Alex Batlin is senior innovation manager at UBS’s FinTech Innovation Lab, and the leader of the Swiss-based financial firm’s Crypto 2.0 Pathfinder research into blockchain technology.
In this opinion piece, Batlin gives a personal view of how decentralized apps run a greater risk of centralization than hardwired protocols like bitcoin. For the last few months, I have been grappling with a gut feeling that somehow Ethereum’s smart contract-based distributed application (dapp) model has a different dynamic to that of hardwired protocols like bitcoin or Ripple.
This week that feeling has crystalized into a semi-coherent thought.
Hardwired protocols do not have a separation of concern between the protocol and business logic. The same set of protocol designers, software developers and miners control how the emergent distributed autonomous organisation ( DAO ) functions.
It’s different for dapps – there is a clear separation of concern between the protocol and business logic encapsulated in the smart contract.
The dynamics of how a dapp-based protocol evolves can be similar to bitcoin, yet very different for dapp themselves. They can have a clearly attributed owner, such as the person or organization that wrote the smart contract, the person who uploaded it or the individual who charges a fee for it’s use. Centralisation risk
This presents an unexpected, to me at least, risk of centralization.
Sure, the protocol may be distributed and hence the operation of the dapp is also distributed, but if many other dapps use a unilaterally controlled shared smart contract, then at least at the logical level you get back to a centralised model, which in some cases you may wish to avoid.This is not necessarily an issue if managed well.Highly shared smart contracts could be recognised as key infrastructure components and be formally owned and managed by some form of open software foundation (OSF), be […]
