Principles of Decentralization

5 minute read

We used the word decentralization in "What's the Big Deal", but have not spent too much time defining this concept which is key to blockchain technology. So what does decentralization mean? In this section we will seek to understand various definitions of decentralization, and how members of the blockchain community have applied that definition to development of the technology. A good way to think about decentralization is to associate the word with a transfer of authority.

There are three main forms of decentralization, or how authority is transferred. Vitalik Buterin, the founder of Ethereum, detailed the following three forms of decentralization as it related to blockchains in a post on Medium:

Architectural (de)centralization — how many physical computers is a system made up of? How many of those computers can it tolerate breaking down at any single time?

Political (de)centralization — how many individuals or organizations ultimately control the computers that the system is made up of?

Logical (de)centralization — does the interface and data structures that the system presents and maintains look more like a single monolithic object, or an amorphous swarm? One simple heuristic is: if you cut the system in half, including both providers and users, will both halves continue to fully operate as independent units?

Let's get specific with an example. The computer or tablet on which you are reading this book was very likely made by a company with a CEO and a board of executives. This company is very likely structured to have business units that take care of various components of building, marketing, and selling the device you are using. The CEO and the board of executives provide direction to the different business units so they can work together to build computers. If the company were to split up, the CEO and board of executives would have to decide (or be incentivized) to split the company up. The individual parts of the company could not decide to do that on their own. If the part of the company that assembles the keyboards decided they no longer wanted to be part of the larger company, they really do not have the choice to break off into another company. According to Vitalik, this means the company is logically centralized.

Another example that Vitalik uses is language. For most languages, there is no centralized infrastructure enforcing people to speak in a certain way. While there are best practices and grammar rules that are most typically followed, no centralized authority policies a person’s everyday use of language. Organizations that publish dictionaries do not have direct control over the language. People who speak the language are the ones with control over it. This is how we see language evolve over time, depending on the place and time in which it is spoken and written. An example is how Latin over time evolved into the modern day romance languages of Spanish, French, Italian, Portuguese, Romanian, and Catalan. No central authority decided that Latin should evolve into these languages. In this case, language is something that is logically decentralized.

In the case of blockchains, they are politically decentralized because no one person has singular control over them. They are also architecturally decentralized because there is no infrastructural central point of failure, as each node keeps a copy of the blockchain. But, blockchains are logically centralized because the system behaves like one computer despite being spread apart on all the participating nodes in the network.

Contrast this with central cloud service providers like Amazon and Google. Their computer networks are architecturally decentralized, as they have data centers all over the world with redundancy mechanisms in place. But these networks are logically as well as politically centralized which makes them less reliable because they are dependent on a single provider and more susceptible to certain kinds of attack, such as political pressures, economic incentives, or data breaches.

Why is Decentralization Useful?

Given the characteristics of a blockchain, decentralization (politically and architecturally) allows blockchains to be:

  1. Less likely to fail because they rely on many separate components.
  2. Harder to attack because the networks are spread across many computers.
  3. Harder for users with malicious intent to take advantage of users who are using the platform for its intended purpose.

If one node stops working, or even 100 nodes, the blockchain survives assuming there is at least one node up and running. This makes the blockchain very resistant to attacks. The blockchain does not stop working even if the power is lost in an entire country. This makes the blockchain very resilient, which cannot be said of many of the existing systems on which we associate with the Internet.

Where do we go from here?

The phrase Web 3 is used to indicate that we are going past Web 1.0 (the original protocols of the Internet) and Web 2.0 (the responsive web, which is the Internet as we know it in 2018). But what does this actually mean?

Currently, companies like Facebook, Amazon, and Google dominate the Internet. They offer many free or cheap services because they are able to collect valuable data on their users, and find ways to monetize that data. As a user of the modern internet, one is never too sure where their demographic and personal data is being used. Through the implementation of decentralization, also called Web 3, data does not have to be stored in centralized systems. Data can be verified independently and content creators are valued by the quality of their work. Micropayments become a feasible method of being rewarded for value created. Users control how their data is used and accessed over the Internet, and can be paid for the use of their data. For a live example, see the Brave browser which is “growing support for content creators through a new attention-based ecosystem of rewards.”

This is all possible through the usage of blockchain protocols which can be operationalized by Ethereum, Bitcoin, etc. Jesse Grushack, the founder of Ujo lays out the problem of users becoming the product for digital advertisers in Web 2.0 and how the Ethereum blockchain can flip this model on its head, in this article on ConsenSys media, a href="">Welcome to 3.0.

As you finish reading this section, we want you to come away with the following: Decentralization disintermediates central control of systems. Instead of a single company being responsible for writing information to the blockchain, the responsibility falls to anyone who wants to participate in the system. This is a significant shift in thinking, but an important one to understanding why blockchains are so important - they are both philosophically and technically engineered to be different from the centralized systems we are familiar with.