In human history, the dichotomy between centralization vs decentralization appears to be opposing forces gradually overcoming or being surpassed by one another. And, when one replaces the other, individuals explain both by positing philosophical or theoretical justifications for their existence.
- 1 Centralization
- 2 Decentralization
- 3 Reasoning
- 4 Ballet’s founder and CEO, Bobby Lee:
- 5 Chang Jia, Bytom and 8btc founder:
- 6 InsideChains founder and CEO Cristina Dolan, vice-chair of the MIT Enterprise Forum:
- 7 Da Hongfei, CEO of Onchain and co-founder of Neo:
- 8 Nervos co-founder Daniel Lv:
- 9 Stellar Development Foundation CEO and Executive Director Denelle Dixon:
- 10 Emin Gün Sirer, CEO of Ava Labs, Cornell University professor, and IC3 co-director:
- 11 Fidelity Private Wealth Management vice president Jennifer Wines:
- 12 Kevin Chou, Rally’s co-founder and CEO:
- 13 Bitrise Capital co-founder Kevin Shao:
- 14 Draper Associates and Draper Fisher Jurvetson founder Tim Draper:
- 15 Chairman and co-founder of Animoca Brands, Yat Siu:
British philosopher Thomas Hobbes published Leviathan (or, The Matter, Forme, and Power of a Commonwealth Ecclesiasticall and Civil) in the middle of the 17th century, in which he formulated social contract theory. According to Hobbes, mankind began with a summum malum — greatest evil — or a continual fear of violent death, which he simplified for this piece. People, driven by fear, constructed a Leviathan, a state to which they abdicate their power in exchange for safety from the tyrant. This marked the beginning of a protracted period of societal centralization.
In the mid-twentieth century, French philosopher Paul-Michel Foucault delved more into the process of power consolidation. Foucault employs the image of Jeremy Bentham’s proposal for the “ideal prison”: the panopticon in his book Discipline and Punish: The Birth of the Prison. In short, it depicts a government that desires control over biopower while also humanizing punitive procedures by making people feel as if the guards are a direct part of their lives.
As Canadian-American cognitive psychologist Steven Arthur Pinker shows in his famous book The Better Angels of Our Nature: Why Violence Has Decline, the centralized system achieves its goal: residents’ safety gradually increasing over time. According to Pinker, centralized, top-down command-and-control structures and systems are a functional mechanism, as seen by Hobbes’ Leviathan and Foucault’s panopticon. Is that true, though?
On both extremities of the spectrum of centralized governments are communist and fascist states, which few can claim to be functioning control systems, given the amount of violence that highly centralized states appear to create. Another example is the World Wide Web, which was designed as a decentralized platform from the start. But take a look at the digital behemoths of Silicon Valley today: they now own and control all of the data and value contained in Web 2.0. Another is central banks, who printed an insane quantity of money even last year, generating high inflation rates all over the world.
“As long as a single center has a monopoly on the use of coercion, one has a state rather than a self-governed community,” Nobel Laureate and American political economist Elinor Ostrom wrote in her book Governing the Commons: The Evolution of Institutions for Collective Action in 1990. She goes on to say:
However, until a theoretical explanation for self-organized and self-governed enterprises based on human choice is fully developed and accepted, major policy decisions will continue to be made under the assumption that individuals cannot organize themselves and must rely on external authorities to do so.
Thanks to the creation of blockchain technology, we now have those theoretical explanations. The process of spreading power and functions away from a central authority is known as decentralization. Decentralized or peer-to-peer networks are participatory systems that resist control by a single, centralized entity. The most well-known examples of decentralized architectures and systems are Bitcoin (BTC) and Ethereum/Ether (ETH). Finding a specific center is frequently difficult, if not impossible.
Last year, the globe witnessed the meteoric emergence of the decentralized finance (DeFi) sector, which signaled the start of a major decentralization trend. In the rise of the Web 3.0 movement, monopolized data, controlled by a few firms in Web 2.0, causes redistribution toward individual users, even to decentralized governance, which is now theoretically, technically, and practically achievable.
Decentralization powered by blockchain technology has the ability to redemocratize society by restoring trust in the electoral process, or, as some claim, by safeguarding democracy around the world. While blockchain cannot solve all problems, it has the potential to address many of them, including promoting diversity and inclusion, closing the gender gap, empowering the unbanked, and battling economic injustice.
One of the three main principles of dialectics is the law of the unity and contradiction of opposites, which is represented by centralization vs decentralization. Without the other, one seems unattainable.
Some claim that central bank digital currencies (CBDCs) are destroying the concept of decentralization by restoring control to governments rather than citizens. Others contend that CBDCs will only attract the public’s interest if they re-establish decentralization at their core.
Exchanges have gone through a similar dialectical process, with some suggesting that centralized crypto exchanges have a potential to lead the crypto sector into the future, or even that centralization is required and real decentralization stems from the roots of centralization. Simultaneously, some say that decentralization has lost its meaning over time and has to be reintroduced.
In the crypto regulatory arena, the opposition between centralization and decentralization has a dialectical aspect. While it’s clear that crypto has no future without regulation, and that compliance DeFi is required for a sector to mature and thrive, what could be at stake by surrendering privacy and leading to financial exclusion?
Because a circle has neither beginning or finish, the centralization vs. decentralization debate should not be seen in black-and-white, polarizing terms. The greatest solution would be to reach an acceptable agreement. To find out what experts in the crypto and blockchain space think about this dichotomy, Cointelegraph reached out to them with the following questions: How do you feel about decentralization vs. centralization? Would a more decentralized approach be more popular?
Ballet’s founder and CEO, Bobby Lee:
“The world in which we live is actually somewhat centralized, in the sense that while there are natural components and things that are decentralized, society, a country’s organization, and legislation are all centralized.” As a result, it’s always a mix and match, a yin and yang situation. We’re switching back and forth.
Gold, for example, is decentralized, but when corporations who sell or invest in gold step in, they concentrate it – whether it’s through the issuing of gold coins or the selling of gold securities and ETFs.
When digital currencies first arose in Central Asia, they were decentralized. However, when exchanges provide custodial storage and trading, it becomes a centralized solution, if you will. However, more decentralized options, such as decentralized exchanges, will undoubtedly continue to exist.
However, because some people want professionals to come in and execute things correctly, including investment vehicles, there must be some centralized nature to things. As a result, it’ll be a mix and match situation. “I don’t believe the world will ever become entirely decentralized.”
Chang Jia, Bytom and 8btc founder:
“With the advancement of blockchain scenarios, particularly decentralized finance (DeFi), we can no longer consider the decision between decentralization and centralization in terms of sustaining the core operation of a public chain.” People would be more likely to study the architecture design and solution of decentralization of rights, which is the first principle, if the underlying architecture of the blockchain was not yet developed when it came to how to establish a worldwide decentralized blockchain a few years ago. As the core network of many public chains began to emerge and mature, a growing number of top layer protocols and scenarios appeared and were implemented.
Some protocols or applications no longer require complete decentralization of rights as long as the underlying chain or scene ecology to which they are tied is sufficiently rights decentralized. These applications and protocols will place a greater emphasis on striking a balance between decentralization and commercial operations, with increased commercial efficiency as the primary goal.
People will accept more decentralized techniques if they select blockchain. As previously stated, people attempt to strike the correct balance between decentralization and efficiency in each scenario.”
InsideChains founder and CEO Cristina Dolan, vice-chair of the MIT Enterprise Forum:
“The real magic of crypto is the decentralized, immutable, and transparent blockchain foundation, which will be embraced by those who truly understand the value.” There have been various attempts at digital cash before to Bitcoin, but the transactions were not irreversible or trustless.
The capacity to interact in a trusted and transparent manner without relying on a central authority, as well as the transparency to observe transaction paths and understand what’s going on across the network, isn’t something that walled or centralized financial networks can provide. If central banks want their CBDCs to be adopted, they should use a distributed architecture that is transparent to build trust. Fear will be created as a result of central bank-issued programmable money that may automatically pay fees or taxes without open transparency, driving more people to other cryptocurrencies.
Although we will continue to watch this field flourish, the incredible decentralized finance innovation that is taking place has encountered some growing pains. When it comes to exchanges, centralizing the on- and off-ramps to traditional financial institutions can be beneficial. It makes enforcing a KYC process at the endpoints easier.”
Da Hongfei, CEO of Onchain and co-founder of Neo:
“I believe that, in the future, decentralization and centralization will exist on a continuum, given both sides’ unique advantages and drawbacks — but, people will have a true choice in terms of how and to what extent they accept centralization versus decentralization.”
Users frequently do not have complete control over their data in the present paradigm; rather, information is fragmented and distributed over the internet across numerous platforms and databases. Users can regain control of their data and directly engage with one another for optimal benefits by developing crucial decentralized technologies ranging from data storage protocols to DeFi. People are ready for decentralization, as the recent DeFi boom has demonstrated, and I believe it will only grow from here.”
Nervos co-founder Daniel Lv:
“The most critical characteristics of a blockchain are product market fit and usability, such as a decent UI/UX and cheap transaction costs (e.g., gas fees).”
There are several levels of decentralization, and what works best for a user is determined by their requirements. DeFi on the Binance Smart Chain, for example, is more centralized than DeFi on Ethereum, but it’s still more decentralized than a bank.
Decentralization is crucial for a layer-one blockchain like Nervos behind the hood. It’s the foundation for safety and the reason we’re here today. Nervos has a unique layered architecture that gives users the security and immutability of a completely decentralized public chain while also allowing them to scale on our layer two with different levels of decentralization.”
Stellar Development Foundation CEO and Executive Director Denelle Dixon:
“Decentralization as a whole has the benefit of allowing systems to respond to the needs of a wider range of stakeholders.” Decentralization has a leveling impact on participants since both the technology and the control are diffused and accessible to everybody.
As stakeholders in a centralized system, individuals who struggle with decentralization are usually those who fear losing control. And, unlike a closed network where everyone relies on the same server, there is no single point of failure with decentralized networks; if a closed network’s server goes down, the service can fail.
On a practical level, we need to articulate precisely how decentralization solves real-world problems in order to accept it. There is a real reason to use decentralized systems when they provide economic opportunity, such as for the unbanked and underbanked, or when they enable frictionless financial transactions for enterprises in developing countries. Women are disenfranchised and excluded from participating in their own economic success on a global scale at various levels. Decentralization can increase access to financial services and economically empower women, raising and improving the economies in which they work, earn, and live.
Finally, the power of decentralized open networks is that it allows creativity and progress to come from anywhere, and it lets developers to use the same technology to solve problems and difficulties in their own region for their own people.”
Emin Gün Sirer, CEO of Ava Labs, Cornell University professor, and IC3 co-director:
“Decentralized services are unquestionably the future. People are opting in to services that respect their privacy and give them back control because they are weary of having their data and access abused by centralized gatekeepers. Decentralization is becoming more widespread, and all it takes is one encounter with that power to become addicted for life.”
Fidelity Private Wealth Management vice president Jennifer Wines:
“We are living in fascinating times, as we reinvent the anatomy of our infrastructures and experience a rapid change from centralization to decentralization.” This transition to decentralization is taking place in the workplace, transportation, retail, travel, currency, finance, and other areas; as a result, it is favorably touching almost every aspect of life.
Consider the following scenario: We’re working from home, taking an Uber to get from point A to point B, and relying on cryptocurrencies for value and exchange. We’ve even seen department stores and motels decentralize, a la Amazon and Airbnb, respectively. Having said that, it’s likely that everyone reading this post has been affected by the evolution of decentralization in some way. Furthermore, because of its efficiency and empowerment, we are likely to continue to accept this transformation.
Decentralization’s efficient and empowering characteristics provide appealing fuel to continue and promote this growing growth. Because of its capacity to address the historically unequal character of our infrastructures, where one side benefited more than the other, decentralization is both efficient and liberating (many). To put it another way, decentralization is here to stay, thanks to bilaterally focused incentive engineering. May the paradigm of win-win-win”.
Kevin Chou, Rally’s co-founder and CEO:
“Decentralized is superior, but it’s a lot harder to implement and stick to over time because most people in business don’t know how to collaborate or function in a decentralized organization.” However, the advantages are enormous. This is especially true in the enormous creator economy, where creators have gotten the short end of the stick while big, centralized digital platforms have enriched themselves. The ability to take control of their financial future and connect with their fans on their own terms has fueled interest in social tokens.
Decentralization on a 100 percent scale is more difficult to achieve than some in our sector would want to accept. However, I am absolutely dedicated to ensuring that Rally gets more decentralized with each passing quarter. The user experience for decentralized governance has vastly improved in recent years and will continue to improve. As more companies switch to decentralized models directed by their communities, and people see how much more democratic it is for everyone to take decision-making power out of the hands of a select few, this model will become the ‘new normal’ in many circumstances.”
Bitrise Capital co-founder Kevin Shao:
“I believe that both centralization and decentralization are organizational strategies. We can’t say which is better or which isn’t. We can both discover a good application model in practice. China can run efficiently and manage orderly under the leadership of the central government. It can also cope with complicated issues and come up with workable answers.
Many Western principles lend themselves to decentralization, and the west’s democratic progress is especially impressive. As a result, diverse historical and cultural circumstances, as well as distinct situations, define which path is best for the national circumstances. For the people, we still need to figure out what kind of organizational structure can improve and simplify their life. This is the most suitable method.”
Draper Associates and Draper Fisher Jurvetson founder Tim Draper:
“I’m a big fan of decentralization.” My motivation for Bitcoin, as well as my enthusiasm for it, is around the concepts of trust and freedom. We can trust a decentralized token like Bitcoin since there are so many eyes on it. As long as the leader is kind, more centralized tokens with a leader are beneficial.”
Chairman and co-founder of Animoca Brands, Yat Siu:
“In general, I believe that decentralization is the more equitable and scalable strategy. We believe that people all across the world will eagerly embrace a decentralized approach… once they realize the immense value and possibility that it provides.”
The writers’ views, thoughts, and opinions are their own and do not necessarily reflect or represent CryptoNewsPipe’s views and beliefs.