The future will (probably) not be decentralised

The future foretold by blockchain has a long way to be actualised

March 7th, 2021

The future will (probably) not be decentralised

The world we currently live in has had a significant trend towards centralised power. Despite technological advancements this trend has not changed and in many ways has accelerated. Nearly everything we do from paying for goods and services to communicating with each other to the food we consume is reliant on a few very large companies and organisations. Although the idea of centralised services may seem like it has brought stability or security, reality has shown that this is not the case. Creating a single point of failure and allowing organisations unchecked power has had untold consequences. If the Coronavirus pandemic has shown us anything its how reliant we have become on institutions/ international supply chains and how fragile these systems are to even the slightest amount of volitility.

When blockchain and other distributed ledger technologies first arrived they were seen as an answer to the ever growing problem of centralised power. By allowing for peer to peer payments and transactions it was believed that future services could be controlled by the many people on the network instead of just giant tech conglomerates. In a previous article I discussed how blockchain along with other DLTs can be used to build a decentralised file storage platform similar to how Napster or Bittorrent work.

The Aftermath

Taking a look around at the various blockchain and decentralised platform projects it doesn't take long to realised that the future foretold has not been achieved. Like many breakthroughs in technology instead of being used by people to improve their lives blockchain has been dominated by a lot of the same companies that previously ruled the tech market. To overcome some of the limitations in the price volatility and conformation time a few major crypto projects opted in for a centralised blockchain instead. A centralised blockchain sounds like an oxymoron but many tokens such as ripple or that god awful facebook token Diem have chosen this route. Nearly every cloud service company such as Amazon, IBM, Microsoft etc... now provides a blockchain service where you too can have a public ledger and cash in on the newest tech fad without any of the benefits of a public ledger.

But what about the real blockchain projects? The vast majority of the crypto currency projects have followed the same philosophy that Satoshi Nakamoto laid out in his (or her but probably not) white paper. Not only have Ethereum, Iota, Monero etc... created a peer to peer payment service but they have also improved on the functionality. The arrival of smart contracts has allowed decentralised platforms such as IPFS and ethernity to be developed.

However, despite these crypto projects being developed with the best of intentions we are still seeing these projects becoming more centralised in other ways. Since all of these blockchain projects require proof of work of transactions a number of miners are needed on the network to authenticate the activity. Most of these mining applications emphasise or often require GPUs to perform the proof of work they already have a barrier to entry of cost and resources. This has resulted in a scarcity of GPUs for regular users in some case as miners have often bought out all the stock before gamers could get their hands on it. That's not even taking into account the reliance on hardware being produced by a few giant companies.

As time has gone on and the complexity has increased this barrier has become even greater to the point where mining bitcoin is no longer profitable unless you set up a large mining rig and use more expensive hardware such as ASICs. Instead of regular users being able to mine some crypto so they can use it or make some profit, mining has been taken over by a few large organisations that have the financial means to do it.

The inability to mine your own crypto currency has also indirectly caused another problem for decentralisation. For the 2 or 3 people who don't know yet, bitcoin isn't anonymous. In fact having a publicly accessible ledger means that anyone can confirm who or what you send your money to. There are ways to get around this (such as using shakers) but not being able to mine your own tokens means that the only way you can purchase these in the first place is to use a broker such as CoinBase. Not only does this link your bitcoin address to your credit card and personal identity but it makes users reliant on yet another centralised tech company.

The Way Forward?

Although the outlook of blockchain and DLT looks bleak, the last thing we should do is to give up. Some of the problems do not have clear solutions and in some cases the solution is even more unencumbering.

Regardless of whether we are discussing tech companies or any other industry every person should aim to be less reliant on "the system" as a whole. As the financial crisis of 2008 has shown us a lot of these institutions that we think of as being unstoppable are incredibly fragile when exposed to any uncertainty or volatility. The Coronavirus lockdown has been a blessing in disguise for helping people understand what is truely important to them and how we need to be less reliant on all the services we use every day. This can range from avoiding mass consumerism to shifting our use to local services or decentralised services. This is important as "voting with your wallet" as many libertarians say is impossible when there is no alternative to vote for. Every one should aim to grown, build and perform things instead of being reliant on large central industries. Self-hosting many of the online services you use is a great first step.

With more people being less reliant on centralised services the next step is to start using products and services that allow for or value decentralisation. I have made many articles discussing the importance of privacy and security with various online services but it is also important to use services that emphasis decentralisation when it's possible. Monero is without a doubt the only crypto currency these days that checks most of the boxes. Unlike other blockchain projects it's completely anonymous and their mining application has been developed specifically for CPUs. This not only allows everyone to mine their currency it also means it's not necessary to use crypto brokers like CoinBase.

The last thing that everyone should do regardless of if they follow this article or not is to actively discuss decentralisation and (despite how cringy I think the term is) become an evangelist. Being a privacy advocate is one of the most stressful things possible but this is even more difficult with decentralisation. Besides illegal services such as the silk road we have not seen very many genuine platforms come out that allow people to trade in a decentralised manner. The only way we can create a decentralised future is if we convince enough people of its importance.

Final Word

Looking at the current state of decentralised platforms is depressing but addressing the problems in current implementations needs to happen if we want to truly use these technological advancements to change the world. Until we start discussing the problems the industry faces we cannot overcome them.

Stay happy and stay private.