Rational Mind with Pietro Boselli Ep 3 - DECENTRALISATION
- We often hear the term decentralization nowadays. We most often hear it used in reference to technology, such as blockchain or in regards to public policies. Decentralized sounds like a simple adjective describing something that is, well, not centralized. But decentralization actually describes many processes that have occurred throughout the entire course of human civilization. In fact, decentralization events can be recognized as major paradigm shifts in history. And today this concept is more relevant than ever in helping us make sense of the world around us and the macro trends of rapid change that we are experiencing.
So what, exactly, are we talking about? What is decentralization? Is it good or is it bad? And how does this help us navigate the modern world? (music plays) 12,000 years ago, fully decentralized hunter-gatherer societies began settling down, thanks to the adoption of a new technology: agriculture. The increased food production afforded by agriculture meant that communities could now grow larger. Anthropologist Robin Dunbar famously suggested that we can only maintain stable, personal relationships with up to 150 people. Beyond this number, people become acquaintances. And beyond around 1500 people, we have complete strangers.
So, in communities smaller than 150 individuals, such as early hunter-gatherer tribes, everyone knew each other on a personal basis. So the community did not need formal governance. But as these hunter-gatherers evolved from nomadic tribes to settled agrarian communities, the communities grew larger and essential authority became necessary. From these communities and their early governments arose cities.
The first cities were formed for clear advantages. Keeping everyone close made transport easier, provided markets and allowed the free exchange of ideas. Additionally, a ruler would offer armed protection against intruders and internal security against crime.
Barter could be abandoned in favor of a monetary system, also guaranteed by a central authority. And this is how the ancient empires came to be. And while all of this was a real boost to civilization, it is actually easy to see, in retrospect, where the problems could arise.
"Power corrupts and absolute power corrupts absolutely," as John Acton once said. Centralized forms of government throughout history invariably led to autocratic regimes and a highly stratified society with a small number of landlords at the top and everyone else at the bottom. There are obvious downsides to this system. First, the abuse of power towards the population at large.
Second, even the gains in efficiency that motivated the centralization process in the first place were lost as empires grew larger. As the mass population at the bottom of a pyramid society grows larger, it becomes impossible for the small group of rulers at the top to make all the right decisions for everybody. All early civilizations were centralized and autocratic and changes of power only occurred through violence. This was through invasions from a foreign power or insurrections from inside. This remained the case in most places and for most of history. But, of course, there was a first exception to this.
In 508 BC, the people of Athens decided that they were tired of being ruled by a single person. They decided they would rule themselves and be free. So they invented democracy.
Demos means people. Kratos means power. Power to the people. This was arguably one of the most significant decentralization processes in the history of human civilization. The power was transferred from a central authority and distributed to the citizens. And with the power also came responsibilities. The Athenian democracy was a direct democracy, as citizens were required by law to vote on all decisions.
This meant that citizen assemblies controlled the entire political system. This was a highly decentralized system. However, even this eventually led to pitfalls. As Athens grew in size and power, the daily voting required for every single decision became a burden to the citizens and the state. - With decentralized systems, you have to use different mechanisms to get it to bring about coordination.
Whether that's incentives or social pressures, it's not always easy to have the entire system coordinating quickly. And this is known as a collective action problem. - Modern democracies are, in fact, not very similar to the Athenian direct democracy but resemble more closely representative democracy, which emerged in Rome around the same time. In the Roman system, legislative, executive, judicial and military powers were conferred to the senate, the magistrates and the two powerful councils. The councils were elected by free male citizens of Rome, who were allocated voting power based on military status or wealth. While less democratic than the Athenian system, it was, nevertheless, the first attempt in history at a representative democracy and the first time a monarchy was overthrown in favor of a republic.
The Roman Republic was a great example of decentralization working in synergy with a centralized system. Administrative powers were delegated to the provinces, which allowed it to grow into the biggest military and economic power of its time. Eventually, Rome controlled the entirety of the Mediterranean.
This lasted for almost 500 years, until the murder of Julius Caesar and the eventual rise of Emperor Augustus in 27 BC, turning the Roman Republic into the Roman Empire. This, in turn, centralized power once again by putting it in the hands of an individual. - Historically, we saw the evolution of centralized authorities that were based on conflict and conquest. And usually after periods of conflict and conquest, one massive Leviathan ruled over them and peace was achieved through suppression. A great example of this is the Roman Empire. - Several enlightened Roman emperors alternated with the tyrants and the Roman empire eventually extended to all of Europe, Great Britain and the middle east.
But this unsuitable, highly centralized governing system was eventually the demise of the Roman Empire. This pattern repeats in history. A process of centralization can bring about several advantages as a civilization expands. But when left unchecked, centralization can cause tyranny and inefficiency.
Decentralization can offer a solution to the shortcomings of centralization but it is a temperamental balance. As society grows, centralization creeps back in to, once again, provide the efficiency of scale. But as the power concentrates once more, decentralization is lost and tyranny comes back. Generally speaking, centralization processes happen over time, while decentralization happens as a paradigm shift, usually in response to excessive centralization or as a solution to some of its limitations. So far, we have seen an example of a technology agriculture, which enabled centralization.
But technology can also enable decentralization. A great example of this is the invention of the printing press. Before the invention of the printing press in the middle ages, knowledge was highly centralized and mainly the domain of the clergy, who were primarily the only people who could read and write. - One of the most interesting historical examples of decentralization comes in the simple printing press.
Before, you had scribes, internal to the Catholic Church, who would be up in the top of their ivory towers scribbling away. Bibles were in Latin and had to be handwritten. But with the printing press, you really saw the democratization, I guess you could say, of literacy. Of knowledge.
And this opened Pandora's box for allowing people to learn, to become literate and to start to rise and have a go in society, where before, knowledge was highly centralized with the Church. - This is a great example of decentralization creating a paradigm shift resulting from a single technological invention. And, yet, centralization found its way back in. In order to mass produce written content more efficiently, large publishers, newspapers and magazines became more prominent. Once again, we had gatekeepers of information. Another clear example of a centralized system is radio and television, where all information is channeled via the editorial choice of the major broadcasters.
It is apparent that modern centralization has clear benefits, such as economies of scale and the resultant high production value. Think of how expensive a movie is to produce and for how cheaply you can enjoy it. And yet, centralization has intrinsic shortfalls, namely that the few entities who will have control over the majority, often end up concentrating more and more power in their hands, if left unchecked.
This dynamic is kept in balance either via governance and regulation or by the introduction of new technologies which promote decentralization. For instance, the worldwide web sparked a massive decentralization process. - In the early days of the internet, it was really a research network. And there was this conception that if you had a decentralized system, then it would be a good way to survive some kind of military attack. Their directives and their funding were originally coming from the Pentagon.
But, in fact, it was kind of a bunch of hippie academics just kind of trying to make it work. They were piecing together leased AT&T phone lines and saying, "Okay, this one's up. That one's up. Is your machine on? Is my machine on?" So you ended up with, really, this challenge of writing a language to allow computers to talk to each other and networks to talk to each other, rather than designing a telecommunications system. - Suddenly, anyone connected to the internet could share and access resources or receive and provide services without intermediaries. This led to the masses taking back a large degree of power over publishing and content. At the same time the web was exploding, we also had the rise of personal computing.
As microcomputers became cheaper and more available, the computational power to run software applications shifted from large, centralized servers to individual homes and offices. This technology-enabled decentralization proceeded relentlessly throughout the '90s and the 2000s with devices themselves becoming more decentralized in their functions. Think of how mobile phones used to come with a set of limited, pre-installed functions, such as phone calls, messaging, phone book and an alarm clock. But now, anyone with an idea can create a new app and anyone who finds it useful can install it. This is a massive decentralization revolution that put power in the hands of individuals rather than corporations. Completely new ideas about decentralization have emerged, thanks to the internet.
For example, open source software, which is freely available to anyone and is developed in a collaborative manner, as opposed to the highly centralized development of large corporations. For instance, Android and Chrome OS are built on the open source platform Linux. Wikipedia is built on the open source platform MediaWiki And Wikipedia itself is an open source, collaborative and decentralized platform.
In a peer to peer network, data and processing power are distributed across a network of peers, as opposed to having all data and processing power on a central server. An example of this is peer to peer file sharing, where a file is made available for download simultaneously from multiple people on the network. This eliminates the need for a single gatekeeper of the data, typical of a server-client model. For developers such as Tim Berners-Lee, who presented the first web server, browser and website in 1990, the vision was of a peer to peer network where everything could be shared, developed and maintained by the community. But as this community grew, the bandwidth required to manage all the information and traffic outpaced what was available on the personal computers at the time.
The success of the early web led to the necessity of massive web servers owned by a few companies. And despite the web pioneers' intentions of a decentralized network, centralization crept back in. When there were just a few hundred websites, it was a bit like a small town - easy to find what you needed or to ask someone who knew. But as websites quickly grew into the millions in the mid '90s, it became difficult and inefficient to find relevant information. The launch of Google in 1997 changed that.
But it also centralized the portal to which most people begin the web journey and put that experience in the hands of a for-profit company with one primary interest: selling your data. Think of how easy Amazon made online shopping since 1994 or how revolutionary the way Facebook has connected us since 2004. With their appealing convenience, tech giants represent the ultimate centralization force.
It's practically impossible to compete with them as they have the advantage of a multi-billion user strong network. The convenience offered to everyone by a centralized system is what gives it prominence, eventually concentrating power in fewer hands and costing more and more to the individuals. In the case of the centralized internet of today, the price we pay is that we, the users of the internet, with our data, have become the number one product for sale online. This is made only possible because the massive servers of Google, Amazon, Facebook and all other major applications and websites store our user data, our preferences, all our online actions and interactions in a single place.
And they own this data, which means we relinquish control over it. Knowing what you watch, what you buy, what you like and how you think is very valuable to anyone who is trying to sell something online, whether it's a product, an idea or a political campaign. The owners of your data have become the richest companies in the world. Your best interest is not their concern. After all, you're being given free access to a powerful platform. Their interests are aligned with their clients, the advertisers and the corporations.
Yes, we all benefit from the value of these platforms. But we are also aware that centralized systems left unchecked have all the known shortcomings which eventually lead to their demise. By having our thoughts, our actions and the details of our lives uploaded and stored on an uber centralized server, we are relinquishing control, we are relinquishing privacy and history tells us it won't be long before we relinquish freedom.
- With this centralization of the internet in the hands of a few companies, it raises a huge question mark for how much control they have over all of our freedom of expression. There used to be a real separation between who owns the wires and the kind of infinite number of parties who were transmitting information on them. You kind of have this phenomenon where the big content providers are kind of eating the internet from the inside. I mean, one really interesting example at the moment is Facebook and Google are both building very large, very thick, very powerful cables to Africa. And so, you have an entire future generation of African internet that, you know, works best if you're using Facebook or Google's network and doesn't work as well if you're trying to do anything else on the internet.
- The next generation of web will most likely address this and will be decentralized. Everyone will be sovereign of their privacy and data, and they might even make money out of it. Ideas, projects and progress will be open source and peer to peer. One of the strongest currents of decentralization on the internet today is the boom in adoption of blockchain technology. For instance, 2008 saw the launch of Bitcoin, a decentralized digital currency without a central bank or unique administrator.
This is a great example of both open source software and peer to peer network. When you make a payment with your regular credit card, a central authority, such as your bank, executes, records and guarantees the transaction. Money that belonged to A now belongs to B and the ledger of all transactions is updated accordingly. But with blockchain transactions, records are distributed across a peer to peer network. Each peer can make available a little bit of computational power to keep and update the transactions, and the transactions are totally encrypted.
This is where the term cryptocurrency comes from. - What is interesting is that, meaning the whole blockchain world, is very community driven. At the same time, where we see that nations, or the feeling, at least, of belonging to nations, is going down, we build up other feelings of belonging. Because I think humans, deep down, we deeply want to belong.
And I think the world of tokens and the crypto world is a world where people really live that world of belonging. And I think people are sort of picking their new communities. - The peers are motivated to share their computational power because they get rewarded for their efforts. In the case of blockchain, the reward is a digital token known as a coin, which is said to have been mined. This centralized ledger is more secure than traditional banks. A hacker cannot simply hack a central server, as record of the transaction is distributed across millions of people.
- Technology is such a vital aspect of allowing decentralization to happen. First, there are technologies, such as distributed ledgers and blockchains that allow for what is known as disintermediation. And that's just a fancy word for taking out the middle man. If you don't need a central bank to have money, for example, with Bitcoin or Ethereum, then you don't need a central bank.
It's a proof of concept for how the world could function without central banks. - It was not long before the internet community realized that blockchain technology could be used not only for cryptocurrencies, but for other decentralized applications where a secure protocol is needed. - Many cryptocurrencies shouldn't be called cryptocurrencies. They are tokens. And I think people will start using that word more. The only real currency, in a certain way, is these Bitcoin, since it's a stored value.
Like EOS, Cardano, Ethereum, these tokens represent an ownership. They represent technologies. They have a use case, not just economically.
But, also, a lot of these tokens are governance mechanisms, voting mechanisms. How do you find consensus? How do you agree on things? - For example, smart contracts and smart medical records can be executed, recorded and guaranteed automatically by the blockchain network. But having a different platform for each type of data would prove to be inefficient, like having a different phone for apps, one for music and one for texting. To solve this, in 2013, Vitalik Buterin created the Ethereum platform.
Where Bitcoin focuses on currency, Ethereum is an open source blockchain that can be scripted to handle any kind of secure information. This means that one platform can be used as an encrypted and secure holder of all your personal information without ever being exposed to hackers or a central authority. Most criticism of the current blockchain platforms is a result of looking at them through the lens of the legacy financial system. - One critique could be that cryptocurrencies and, in that case, I would say Bitcoin, is just a store of value. And my answer is, like, "No. It is a store of value and that's what makes it amazing."
Because the world always needs a store of value. Why? Because politicians inherently ruin every single currency ever. There is not one single example where a currency has survived for a long time. - As acceptance of this technology widens, the usefulness of self-control of your financial, medical and other information will become more obvious. Blockchain even features prominently in the UN Sustainable Development Goals. This is because in developing countries, central authorities are often unstable and the local financial and legal systems can be unreliable or corrupt.
Blockchain offers a cheap and secure way for individuals in these countries to transact business as secure digital identification, document property rights and even to do business with people around the globe, by digital remittances. For instance, in countries such as Afghanistan, it is possible to encounter people who have no official identity because they have no ID, birth certificate or property record as a result of a highly unstable local government. A shepherd who lived on a piece of land all their life could see it taken away suddenly and have no legal recourse.
The same person cannot send or receive money because they have no bank account or way to get one. But blockchain technology allows for all these transactions to happen in a decentralized way, independently of the existence of a reliable government. And the transactions are guaranteed by the global peer to peer network, not by a central authority. Given that nowadays, most people in the world have a phone, even our hypothetical shepherd, a decentralized financial and legal platform could be the answer to achieving the UN development goals.
- We take our current models of governance, nation states with a democracy, as a given. And we have thousands of years' development of humanity and the forms we go on from kingdoms to dictators to democracy. And I deeply believe democracy must not be the ultimate form. There might be, at least, a new version of democracy. A new iteration. And I deeply believe that could be blockchain based, where we find new ways and get rid of so many flaws we are seeing, which democracy still has, you know, because it's not perfect.
It's like the best one among a lot of very bad solutions to govern us. And I think the question is, "Can we do it now for the first time ever in history in a peaceful way?" We just need to make sure that on the way to that, we don't kill ourselves. Which is, I think, a very vital risk. - Even material production will be decentralized, thanks to innovations such as 3-D printing and AI. Energy production might also become more decentralized.
Think of solar panels on the roofs of homes. Even agriculture is rapidly changing as innovations like vertical farming free production from the ties of geographical location. Food will be produced increasingly where it is consumed rather than produced centrally and distributed. This will improve food security. Central assistants have helped civilization organize themselves beyond our circle of 150 friends, but usually at the cost of individual freedom or mobility. The initial solution was the highest form of centralization.
Kingdoms and empires were the norm for almost the entirety of the history of civilizations. But there is one thing that can help us transcend Dunbar's number and progressively shift towards a more and more decentralized, free and equal society. Technology. And yet, all the examples of decentralization we have seen still exist within a framework of centralization. Our society still heavily relies on institutions, central government and the rule of law.
These are still essential for our function. A decentralized free market economy, even in its theoretical purest form, still relies on the centralized guarantee provided by a feared currency. Our future will be decentralized. But for now, centralization is still necessary.
This is because the technology for full decentralization of our incredibly complex world is not yet available. And we have many people in this world who are still left behind. Decentralization is a process or a set of processes, not a standalone concept nor a one-stop solution to everything. But, like all progress, it proceeds incrementally.
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