Is Decentralization Only An Illusion?

ga38jem in #hive-167922 • 3 years ago

As we all know the crypto space is all about transparency and decentralization. The problem with that is that we are not there yet. In this article I will talk about some projects that recently showed that they are not completely decentralized and that we are currently living in kind of an illusion. Furthermore, I want to talk about the only Project that is supposed to be the true and only decentralized project out there: Bitcoin!

Illusion of Decentralization

Let’s start of with a very unpopular opinion, but even projects like Ethereum are not truly decentralized. Many experts would bring the argument that decentralization is a spectrum. But in my opinion it is a binary true or false. If something is more decentralized than something else but less decentralized than another project than it is not truly decentralized. With this being said let’s talk about some Web 3 applications that showed their tendency towards centralization.

First up is the very popular NFT market place OpenSea. It got recently in the news for banning Iranian users as sanctions from the US are starting to get more likely. This is a very bad example how something that is supposed to be decentralized is influenced by political decisions. The main point of decentralization is to get more independency back. On the other hand OpenSea showed that such an approach could benefit the user as well. A few weeks ago some users were hacked and lost a good amount of Ethereum. All of their accounts were frozen and all of the assets were able to be returned. This case shows that it can have benefits. The main thing in my opinion is that this platform makes itself attackable by politics which is a downside in my opinion.

Another very prominent example is no other than Metamask! Recent news suggest that Venezuelan users were banned from using this wallet. This has to be explained in some detail. All of this turned out to be some kind of geo-political mistake as the company behind Metamask, Infura, wanted to ban users from North Korea, Iran, and places in Ukraine. Although the ban of the Venezuelan users is supposed to be a mistake this just shows that even one of the most popular Web 3 wallets like Metamask is not as decentralized and permissionless as we would have thought and hoped. This raises the question of the illusion of independency and true decentralization.

True Decentralization

I think we could name many more projects. The best examples are probably all of the new blockchain projects that are founded by a number of VCs. The only real decentralized project is in my opinion the founder of this crypto space itself: Bitcoin. Many people would suggests that Bitcoin is too old, too slow and in general a very bad project to invest in as it is the first one and that it can be compared with the first generation of a technology. In some regard this can be true but on the other hand we should look at it in more detail. Cryptography was not invented with Bitcoin and the concept of digital money is also not new to the world. Out of my perspective, a very smart person or many smart people, with the name of Satoshi Nakamoto found a way to build a sophisticated algorithm that is the most and pure decentralized version so far. Many doubters are saying that this algorithm is to generic and easy but if you really think about it, the best things in the world are very generic and easy.

Yes, Bitcoin has some issues, one of them being the scalability, but the whole idea behind this project was the decentralization of a monetary system, which is independent from the government and politics. All of the projects that are trying to change its consensus mechanism to proof of stake or something else are always sacrificing the decentralization part which makes them again very vulnerable to regulations.

Conclusion

Now I know that this topic can be discussed in more than just the few paragraphs that I just wrote and I would be more than happy to trigger a discussion on that in the comments. But my main intention was to remind myself and maybe the people who are reading this that although all of the new and existing projects are very exciting and will probably form the future, if we want real freedom and independency at some point, Bitcoin will be inevitable.

Published by ga38jem on
LeoFinance
On 9th March 2022

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#proofofbrain #leofinance #piotr #posh #hive #oneup #vyb #cent #bitcoin

3 years ago in #hive-167922 by ga38jem

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taskmaster4450le 3 years ago

Is Decentralization Only An Illusion?

Is it commonplace? Also no.

I agree with you about Bitcoin. In fact, I would say Bitcoin is the largest DAO we have. It is truly autonomous, running via computers all over the world. If one falls off, another fills in.

That is why the idea of banning or stopping Bitcoin is laughable.

As for the rest, there is little there. I would say the removal of the ninja mined stake after the fork puts Hive in that category. Now PoS (DPoS) is much different from PoW so we have that to consider.

The token distribution is spreading out which is helpful. However, this brings up the question as to when something is decentralized versus when it is not. Where is the line in the sand?

I would say the fact that Hive's attack vectors are minimal compared to most of what is out there tells a great deal. Not too many can say that when there are VCs, labs, or foundations behind the projects.

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ga38jem 3 years ago

Thank you for sharing your thoughts! I always thought that Hive was something special but never understood why. Thank you for clarifying! :)

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poshtoken 3 years ago

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coinlogic.online 3 years ago

This is an issue we have really been looking at lately. The term Decentralized, especially in DEFI is really just becoming a catch phrase. Most projects are still extremely decentralized.

Hive is one I will argue, that at it's core level is decentralized, but the DPOS system has it's flaws in that the it is down to the top 20 plus 1 and becomes a popularity contest.

We have been heavily exploring the Cosmos ecosystem and as that is a whole other beast entirely, it's possible to spin up nodes and try and get delegations, but then it's the whole popularity contest issue all over again.

Bitcoin and others like it, Litecoin, Digibyte, and even Monero, are completely different in that anyone can get a computer or ASIC miner and start mining, no campaigning, no having to prove your worth, other than just providing power and infrastructure to the network. These chain are some of the most decentralized, but don't have that sexy defi and smart contract aspect.

My play is I earn inflationary assets and turn them into BTC, LTC, and Monero.

Reblogging for the Coin Logic front page feed!

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ga38jem 3 years ago

I think your play is very similar to a lot of others! At the end BTC and such will hopefully remain and raise in value! :)

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coinlogic.online 3 years ago

BTC isn't going anywhere. Long term extremely bullish. Governments know they can't stop it at this point. Monero is another solid play, but can be affected by access to exchanges if they are required to drop it. But then that's where you just have to get creative, lol.

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leagalease 3 years ago

You really need to breakdown terms when discussing this. I consider myself more of a bitcoin maximalist than not, and with such, I would argue Bitcoin (maybe 1 to 2 others) are the only truly decentralized projects in existence.

What are bitcoins guiding principles? Decentralized, peer-to-peer, cashless, intermediary-less, transactions. Now saying this is one thing, however the entity (Satoshi) that laid it out, is either still an enigma, dead, a group, etc. That is part of the decentralization that Bitcoin has over all others. Satoshi can never come back and change Bitcoin (or probably won't, assuming it's 1 person/group who still lives). Your bitcoin can never be confiscated (if its in your custody) and anyone can secure the network (yes yes, ASICS I know but in theory).

The difference between Bitcoin, and literally any other project, is that Satoshi is an Enigma or a ghost. Ethereum has the dev foundation, essentially every blockchain has a core dev team. Now I will say decentralization as I see it, can never be an absolute. It is a sliding scale in terms of how we understand the word. Some projects feature more decentralized operational tactics than others, but some are very very closer to completely (if not completely) centralized.

Now, I could drone on about this topic forever, however the key takeaway is that Bitcoins guiding principles are as close to a decentralized finance system as the globe can get. Does it have its issues even with that? Yes, of course it does. However I do believe that there is also a place for the semi-centralized/decentralized projects. It is a sliding scale, not an absolute. If we were to construe the concept as binary, then not even Bitcoin (look at mining pools...) could be decentralized, and nothing could ever be. Hence, it needs to be interpreted as a spectrum that everything sits along.

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ga38jem 3 years ago

Thank you for sharing this very intersting view. I guess yiu have a point that nothing is ever completely decentralized.

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