WHY DECENTRALIZATION??

WHY DECENTRALIZATION??

DECENTRALIZATION IS A GOOD IDEA.

Human civilisation has been around for well over 10,000 years and we have been reliant on centralized systems like governments, banking, power and even cities themselves. Decentralization though not a new idea is the concept steering our future into the fourth industrial revolution. This revolution began in 2008 when financial institutions with singular points of failure let economies crumble. In 2009, the infamous Satoshi Nakamoto solved the problem of peer to peer electronic cash, coming up with a system that wasn’t controlled by one person or entity.

CENTRALIZED OR DECENTRALIZED.

The best classification of whether something is centralized or decentralized that I have found is from Vitalik Buterin, the founder of Ethereum who I would consider a pioneer in blockchain and can be broken down into three parts.

1. Architectural Decentralization — Is it one physical system or many physical systems? Does everything depend on one particular computer, one root server, one physical architecture or is it spread out over many computers or systems. If one of the these goes offline or gets hacked, will the rest of the system keep working.
2. Political Decentralization — Is it controlled by one person or entity or many? It is not just about the physical architecture, or the physical distribution, it is about control. Is the system or the protocol controlled by one entity or is it controlled by everyone together.
3. Logical Decentralisation — Is the interface or data structure a singleton or an amorphous swarm? Does the system your creating look like one single thing. Does it create a singleton, one single object or does it look more like an amorphous swarm. The english language is architecturally decentralized, politically decentralized, and logically decentralised.

BENEFITS OF DECENTRALIZATION.

There are definitely use cases for both but there is with out doubt logical future for humanity that doesn’t move towards many of our systems to become decentralized. Here are some reasons why we should be moving towards decentralized systems.

1. Fault Tolerance — Use redundancy to reduce risk of a system failing accidentally. A good example is on the internet, we use links to reference particular piece of information, overtime, the company that hosts that piece or information seises to exist, all links to this information are then broken and useless. Instead of linking to a specific piece of data hosted on a particular server you would link to a hash. So as long as one server in the world hosted that piece of information your link will work.
2. Attack Resistance — Making the cost of an attack sublinear, splitting a system into components makes attacks less costly. If you spend 100 times more money making one centralized system, it is not going to make it that system 100 times harder to hack. A good example is SSL certificate authorities, one of these companies got hacked a few years ago, in turn, all of these companies that relied on this authority to make their sites secure became vulnerable. Databases are also another good example and we have seen these systems being hacked multiple times over recent years comprising the personal information of millions of people.
3. Collusion Resistance — Making it more difficult for a sub-group of a community to act in its own benefit at everyone else’s expense. A simple example, is being able to have a monopoly such that one person or entity can raise prices making life difficult for the rest of the community. We have seen this throughout time with resources and electricity.
4. Efficiency — Decentralization may be more efficient due to diseconomies of scale or spare capacity considerations. For example Uber or Airbnb. Also forms of energy production are more efficient if you make them decentralised. You let people put solar panels and windmills on their roof tops, not only do you have millions of consumers but you have millions of producers.

TWO KINDS OF COSTS OF LOSSES TO NOT BEING DECENTRALIZED.

1. The Seen — Losses due to existing over-centralisation. The main ones being security losses and faults.
2. The Unseen — These are the unrealised gains because people are afraid of upgrading to network-enabled technologies due to their present centralisation. The main one being efficiency. An example of this could be online voting, the fact that in the 21st century we still vote using a pen and paper system is ridiculous. And that the fear of online systems being compromised stops or prevents this change from occurring.

Originally published at VISIONAIRE.