Decentralization Vs. Scalability; A See-saw Relationship

Those who have been in the world of crypto for some time know that there has always been a see-saw relationship between scalability of crypto assets and how decentralized they are.

Take Bitcoin for example. It is based on proof of work and miners to distribute shares and power. Although it is believed that it has the most decentralized ledger, it charges really high fees for its transaction. Everyone remembers 2017 when Bitcoin was traded at its highest, each transaction could cost you about $50. The transaction fees in crypto world put limitations on the system and its scalability.

And yeah! Everybody remembers what Bitcoin was supposed to be. A system to transact money in a decentralized way. Bitcoin and all the altcoins that came after were the first generations.

With the second generation, like Ethereum, and all its Dapps and smart contracts, the goal was to go beyond transactions and increase the scalability. But it came with a cost and that was lowering decentralization.

Let’s get deeper into the rabbit hole.

Because of all the dapps and smart contracts in Ethereum, the ledger gets huge. It is currently a matter of terabytes. So nodes (unlike Bitcoin) aren’t able to host all the data on their ledger. With fewer number of nodes, it’s easier to gain power over Ethereum’s network which makes the whole thing a step forward towards scalability but at the same time many steps backward with decentralization.

The same pattern is true with EOS, with some differences. In EOS, the system is designed to work with proof of stakes in which stakeholders select 21 delegated nodes. Knowing that the majority of stakes in EOS belong to block.one company, it’s evident that block.one company can control everything by having bigger votes in selecting those 21 delegates. In other words, EOS would be out of the picture, if anything happened to block.one company.

Let’s focus on scalability and why it is such a big problem. With the first 2 generations of cryptocurrencies, all nodes need to host everything. Two problems arise. First, to host everything on thousands of nodes is costly and second, the amount of data is huge, just think about a video sharing Dapp, something like YouTube and how much data should be stored on nodes.

The most important problem, however, is not even hosting! It’s the power everyone should have. After all.

With the 3rd generation of cryptocurrencies, not everyone needs to host everything but everyone has the power to vote and resolve disputes of double spending attacks and such. This is achieved by shifting from proof-of-work and proof-of-stakes to proof-of-uniqueness and the introduction of BrightID to the system.

In BlankDAO and incorporation of BrightID, everyone has the same fair amount of power in case a dispute needs to be resolved. It basically changes your approach toward decentralization. In BlankDAO we believe that not all dapps need to be hosted on all nodes. It depends on the dapps. Some dapps are really sensitive and need to be fully decentralized, like financial and banking dapps, while there are other dapps, like social media or video sharing dapps which essentially aren’t that sensitive and can be hosted on a fewer number of hosts.

In blockchain, however, everyone hosted everything but not everyone had the power to make decisions and vote.

In Bitcoin, the decisions are made by the owners of four mining pools. In Ethereum, we’re talking about three major mining pools who had the power. And in EOS, those who control block.one company. With BlankDAO, BrightID and it’s proof-of-uniqueness, this issue is resolved by letting everyone to have a vote on issues and disputes.

Now that we have BrightID, we don’t have to worry about sybil attacks on the system, as this problem gets solved in a different place. How? With BrightID, we can make sure each player can create only one account on the system. Dapps can have their users use their dapps for free, as long as they’re using it in a reasonable amount. And when they ask for more usage of the dapps, then they’re going to have to ask for some costs and fees for the service they provide.

With proof-of-uniqueness, incorporated in BrightID, because everyone has a vote to resolve a dispute like a double spending attack, you’d have to collude with 51% of the people. That is impossible because you’d have to collude with a large number of individuals. BrightID is a revolutionary approach which allows high scalability and high amount of decentralization securely, and at the same time, really low or no fees at all for some dapps.

Make sure to visit Blankdao.org and read the whitepaper.

Join our community at https://riot.im/app/#/room/#BlankDAO:matrix.org

Check out BrightID and awesome new possibilities at brightid.org