The Decentralized Kingdom: 2
Decentralization and China, Genaro, Ethereum
As I write, crypto-investors around the planet impatiently await a decision from the SEC on granting an ETF for trading in cryptocurrencies. Affirmation is likely to draw in investment from big players in finance and value spikes for Bitcoin et al. This is a reminder that the crypto world is being pulled in several directions.
One core issue is centralization– the mass adoption of crypto tokens, blockchain-backed services and DLT record keeping seem inevitable, but what form of adoption will drive acceptance further? And what is preferable?
Some say that only when more large entities in the form of corporations and heavyweight investment funds wade in will adoption trickle down. Others argue that this is not preferable and will lead to crypto being co-opted and privatized. In the past I have argued that it will be use cases among relatively lower income people in less developed countries (often categorized as “the unbanked”) that will reinforce the trajectory and keep the decentralizing momentum going.
This question relates to the geopolitical distribution of projects in the world.
In my last piece on China and Silicon Valley (the Show, but by extension the American locus of creativity and drive that also fuels crypto disproportionately) I touched on how explosive and multifarious the scene in Asia is becoming. Just as some have qualified cricket as an “Indian game, invented in England” much activity in crypto is becoming centered on Korea, Japan and China, and Chinese speaking places like Singapore.
Here I want to expand on the significance of this from my own point of view, as a content manager within an ambitious, China-founded project that seeks to integrate cloud storage DApp development and a public blockchain.
•••
Last month, in an interview with Jeremy Millar of Consensys, I asked him about the future development of large-scale smart-contract blockchain infrastructure projects such as Ethereum. Might there be room for more projects in future? His response included the statement that, historically, technological innovation has “not tended to lead to a single platform” being dominant. That remark seems apt when considering how blockchain is emerging within China’s tech world, where it is swiftly becoming one of the most energetic and creative sectors.
Large, encompassing projects like Ethereum are supremely useful in any new industry.
Watching the progress and wild financial speculation of blockchain projects after Ethereum’s launch, there is a certain symmetry with the emergence of leading operating systems and software giants 30 year ago, after the first breakthroughs in hardware and web infrastructure had been achieved. A new tool began to permeate through society. On this basis an array of further tools were built, and countless investments made. Even as teenager whose sole interest in computers was their ability to deliver distraction and escape, I registered the inevitable excesses of the dotcom boom and the many defunct software and web projects.
Microsoft attained a monopolistic profile through providing so much value as a daily tool, but Windows was never the only operating system available.
Ethereum is now preeminent as a foundational structure for DApp developers. The world is also big and complex enough to generate more than one such “World Computer”. Most good blockchain projects seek global accessibility and rapid scaling. Each of them must also get started somewhere in particular, and that is likely to influence how they function and who participates.
I see many encouraging aspects to this: unprecedented connectivity can augment and empower local differences rather than wipe them out.
I also see factors that place strain on the integrity of blockchain as a decentralized phenomenon. The struggle to keep this structure while also bringing tools into everyday life that people can rely upon is a real one.
China, like blockchain, is growing fast, and changing form rapidly as it grows.
In a recent episode of ‘Unchained’, Laura Shin asked Jeremy Allaire of Circle questions about that platform’s large ambitions and swift diversification. This led to the question of how decentralized the future of blockchain might be. Allaire, speaking of the potential for connecting crypto to big, complex markets like real estate, stated that one might need to accept a pattern of centralization.
This will help with healthier regulation and other legal quandaries, generally bringing more benefit to more people–and keeping the engine running on innovation, as actors must pay attention to a technology that expands and morphs at an equally rapid pace.
In a 2017 Medium piece discussing the nature of decentralization, Vitalik Buterin described the concentration of Bitcoin miners in China as a benefit, as it creates a balance with the concentration of core development activities in the U.S. The reasons he gave for this were to do with communication and culture, rather than economics. Here “coordination” is a bad thing because it is one element that can work against a healthier decentralized governance.
“…the fact that Bitcoin’s core developers generally speak English but miners generally speak Chinese can be viewed as a happy accident, as it creates a kind of “bicameral” governance that makes coordination more difficult, with the side benefit of reducing the risk of common mode failure, as the English and Chinese communities will reason at least somewhat separately due to distance and communication difficulties and are therefore less likely to both make the same mistake.”
My only criticism here would be the use of the word “accident”. Most digital manufacturing, and most individual uptake of new tech is now concentrated in the Far East. Yet much digital technology naturally has a Western bias. Its roots are located there. Coding languages are more closely tied to western alphabetized languages, and even being generally computer literate (let alone capable of coding) makes an Asian user someone who thinks with more than one script. The accelerated fusion of structures is yielding results that are difficult to gauge, but it certainly does not appear to be making anyone stupider.
As with culture as it spread around the globe, themes will emerge. That Norway and Canada both like winter sports and are good at them shouldn’t be a shock. Nor that names showing the history of East Asian diaspora ring out among many technology projects founded outside the continent itself.
That mining is concentrated in China should not be a surprise, nor that the structure of a technology that spreads far and wide will change as the user base grows. Some of the fear around this may be exaggerated. In blockchain, most actors thus far have added to, rather than tried to destroy the integrity of the systems involved. In fact, this helps explain its success. Partial “centralization” in certain areas is one consequence. With the launch of Genaro’s Testnet and Mainnet this year, DApp development will have another foundation, one with roots in Asia and a planetary practicality.
This may be the future profile of blockchain then: global, with outcrops of local characteristics.
Genaro’s Testnet launches next month.
