The Geo-Politics of Decentralization

Erosion of Trust

As our digital footprint expands due to increased use of online services, we start to lose control over who collects our data, who owns it and makes accounts, whom it is being shared with (and why), who aggregates it, who profits from it, and who steals/abuses it.

Data breaches have become alarmingly frequent in the current age. Examples include Equifax, Yahoo, Facebook (in October 2018; 50 million accounts hacked), and many others. Incidents of identity theft serve as a constant reminder of how centralized systems are increasingly becoming primary targets for hackers, leaving everyone distressed about “who can we really trust?” As systems continue to grow, they become even bigger targets for abuse!

The authenticity of the data stored in India’s controversial Aadhaar identity database, which contains the biometrics and personal information of over 1 billion Indians, has been compromised by a software patch that disables critical security features of the software used to enrol new Aadhaar users,” according to a HuffPost investigation — for as little as $35.

Unchecked use of centralized platforms has led to anti-establishment movements that have rocked the world, from the U.S. election tampering to Brexit and many others. Decentralization offers, perhaps, the best economic alternative and release-valve to address these social/political issues arising from the winner-takes-all economic model that centralization represents.

The infamous Facebook — Cambridge Analytica issue exposed another face. It is not exactly data theft, but it raised serious questions about user data collection and sharing, and its long-lasting consequences. There is an urgent need to ensure that trust, security, data, and control don’t become too centralized, allowing them to become a sweet spot for abuse and a single point of failure.

Decentralized solutions based upon Distributed Ledger Technology may offer a way forward into what Marcella Atzori described in 2015. Neo-libertarians and crypto anarchists believe that we are at the stage in history when individuals can gradually overcome any centralized political institution through distributed consensus, and create the conditions for an idealistic society of equals characterized by flat rather than hierarchical structures.


Change often comes very quickly and unexpectedly, allowing no time to prepare. Whether it’s the rise of the Arab spring, the popularity of crypto currencies, or the #MeToo movement — which continues to occupy center stage even in U.S. politics, with the Brett Kavenagh confirmation hearings — change is swift because of its social ramifications, and therefore viral. We believe this is also true for the decentralization of service delivery. It’s already here. The time to act is NOW, and non-adopters underestimate the speed of change at their own peril!


Relationship-Centric Services Community Development Is the New Mantra

Companies and service providers throughout history have constantly shifted modes of delivery and focused on offerings to keep pace with market opportunities and new ways of doing business. The traditional notion of “technology drives the solution” has been challenged with the slogan “innovate for new ways to do business,” which has swept us from Uber to Airbnb, digital-only banks, and virtually free stock trades through Robin Hood.

The service-centric model: During mid-90s, the world started to embrace the Internet. The Internet boom enabled new ways of reaching customers, offering new channels of distribution. Many early adopters like Amazon and eBay challenged the legacy product-centric approach successfully with e-commerce services by harvesting the power of the Internet.

The experience-centric model: By 2010 and after, the industry had started to shift focus toward personalized service delivery and user experience. The Fintech companies encashed the opportunity, and banks got disintermediated by them. Entry of the Fintech companies raised the bar for customer experience, reducing banks to mere utility companies.

The era of the relationship-centric model: We are now living in an era in which business success is defined and propelled by businesses’ relationship with their customers! Blockchain technology is enabling the creation of new trustless, inclusive models. This promotes an ecosystem of community-driven, level-playing environments fostering collaborative growth.

Change Is in the Air: There Will Be Winners and Losers

Digital disruption has had quite an impact on companies today. Since 2000, approximately half of the Fortune 500 companies have fallen off the list, which shows that if companies don’t change fast enough, they will lose out on opportunities, rendering themselves increasingly irrelevant. For companies, it is insufficient to simply keep up with changes (like adopting new technologies); they must also continuously find new perspectives and innovative ways of doing business.

Historically — for example, in 2011 — the top ten global companies included many oil companies. However, the majority of these slots are now held by platform companies. They include Apple, Alphabet, Microsoft, Amazon, Tencent, Alibaba, and Facebook. We expect that this list will continue to change, with prime positions being gradually taken over by decentralized counterparts.

Here is another look at just how centralized we are:

Source : McKinsey Global Institute

The concept of decentralization is not new. In fact, the Internet is one of the best examples of what a decentralized system can offer. It’s ubiquitous. It is not centralized. It is open to all, and the ownership is truly shared. No single node can bring it entirely down nor destroy it. It also lends itself to use, and allows centralized private networks like SWIFT, SAP/ARIBA, and Tradeshift EDI Networks to co-exist with it.

Other examples in the e-commerce space show how Alibaba’s decentralized business approach has propelled them to significantly challenge Amazon. Alibaba focuses upon its sellers by using its platform to globally connect buyers to all small businesses in China. This stands in stark contrast to Amazon, which focuses more on consumers.

As the central authority, Amazon manages warehouses of inventory and logistics, and is often criticized for squeezing its sellers and making it harder for them to compete and stay relevant online.

La`Zooz is an Israel-based startup building a decentralized real-time ride-sharing transportation platform. The La’Zooz network will exist on the phones and computers of its community of users, rather than on any central server. The platform is owned by everyone who uses it, making it open, community-based, and equal-opportunity. This, in reality, is a radically opposite approach from centralized ride-sharing platforms like Uber or Lyft.

What Is the Emerging Narrative?

This is the question to bring the point home. The need for a decentralized economy is evident and obvious. There’s a fierce ongoing battle in the startup space over who’s going to be the next Amazon, Google, and Microsoft in the decentralized world in the next 5–10 years.

The winning strategy for the new-age platform is clear; it is the mantra of decentralization! This is one of the core principles the Tallyx platform is built on. However, the established political and commercial order will not take it lightly, as decentralization will challenge the rent-seeking, controlling behavior upon which intermediaries depend, prevent the growth of monopolies, provide a flatter structure of governance, and offer a more inclusive model of business.

In order to get there, key technology underpinnings such as self-sovereign digital identity and decentralized data management and analytics are essential to truly decentralizing information and its access.

Just imagine: in a decentralized world, the data stays where it is, but the code moves! In this diagram by Phillip J. Windley, Chairman of the Sovrin Foundation, it’s

important that people determine how, what, and when they want to share attributes with interested parties.

Source : Sovrin Foundation

by Aditya Menon CEO&Founder Tallyx