledger entry. Hence, triple-entry accounting. And basically, that third immutable ledger entry will serve as a watermarking, a notarization, an agreement that I indeed gave you the dollar.
And while that seems somewhat trivial, what we just did was essentially automate the audit. Because right now, we pay auditors billions of dollars, the Deloitte’s, PwC’s, KPMG’s, the Ernst & Young’s of the world to reconcile that transaction. And with this next-generation database technology, we are going to be able to automate that function.
🕵️♂: ️Want to know about the history of Blockchain?
😎: Yeah? click this.
That’s all for today. Keep learning, keep growing…🏃🏽♂️
