Decentralization: Where Are We Now?

Last week, I talked about the four pillars necessary to build any society: Finance, Communication, Production and Law. In order to live in a decentralized way, we need to decentralize all four of these pillars, as well as create reliable, decentralized reputation and identity systems to keep them running smoothly. If we’re going to make any meaningful progress towards true decentralization, it’s important to see this pillars as part of an integrated system.

That may seem a rather abstract approach, but at Libertaria we know it’s essential to tackle these philosophical problems in tandem with the technological ones.

Still, looking to the future can only get you so far. And designing Utopian systems in a vacuum ignores the fact that conceiving a new and better model is often the easy part: the problem is how to transition smoothly and stably from the current system.

For example, whether you think it’s a good idea or not, it’s not that hard to imagine a transport system populated entirely by fully automated self-driving vehicles, all communicating with each other and overseen by a variety of navigation and safety protocols. The complexity comes in the messy intermediate stages, where the automated vehicles have to safely coexist with human controlled ones. Established systems don’t disappear overnight, and the early transition phases are often the most precarious.

Decentralization comes with the added problem that often it’s the systems and actors we hope to improve or replace which benefit most from new technologies. The very fact that they’re established gives them the resources and the widespread acceptance needed to adapt the new technology for their own ends, while new or radical approaches are looked on with disdain, suspicion or even outright fear.

Libertaria has strong philosophical underpinnings, but we also realise the need to be practical. There’s no point dreaming of a future that cannot be reached. We may dream about our own Libertopia, but we have to be realistic and implement Libertaria.

So in that spirit, today I want to look to the present and assess the current status of technology when it comes to decentralizing the four pillars and society as a whole. Are we any closer to decentralization, or is the dream further away than ever?

Finance

Let’s start with finance, as this is where you’d expect to see the most progress. People have dedicated a lot of time and energy to decentralizing finance, and with good reason. The problems with traditional centralized systems are well documented, with near daily stories about data breaches compromising users’ financial information.

Finance is also the context in which blockchain, one of the key decentralization technologies, is most commonly talked about. If people have heard of blockchain at all it will be in the context of Bitcoin, and the limited (and always inaccurate and misrepresentative) attention that blockchain receives in the media is almost all about Bitcoin and what it means for traditional finance. Online coverage is often more accurate, but the focus is still firmly on finance, with other applications of blockchain seen as niche or a long way off. In online communities, a huge majority of the dialogue revolves around token value.

But for all our talk, our best attempts to decentralize finance haven’t fared well. The ASIC race has seen Bitcoin become increasingly centralized, with a handful of mining pools dominating control of the network. Attempts to address this by replacing proof of work with other consensus protocols are promising, but still largely untested.

From an individual perspective, it is still incredibly difficult to separate yourself from established financial systems. Cryptocurrencies are mostly bought on platforms that are centralized and require personal information for transactions of any meaningful size. You always have a public entry point, and if that entry point is known, the transparent nature of blockchain ledgers means your transactions may actually be more visible than under traditional systems. Unless you’re lucky enough to be paid in cryptocurrency, it’s almost impossible to acquire them privately. Platforms like LocalBitcoins attempt to address this, but they do not scale and are banned in many countries, paradoxically making it harder for cryptocurrencies to escape from their unfair associations with illegal and immoral activity.

As for security, cryptocurrencies may be theoretically more secure than entrusting your data to centralized systems, but practicalities matter. For the vast majority of people, using crypto is still cumbersome and fraught with risk.

I don’t want to understate the massive achievements here. Bitcoin and other cryptocurrencies are incredible achievements, but there’s still a long way to go before we reach anything close to true decentralization. To address this, Libertaria is developing its own Hydra blockchain protocol, which will be fully integrated with the other parts of our network. By tackling the problem holistically from the outset, we hope to resolve a lot of the problems we’ve seen so far in this area.

Communication

The problems of centralized communication are getting more widespread attention. Facebook and other centralized communication platforms are losing some of their sheen as people realize how their data is being horded and sold.

But even though people are growing suspicious of the social media giants, this has not translated into any noticeable migration away from the platforms. With no viable alternative, most people have viewed recent data scandals with a resigned indifference.

Encrypted communication (WhatsApp, Telegram) is a noble attempt to restore privacy to users, but the data still travels through different servers outside of the users’ control. There are also persistent rumours that these services are compromised at the behest of state actors.

But some projects have made good progress on a truly decentralized solution.

Tox Messaging has found a good solution for P2P messaging, but like every other P2P messenger it has battery life issues on smartphones. Users are also bound to this specific application, so you can only receive and send messages from and to Tox applications.

Blockstack has a web-based solution for a decentralized internet by providing a special browser with web apps. But the browser is still at an early stage, which presents obstacles for users without good computer knowledge. There is currently no mobile version, although one is promised. But from experience it seems certain Blockstack’s mobile version will suffer the same battery life issues as Tox.

Libertaria is ahead of the field here. Our Mercury protocol is truly decentralized and the method by which the P2P connection is established minimizes resource use, making it viable for use on mobile phones or other lower power devices. Mercury will also support all kinds of decentralized apps.

All in all, then, communication is one pillar in which we’ve made great progress, although the problem of mass adoption is still enormous.

Production

Although privacy and control issues receive the bulk of attention in decentralization circles, centralized production may actually be the biggest problem we face. The ability for companies to easily create and manage the logistics of global supply chains has transformed every aspect of our lives. For many of us in wealthy countries this change can seem positive: over the past few decades globalization has given us cheap and easy access to food, products and services that would have been unimaginable a few decades ago. But the system is out of control. Millions of people across the world find themselves in an impossible situation, unable to make a living outside of the system, but barely making enough to live if they choose to work within it. Almost every product we buy has someone living on just a few dollars a day hidden somewhere at the start of its supply chain.

And once again, the decentralization tools that currently exist are likely to make the problem worse, not better. Smart contracts will help global corporations automate complicated logistics processes and become even more ruthlessly efficient. True, in theory the marketplace is opened up for smaller operations to connect and transact, but in practice only the existing behemoths will have the resources to pay the gas prices to force their contracts through the network.

But there are some rays of light to illuminate this bleak picture.

More and more people are seeing the value in buying locally, especially when it comes to food. More and more research is being done on how to create smaller, sustainable local supply chains to reduce our reliance on global shipping. Going even further, projects like Lifecycle are building self-contained units which contain an entire sustainable food ecosystem, which would allow families to feed themselves indefinitely with minimal resource input.

There are also major strides being made with energy. Solar panels and turbine technology have improved massively in recent years, making off-grid living a viable option for the first time. There are also several blockchain projects hoping to make community energy possible, allowing communities to share energy locally without relying on inefficient interactions with national grid systems.

Finally, projects to tokenize natural resources using blockchain technology will hopefully provide people access to new sources of income while encouraging them to live more sustainably.

Law

Law is the hardest of the four pillars to decentralize, so it’s not surprising that there has been limited progress here. There are several projects attempting to use blockchain technology to improve governance, but this is mostly in the form of improvements to existing centralized systems, such as a proliferation of projects aiming to improve vote transparency using the blockchain.

In decentralized projects, there is a dispiriting tendency to handwave governance issues, asserting that thousands of years of human development in this field can be encapsulated through proper use of smart contracts. But the real problem here isn’t the contracts themselves, its dispute management, and this is very difficult to do in a decentralized way.

Some cryptocurrencies like Dash, PIVX or Decred have governance systems to bring decision-making to the whole community rather than having control rest exclusively with miners (like in Bitcoin). But these are “coin-only” projects, concentrated on the development of the currency. These are good and necessary, but without decentralized alternatives to trading platforms for goods and services and/or decentralized communication, the benefits are limited.

Reputation and Identity Systems

Here, sadly, the problem is even worse. Countless projects and whitepapers include sentences like “obviously this will require some kind of reputation system” or “for full security, an identity system will be necessary” but there seems to be very little actual work or research being done in these fields. The few instances of blockchain-based identity systems which have got off the ground are large-scale state-funded projects, once again showing that centralized entities will be the main beneficiaries of these technologies in the short run.

So Where Do We Stand?

It would be unfair to call the decentralization project of the past few decades a failure: we’ve made huge strides, and there are now a variety of amazing technologies which show that decentralized living is not just a naive dream. But it can hardly be called a success, either. You don’t have to look very hard to see that my warning above is distressingly accurate: It turns out that almost every technology which helps the decentralization cause can be co-opted to make centralized systems even more powerful and efficient. Far from being freed, centralization and control of our data are stronger than ever.

But it’s not all in vain. As we’ve seen, there are many projects working on individual parts of the decentralization problem. But more than ever, it’s clear that we need to consider all four pillars of a decentralized society together, to give the best chance that these technologies aren’t co-opted by the very centralized entities they’re designed to disrupt.

Libertaria is the only project working on the full decentralized stack. We’ve looked at the real progress made in all these areas and combined them in a community-focused approach that will give people their first real shot at truly decentralized living, as well as providing major advantages to people who just want to decentralized individual aspects of their lives.

If these ideas resonate with you and you want to learn more, join the Libertaria project by signing up to our newsletter, following us on Medium or joining our Discord channel to talk to the Libertaria developers and other like-minded people.