
Centralization vs. Decentralization - sergeant3
https://avc.com/2018/12/centralization-vs-decentralization/
======
throwawaylolx
False prophets are plenty in crypto, especially when their bags are full and
heavy. Fred Wilson has repeatedly supported centralized premined coins, and he
was the one to claim that "the market cap of ethereum will bypass the market
cap of bitcoin by the end of the year."

The first step in writing about decentralization is to understand what
decentralizaiton means. Premined coins are centralized by desgin--the founders
may hold an undisclosed amount of coins that were acquired at no cost. Thus,
any fork that threatens the founders can be attacked crushing the incentives
of the miners, and thus the security of the network.

Linking to websites such as
[https://arewedecentralizedyet.com/](https://arewedecentralizedyet.com/) is
both lazy and meaningless because those metrics are easily gamed, insecure,
vulnerable to sybil attacks, and unreliable. Most of the decentralization
discussion is a red herring that many use either out of ignorance or in order
to distract from fundamental problems such as the distribution of incentives.

~~~
splintercell
> Premined coins are centralized by desgin--the founders may hold an
> undisclosed amount of coins that were acquired at no cost.

This seems like a deep thought, but it isn't. All this is, a shot fired in
coin v coin wars (and this one against Ethereum).

Bitcoin used to be easily minable from a CPU, and was under a dollar for a
large point. Any entity could be holding undisclosed amount of coins that were
acquired at no cost either.

~~~
coralreef
I suppose its a matter of semantics, but 'easily minable' is not the same as
'guaranteed free'.

Bitcoin's mining cost was always a function of hash power, hardware and
electricity cost (and competition). If it was cheap, it was because you were
early. Satoshi mined from day 1, which is how he amassed coins.

Some forks however played in a developed crypto space and wanted to guarantee
themselves a chunk of coins that would not require them to openly compete for
them.

Does the difference matter? I dunno.

------
AndrewKemendo
I'm surprised that Fred didn't identify this as a cyclical phenomenon in
computing.

The history of computing is the cycle between centralization of compute
(Mainframe, Cloud) and decentralization (Desktop, Edge) from the users
perspective. It's been going on forever and I don't see it stopping because of
the computing cost cycles and increasing network speeds.

We're going to push more compute to mobile devices, then back to mesh networks
etc...

~~~
olivermarks
Fred is applying this tech logic specifically to Crypto's evolution.

~~~
AndrewKemendo
I think the cycle still holds even with Crypto.

If you look at the primary platform where velocity is happening in the crypto
space (number of transactions or touch points) - coinbase - it's a centralized
broker for crypto.

Individuals aren't mining their own coins, they are buying them from more and
more centralized miners.

~~~
olivermarks
I'm intrigued because historically currencies tend to get 'rolled up' \- euro
centralization of european currencies around the (very secretive) ECB is a
good example. I agree with your point about the tech world centralizing and
decentralizing in sequence (thin clients/cloud etc) but in the monetary world
there seems to be far more momentum to centralize than decentralize. We even
see this in banking - there are 5 big high street banks in the uk and 100s of
local banks in Germany, who arguably are the defacto central bank of the
european union. Closer to the center equals more options for diversification.
This may be a similar scenario with crypto, especially now security tokens are
increasingly asset backed.

~~~
AndrewKemendo
Different time horizons, but it actually happens there too, only it looks like
the disintegration of nation states into smaller states and then
centralization again.

Interestingly there haven't been as many of these monetary cycles in history
since the emergence of major centralized banks, which is a good thing. So
there is a (strong) argument that currency centralization is a driving force
in stability and peace.

~~~
adrianratnapala
The correlation is clear, and probably meaningful. The causal are are
complicated.

Countries that have been at peace a long time, and which have whatever
institutions and habits encourage such peace are also ones that can grow big
multi-national corporations including banks.

------
chubot
The diagram about tech monopolies is interesting, but I don't understand why
he thinks it will happen.

You need a new business model to go along with the new tech. What is that for
crypto?

\- For Microsoft, it was selling software instead of hardware like IBM. "Open
source" hardware complements software. This was hugely profitable.

\- For Google, it was selling user attention instead of software like
Microsoft. Open source software complements web services. This was hugely
profitable.

This analogy breaks down here a bit because there is a strong incentive for
"open source" hardware (money for dozens of vendors), but not as much for open
source software. It's more of a byproduct of the SaaS movement. I guess you
could say the real corporate motivation there is developer attention, e.g. the
purchase of Github. So the analogy falls down a bit.

\- So now he claims we will have open source data. I would love this, but why?
What's the new business model? Companies USED to provide APIs in the 2008 era
when they thought it would benefit then, but they've now pulled back --
Twitter, Facebook, Google, etc. Google APIs are in terrible shape.

He said someone proposed a regulation that Twitter be forced to write a better
API? Huh?

That would be analogous to the government forcing Apple to open up its
hardware like the IBM PC, or the government forcing Google to open source its
search algorithms. I see why it sounds nice, but I don't think it will happen.

This is an honest question, not trying to pour water all over this ... what's
the new business model, or is there at least a candidate?

~~~
dumbfoundded
There are a few candidates. The most obvious case of the technology is
currency. Another interesting use case is social media and it's interesting
that Steemit wasn't discussed.

I love Steemit's idea (not necessarily implementation) of a decentralized
social media platform. All the data is public so now there's a decoupling of
the network problem and interface problem. Facebook for example is impossible
to compete against due to network effects. If you have a better version of
facebook, it's very hard to get people using it because all of their friends
are already on Facebook. Steemit decouples the problem by enabling people to
create new interfaces to it and everyone with a steemit account can already
immediately use it because their account, followers, and the rest is all the
same data. Someone connected IPFS to Steemit and created DTube which basically
the same thing as Youtube.

Why use a decentralized social media platform? The two biggest reasons are
that decoupling the data from the interface creates better and new interfaces
and content creators are rewarded with money. Right now, social media
companies like Reddit get money for the content you create. With Steemit, the
rewards go to those who create content and those who run the network. It seems
like a more fairer system. Steemit does have problems though but the idea I
think is some version of what we can expect to see more of in the future.

~~~
chubot
Hm so Steemit scrapes Facebook so your friends are there? Why wouldn't
Facebook just cut them off?

In general I don't think it is possible to create new interfaces to social
media sites without the owners consent. It is too easy for them to break you
on purpose, and that has happened many times in the past.

Maybe I'm misunderstanding how it works.

Decentralization also seems orthogonal to this issue. If someone could gain
users by creating a new UI on top of Facebook, it would have already been done
in a centralized fashion.

~~~
dumbfoundded
Steemit is completely separate from Facebook and you have to create an account
there. In terms of interface, it's a lot like reddit.

The thing that makes Steemit unique is that to create your own version of
Steemit, you just build an interface on the blockchain. You and every other
developer has unlimited access to Steemit users, followers and other data.
This allowed projects like DTube (a decentralized Youtube) to immediately have
millions of users. If the Steemit website starts placing ads everywhere for
example, someone can create a different better interface. The point of this
decentralization is exactly what the author mentions. You decouple user data
from the interface enabling companies to compete on interfaces instead of
network effects.

------
mStreamTeam
> "Sadly, I think we are in a race with ourselves in this centralization vs
> decentralization debate. We need the decentralized tech stack to evolve more
> quickly and show the world how decentralized technology works in a
> mainstream way at scale before policy makers and regulators force the tech
> sector to go the wrong way."

This is something I've been working on for the last few years. I've been
working on a selfhosted music server that anyone can setup in there home to
stream their collection.

I've had some success building a dependency version that's deployable as an
EXE for Windows (or pkg for OSX). The fact is most people aren't going to
setup a separate computer just to host a decentralized server. But people are
willing to use their current hardware for decentralization. And most people's
current hardware is a Windows PC.

The other thing I focussed on was making it dependency free. This way you can
just install it and run. Most people don't want to hunt down dependancies and
write config files.

The fact is, decentralization won't take off until people can do it
effortlessly. The reason centralized services rule is because it requires no
effort or cost to the end user. Until that changes, decentralization will
always be a niche

~~~
dwiel
What are your thoughts about using ipfs/filecoin or swarm/ethereum as the data
store for such a media player?

~~~
mStreamTeam
I'm looking into IPFS for the project. Looks like it might be a good way to
backup things. Need to more research to make a decision though

------
0xb100db1ade
The way I see it, centralization has the more favorable best case scenario
while decentralization has the most favorable worst case scenario.

Centralization allows for extreme optimization, but decentralization allows a
system to keep on chugging along no matter what the conditions (within reason)

~~~
brokenmachine
_> centralization has the more favorable best case scenario while
decentralization has the most favorable worst case scenario_

This is a very insightful observation.

I guess that makes me slightly pessimistic for favoring decentralized
services.

------
xte
Mh, nntp news are decentralized and no one control the entire network, email
are similar in that sense. On crypto GNUPG works in a fairly decentralized
concept because yes we have keyservers but they are no single body and we can
also build "sub-network" of trust as we want.

On cryptocurrencies that seems IMO the "real" topic of the article IMO they
are not a "free new form of currency" but a test by some bigs of IT that think
they are big enough to substitute with their infrastructure the actual banking
system. Of course cryptocurrencies are generally free software but due to poor
scalability of blockchain operations and it's ever-grown size and the
substantial need of connection and hw to operate they are de-facto a
controllable ecosystem. And actual hw and firmware's trend is direct in a
really dangerous direction.

IMO the problem is not much centralized vs decentralized or distributed but a
matter of "design mind", today most people are _unable_ to think free by
design solution, being born in an unfree world where web tech are so
"affordable&effective" that seems to work like magic.

------
untangle
> From the slide: "Cryptonetworks --> open source data"

What is a cryptonetwork and how does it lead to open source data? Wait...lemme
guess...a blockchain! I wish that people would be more precise with language.
Here's a news flash: crypto already runs the world. And blockchain runs almost
nothing. This wholesale substitution of "crypto" for "blockchain" is
disingenuous at best and self-serving at worst. It reminds me of substituting
"climate change" for "global warming" (or for "pollute less").

> "...regulators...are taking actions to slow the decentralization sector
> down..."

I thought that regulators were taking actions to slow the centralized sector
down (through antitrust, privacy provisions, etc.). Wouldn't this provide
fertile ground for the (undefined) decentralization sector. Oh wait, you mean
the blockchain sector? And ICOs?

This whole blog post makes me uneasy. The inaccuracies and omissions are one
thing, but the fact that VCs now have the power, wealth, and inclination to
become lobbyists for failing investment theses by "...spending a lot of time
with public servants of all kinds, educating them, imploring them, and
desperately trying to get them to understand where we are, why it is an
important moment, and why we need to this new technology to succeed..." makes
me ill.

These attempts to tilt the regulatory playing field are the stuff that undoes
free markets.

------
justicezyx
This article is quite forceful in laying out the metaphor from cherry picking
suitable historical events.

The computing primarily is because Moore’s law, i.e., the continuous lowering
of computing hardware.

With the dropping costs of hardware, coming the proliferation of software,
then at certain generic integration point, naturally some major players pop
out: Instruction set Operating system Internet Web

It’s then a matter of who can be the right pint to capature the market
opportunity and become the winner.

The article tries to fit this process with open sourcing metaphor. But open
source has little matching properties with this process. It’s more like the
software abstraction always goes higher and higher therefore the previous
winners naturally loses their advantage when the world moving to build new
things on a different basis.

Crypto network, how it’s connected to this process is not clear to me.

In the end, there is no competing of centralization vs. decentralization. They
always coesist. All the crypto buzzword is just a slogan for financial
industry to adopt open data exchange protocols.

And to equate crypto network or blockchain with decentralization is about as
deceptive as calling internet an open network for information exchange.

------
bitxbitxbitcoin
> "Sadly, I think we are in a race with ourselves in this centralization vs
> decentralization debate. We need the decentralized tech stack to evolve more
> quickly and show the world how decentralized technology works in a
> mainstream way at scale before policy makers and regulators force the tech
> sector to go the wrong way."

Hear hear.

------
ilaksh
My take on this is that the ecosystem of interacting decentralized platforms
needs to sort of become the new government in order for it to be effectively
regulated. In other words you can't deal with it with some external group of
people that not only don't fully understand it but also have no direct
influence.

Which is not to say that any self regulation built into decentralized
platforms should closely resemble anything like traditional government.

------
parasubvert
I tend to believe this argument is correct but has nothing to do with crypto,
and everything to do with evolving REST into providing uniform extensible
media types for describing state transitions and data.

[https://www.slideshare.net/mobile/StuC/ill-see-you-on-the-
wr...](https://www.slideshare.net/mobile/StuC/ill-see-you-on-the-write-side-
of-the-web-7575407)

------
rolleiflex
> Twitter should significantly expand the features that let individuals and
> groups manage the visibility for tweets for themselves. There are already
> useful features such as muting a conversation or blocking an individual.
> These could be expanded in ways that allow for delegation. For instance,
> users should be able to say that they want to subscribe to mute and block
> lists from other individuals, groups or organizations they trust. One
> example of this might be that I could choose to automatically block anyone
> who is blocked by more than x% of the people I follow (where I can choose
> x). Ideally these features could be implemented at the tweet/conversation
> level and not just the account level.

These are not new ideas. [User] sovereignty in controlling one’s own view and
being able to voluntarily pass control of what you see to someone else are
quite literally _the_ founding ideas underlying a democracy.

At the risk of belabouring the point that these are not new, I already have
what he describes in production [1], by the way of moderators you can disable
and enable as needed, coupled with community mod elections. See the docs here:
[https://getaether.net/docs/faq/voting_and_elections/](https://getaether.net/docs/faq/voting_and_elections/)

It does make me happy to see I’m not the only person thinking about this,
though.

[1] Currently disabled, pending UI work

------
PopeDotNinja
How does monetizing an API compare to monetizing a walled garden? It seems
like it's be super hard to police content in an a way that's palatable to
advertisers.

------
peterwwillis
This is some creative re-interpretation of history.

 _" But the open PC hardware standard allowed Microsoft to develop an
operating system that could run on any computer built to the PC hardware spec
and they eventually unseated IBM, only to become a near monopoly themselves."_

Microsoft didn't unseat IBM. IBM hired Microsoft to write its operating
system, and Microsoft retained ownership of it, and many versions were made
for many personal computers. Hooray, write it once, use it everywhere, right?
But as more software began using direct calls to hardware (rather than just
MS-DOS calls), that software had to be ported to new systems. Most were unable
to port successfully, so everyone just started writing software for IBM PCs.

Even though there was this "open standard", the de-facto standard remained
"IBM". All personal computer manufacturers were forced within a few years to
abandon any proprietary product and sell only IBM PC-compatible machines. It
took nearly a decade for the clone makers to reduce the price enough to make
it affordable to buying something not IBM. Eventually IBM lost the lions'
share of the personal computer market, and went back to its original near-
monopoly of mainframes and minicomputers.

 _" But just as we were wringing our hands about what to do about Microsoft’s
monopoly, an open source operating system (Linux), the internet protocols, and
the free distribution of the world wide web undid that monopoly and we got
Google, Facebook, Amazon, and other big tech platforms."_

Microsoft's monopoly wasn't unseated, and the rest sounds like nonsense. There
were a variety of operating systems and software running Internet services
back then. Linux and the Apache web server unseated them from web hosting and
commodity server needs, but Microsoft maintained its consumer-facing monopoly
for... ever, and its business-facing network software. I don't know what "the
internet protocols" has to do with M$... they tried to market competing
protocols, they failed. We could extend this comment into the browser wars,
but that's a whole 'nother rant (and the one monopoly they've really given
up). As for "the free distribution of the www" ? What does this even mean? The
web has always been paid for by somebody, I'm not sure who ever thought it was
free. Microsoft was never a threat to the distribution model of the web - if
anything, AOL was that threat.

Microsoft's tech platform is still here. Amazon, Google, and Facebook were not
created after someone "unseated a monopoly". The web was just there, and these
companies built businesses on top of it. Amazon and Google were even created
whilst Microsoft was at the height of its power (1995 and 1998).

 _" And now we are wringing our hands about these near monopolies and their
market power and the ability of bad actors to manipulate them. And around the
same time, the technology to architect and scale a completely decentralized
system emerges."_

This is actually an interesting point, though completely by accident. It seems
like new markets sometimes spring up while we're distracted looking at some
other market. We're distracted right now with Facebook, Google, Amazon, etc.
But probably some new business model will emerge that has nothing to do with
these, and they'll become less important as we shift our attention somewhere
else.

.... However, please note that we still use IBM PC-compatibles, we still use
Microsoft platforms, and we will probably keep using Google Search & Maps and
Amazon until the sun burns out.

