Developing automated crypto & for-ex trading system - twitter.com/arstech_biz
I am taking the invitation of Hackernoon to have a writing contest on the topic of decentralization.
Decentralization is a dear topic for me as I work on a decentralization project and put ideas into a code.
Currently there are several definitions of decentralization:
- Decentralization in the form of a small but growing platform against giant monopolistic platforms. Even though the small platform labels itself as an alternative and something new their users still have to access the platform through a web site, in a centralized way.
- Decentralization as a replacement of a specific internet protocol (for ex.DNS) or service (for ex. file storing). However, replacing one part does not radically change the existing centralized way of internet use.
- And finally, the most widely accepted understanding of decentralization ties it to the blockchain technology.
All 3 listed ways of decentralization, that I label DINO (decentralized in name only) take some steps towards decentralization but are not yet true decentralization.
2. What is a centralization
The current dominant way of internet use is based on client-server model.
In this model billions of us - users (clients) have the choice go to tens of millions of web sites (servers).
What is wrong with this?
Governments, whether democratic or totalitarian, absolutely love to collect data on its citizens. As a major business located in a specific country whether it is Wechat, Alibaba, Baidu (in China), Yandex (in Russia), or Google, Facebook, Twitter(in US) these companies most likely provide access to governments - for 'national security reasons'.
In addition, the centralized way of use allows easy block of access of entire websites by a government (Youtube, Facebook - in China), or block of a specific user by a platform (Twitter account of a former US president).
3. The blockchain way of decentralization
Unlike what marketing for crypto enthusiasts claims, blockchain technology is not a peer to peer technology.
Blockchains are network of nodes storing identical copies of blocks. Blockchains are accessed through decentralized apps / Dapp-s which make RPC calls to a node to make a transaction or call a smart contract.
In general Dapp-s do not communicate directly with each other. One Dapp can write information on the blockchain which other Dapp-s can then read.
This is the standard way of communication for users of the blockchain technology.
In my personal opinion blockchain technology is 'rent seeking' and a 'heavy burden' to carry.
Regarding 'rent seeking' - every project has its own coin (of its own blockchain) or token (as a 'tenant' on a blockchain) - it is a pay-per-use model.
The more successful a blockchain becomes the higher the payment for access/use transaction of the blockchain is. As witnessed now the 'gas' fees on the Ethereum blockchain are $100+ for a single transaction.
Regarding the 'heavy burden' - as the blockchain grows over time it becomes larger and larger in size. It becomes impossible for almost any user to run their own blockchain node.
And this is the unintended consequence of success for a specific blockchain - becoming increasingly centralized.
Ethereum - one of the most successful blockchains has maybe single or double digit nodes dedicated for wallet type of Dapp-s - run by centralized exchanges and commercial crypto-wallet providers.
And then most of the other Dapp-s access the Ethereum blockchain through calling a node of Infura.
What is the problem of large number of Dapp-s calling a single Ethereum node?
It didn't happen yet, but a DOS (denial of service) attack on Infura will knock down the DeFi Dapp-s with their tens of billions of dollars stored as liquidity, as well as bunch of other Dapp-s - for the duration of the DOS attack.
Blockchains proudly declare that there is no single point of failure in the technology. But, considering the above scenario - Infura is the single point of failure for most Dapp-s on the Ethereum blockchain.
4. True decentralization
As I mentioned in the beginning, the true decentralization is based on the direct user to user communication.
This way of communication solves the privacy and censorship issues of the centralized communication.
An implementation of a true decentralization may still use a blockchain - not as a central element but as a support element in the implementation.
A successful true decentralization project must include the following mandatory elements:
- minimum decentralized identity
- decentralized network of bridges/nodes
- personal decentralized web site
The ideas of these elements and many additional optional elements are topics for upcoming, follow up articles.
I believe decentralization is new, upcoming, and post-blockchain technology. It has the revolutionary potential to turn the existing internet use upside down.
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