What Does Decentralization Mean To Me

in #decentralizesteem24 days ago (edited)

I approached blockchains first from a theoretical point of view - my interest (as limited as it is right now) in the underlying financial value of cryptocurrencies came much later. In the beginning I was just fascinated by this new software construct.

I'm sorry, I think I should have started by saying that I'm a programmer, that's how my rent is paid.

One of the most important aspects of a blockchain - again, from a theoretical point of view - is that it can't be controlled by a single entity. In fancier words, it's not centralized (or it's de-centralized, if you want).

A Bit Of History

Securing financial value was one of the main goals of humans - immediately after they were able to fathom the whole concept. The whole concept of "money" I mean. Once they decided money is precious, making sure their money is always safe became paramount.

So, sending money from one person to another became a delicate issue.

In traditional setups, the integrity of the transaction was insured by a certain amount of trust. I, the notes holder, I trust this bank enough to leave it my notes. And from now on, the bank will act as my trustee: I will not send the money myself, by putting notes in an envelope and then mail the envelope. Instead, I will mandate the bank to put a certain amount of the notes from my account, in the receiver's account. And, again, I trust the bank will do as it says.

For centuries, this setup worked relatively well. The problem appeared when the trust was misused. Banks slowly acquired enough influence to take over my own notes and do whatever the fuck they want with them, and, this is more important, with impunity.

Introducing Blockchains

A new approach was needed, one that will achieve at least 2 things:

  • eliminate the need for centralized trust
  • guarantee the transactions

Blockchains are able to do this, but only to a certain extent. They can, for instance, to guarantee that a transaction signed by all the required actors will always be correct. Cryptography validates inputs and outputs. Cryptography doesn't validate decisions, though. These are humane, prone to errors and subject to always changing moods and needs and desires.

In other words, tech can't fix humans.

As the recent hostile takeover of Steemit shows, at some point, one of the blockchain validators will want more than the others. Will want to have more, to do more and to get back more. Will want, and, with enough resources, will get, control.

Why Decentralization Still Matters, Then?

Because, in my humble opinion, decentralization exists and produce effects predominantly at the moral and ethical level, not necessarily at the code level. And by moral and ethical, I'm mainly referring to the concept of trust. It so happens that I strongly believe that money, as a physical object, is completely inexistent. Money is just a collective hallucination, which affects only humans, and which is based exclusively on trust - trust that a specific interaction will continue to happen, in a certain context, given a set of parameters. That's what "payment" is for: predictability. And predictability needs trust.

What happens if a single entity takes control over a blockchain? That blockchain will become a bank. With slightly better cryptography and faster transactions, but still a bank, with a single point of failure. And a single point of failure will always diminish trust. As a result, the bank won't be able to attract, store and manipulate the same amount of financial value. Trust and financial value are directly linked.

So, the subtlety here is that, even if you get control over a blockchain, as a single actor, the value of the underlying assets will simply vanish. Because that value is not there, in the servers, in the code, in the transactions. That value is made up of all the collective trust invested layer upon layer, within the entire governance mechanisms, in a predictable and balanced structure. Take that trust away, and all there's left is a bunch of code written in C, which will take months to read out loud to yourself, because that's all there is left to do with it. In the absence of real people that are willing to invest (time, skill, experience, assets) in that predictable and balanced structure, you're left with zero. Nada. Zilch.

I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.

Dragos Roua

Wanna know when you're getting paid?

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It's free to use, but if you think this is a useful addition, I'd appreciate your witness vote.

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Yes, agree, decentralisation matters, but it's hard or even impossible to code it. Also, people's nature is not possible to code. Maybe we need some kind of AI that will balance the relationships between strong single entity and the community?

Self-reliance is key.

You make a good point for why decentralization is needed. I just don’t think we really had it before all this. Not sure we will after.

Posted using Partiko iOS

I have managed to understand a little more about the blockchain thanks to this post. I will participate in this initiative. I have tried to access steem.supply but apparently cannot. You should check it to make sure there is no problem on the page.

Thanks, I think I know the problem, I use Steemit API, so apparently this was turned down.