The Capital
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The Capital

The Convenient Decentralization Theory

In the long run, convenience drives society towards more decentralized solutions

Throughout modern history, our society tends towards more decentralized solutions.

This applies to most everything in our social and economic lives, for things like goods + services, governance, work, and money. This trend towards decentralized solutions is driven by convenience, and will only continue.

My favorite example to illustrate the Convenient Decentralization Theory is…ice.

The Evolution of the Ice Trade

In the late 1800s, there was a huge natural ice industry in the United States and Norway. In the US, folks would harvest ice from lakes and rivers largely in the New York and New England areas, and ship it around the country and the world. Even though ‘plant ice’ (industrial ice created in plants) was invented in the 1850s, the ice trade largely relied on ‘natural ice’ through the early 1900s (source).

Eventually, cheaper production costs for plant ice, recurring ‘ice famines’, and health concerns (sewage in your ice!) made ‘plant ice’ the go-to ice creation method. Now, places could produce ice in factories around the world in the middle of the harshest heat conditions, and spend much less time and money storing and transporting it. Ice plants reached their peak in the early 1900s.

It wasn’t until the 1930s with the introduction of cheaper electric motors that it was possible for refrigerators and freezers to make their way into American homes en masse. Now, people had ice machines in their kitchens, which (a) rendered the ‘ice’ industry obsolete, and (b) completely revolutionized food production, food transportation, and cooking in general.

An image of early refrigerators

Refrigerators must have gave families a whole new level of autonomy — imagine how it must have felt to have a refrigerator for the first time and discovering how easy it was not worry about buying groceries and storing them for later use, not having to go to the market everyday for fresh food, how easy the concept of ‘leftovers’ and ‘frozen dinners’ suddenly became. It must have saved families so much time, money, and energy.

Note that the mechanical refrigerator was patented in 1899; it took 3 decades or so for it to be commercially viable in the American market. But its eventual market attainability, massive convenience to families, and the way it highly simplified the ‘supply chain’ of getting ice to people made this…ice creation decentralization inevitable.

Convenient Decentralization

I love this example of the ice industry and refrigerators because it clearly illustrates the convenient decentralization theory: in the long run, we trend towards decentralized solutions because they bring convenience and ease for people.

We trend towards decentralized solutions due to the convenience they bring.

These decentralized solutions are largely made possible by technological and societal innovation. You can find examples everywhere; here are a few key highlights:

  • Technology frequently follows this decentralized pattern. Goods and services from refrigeration, most every kitchen appliance, telecommunications, the internet….they all follow the convenient decentralization theory. This is best captured by economist William Gibson’s famous quote, “the future is already here — it’s just not evenly distributed.” That is, technology often becomes decentralized and available to people as it becomes more convenient to people and more attainable to produce or manufacture.

The future is already here — it’s just not evenly distributed.

  • Writing used to be something reserved for the educated, the elite, and the church. The invention of the printing press was monumental and allowed for print of all kind for people to consume. Eventually, we’d be printing opinion pieces, magazines, and journals of all kinds. Nowadays, everyone can put their opinion on the internet without going to a printing service
  • Governance has trended towards decentralization, at least in modern history. History has been riddled with monarchies and empires. The first step towards a more decentralized government occurred in 1215 with the forced signing of the Magna Carta, which effectively transferred some powers of the kings to barons (and eventually to citizens). Through time, this led to governance of the noble/baron class, a rise and power of a bourgeois class, a string of revolutions calling for a more democratic process, and the creation of provinces/states.
The signing of the Magna Carta (1215)

In these examples, the movement towards decentralized solutions was more convenient for the general populace and required less resources for people to be autonomous.

Pre-requisites for decentralization

There are 3 rules that hold in order for such solutions to materialize:

  1. These movements are user-driven — Decentralized solutions occur because they are convenient (hence the convenient decentralization theory). They save people time and/or money. Though this piece makes a big case for decentralized solutions, decentralization for its own sake isn’t enough — it really has to be bring palpable convenience to people.
  2. Protocols — all these examples above have underlying laws or protocols in order to streamline use, keep a high-bar for experience across all instances or products, and in many cases to limit bad actors taking advantage of such systems.
  3. Economically Viable — these solutions arise only when it becomes easy to create, produce, and enforce these solutions. Perhaps that’s why many of these decentralized trends take years or decades to formulate. Again, the mechanical refrigerator was invented 3 decades prior to its widespread use due to the early, expensive electric motors.

This Trend Is Not Stopping

If anything, convenient decentralization will only increase as technology advances. Furthermore, COVID-19 has accelerated the rate of decentralization in some key parts of our lives — we’re working from home instead of offices, learning from home instead of on-campus, exercising on our own instead of congregating at gyms, etc.

What will be decentralized next?

Money, data, and identity.

In todays world, money, data, and identity largely live in a federated world, meaning that certain powers hold the vast majority of this information in silos. But just as the movement from “harvested ice” and “plant ice” in the early 1900s to refrigerators in the 1930s brought on unimaginable benefits and autonomy to people and businesses, so too I’d say the convenient decentralization theory applies.

The bitcoin movement, which has been taking off long before COVID, is moreso in the spotlight due to monetary policy concerns exacerbated by the epidemic. It’s brought to light just how easy it one day could be to create protocols for decentralized solutions and allow people to be more autonomous with their money and value.

The same ethos and technologies that apply to the bitcoin movement can apply to the data we generate online and the way we hold our digital identities. In short, web 3.0 and the ethos it brings will usher in a world where online trust will be re-imagined through decentralized online identities, the way our data is stored and monetized will be decentralized and yield direct payments to individuals, and the way we exchange and create value will be significantly easier than it is today (especially for the underbanked). Can you imagine the goodness that will come out of these movements? We’ve just but scratched the surface.

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Paul Stavropoulos

Paul Stavropoulos

I like olives. And coffee. Technology, economics, and psychology are also decent things to talk about. Cofounder of Calltend.