“Decentralized” Applications? Please Don’t Be Fooled!
In the blockchain and cryptocurrency world, the term “decentralization” is thrown around a lot. It’s often touted as the ultimate solution to many problems inherent in traditional systems. However, the reality of how decentralized these applications truly are can be quite different from what is commonly perceived. In this post, I aim to dissect the concept of decentralization, particularly in the context of Ethereum-based applications, and shed light on some overlooked aspects.
The Reality of Smart Contract Development
Below are two visuals to help illustrate this discussion. The first visual maps out the process of how project owners or developers mature and implement a smart contract, while the second visual outlines how a user interacts with this smart contract.
Developers’ Aspect
🟢 Green Box: Interactors and interaction tools
🟡 Yellow Box: Third-party connections
🔵 Blue Box: Vulnerabilities related to data security and data-derived security
🔴 Red Box: Security vulnerabilities arising from the application itself and its implementation
⚪️ Gray Box: Network operation principles
The first visual represents the steps a developer takes to create and deploy a smart contract. This includes using various tools and platforms such as web3.js, Remix IDE, and IPFS, among others. Despite the use of these tools, the process is far from being entirely decentralized due to reliance on third-party services and infrastructure.
User Interaction with Smart Contracts
The second visual shows the user’s journey when interacting with a smart contract. It includes using a browser, interacting through wallets, and ultimately reaching the Ethereum network. Here, again, multiple points of centralization and potential vulnerabilities can be identified.
The Illusion of Decentralization
When examining the entire process from the formation of smart contracts to their implementation, I don’t see the exaggerated “decentralization” or “decentralized applications” that are often too large to fit in books. Instead, we encounter numerous dependencies and centralization points that compromise the ideal of a fully decentralized system.
Where Decentralization is Truly Seen
But let me tell you where I do see decentralization. It’s prominently featured in:
- Conference Topics: Many blockchain conferences highlight decentralization as a key theme.
- Summits and Webinars: These events often focus on decentralization but rarely delve into the technical challenges and limitations.
- Blog Posts: There is an abundance of blog posts, often translations, that praise decentralization without critical analysis.
- Books and Articles: Many publications glorify the concept without addressing practical issues and challenges.
The Harsh Reality
The poor applications of these technologies, security vulnerabilities, code flaws and deficiencies, third-party dependencies, and the dead-ends projects face due to the technical incompetence of the application owners, sadly, are not written in large letters anywhere. This lack of critical discourse can lead to an overly optimistic view of blockchain’s capabilities.
Amara’s Law states: “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”
This is exactly what we are witnessing with blockchain technology. When systems and applications developed under concepts like “decentralization” are eventually reduced to public activities, the grievances that will arise will be covered up with the same concepts. However, it is not too late in the long run.
The Way Forward
For blockchain technology to truly reach its potential, we need to address these issues head-on:
1. Critical Evaluation: More critical evaluation of projects is needed to identify and mitigate centralization points.
2. Improved Education: Educators and influencers in the blockchain space should focus on realistic portrayals of decentralization.
3. Technological Advancements: Continued development in blockchain technology to reduce third-party dependencies and enhance true decentralization.
Maybe I am wrong or missing something. What do you think? Let’s continue this discussion and explore how we can collectively improve the state of decentralization in blockchain applications.
