Blockchain is Not Trustless or Decentralized
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However, a few statistics can lay the political decentralization argument to rest. For one, “97 percent of Bitcoin is held by 4 percent of investors.” Further, Bitcoin is mined almost entirely by mining pools: Also, the way cryptocurrencies are transacted is almost entirely through centralized exchanges. Finally, the core developers have significant control over the future of the network.
The final argument for blockchain’s decentralization is that it’s logically decentralized. For example, there’s no CEO or board of Directors who get to control the network. There are no articles of incorporation, physical address, or bank accounts. While it’s true that blockchain, as a technology and not a company, doesn’t need these things, there are still stakeholders and people with power, like the core developers, mining pools, and “whale” investors with huge wallets.
Ultimately, blockchain is less centralized than traditional networks, but it’s far from decentralized. And when we have to trust the core developers with the entire future of the technology, trust users and investors not to collude to manipulate applications, and trust mining pools to validate transactions, it’s not exactly trustless.
P.S. If blockchain was trustless and decentralized, how much would it really matter? No layperson outside the blockchain bubble has ever heard of decentralization.
Jesus: Hey, Dad? God: Yes, Son? Jesus: Western civilization followed me home. Can I keep it? God: Certainly not! And put it down this minute--you don't know where it's been! Tom Robbins in Another Roadside Attraction
October 6, 2021 at 6:31 PM #448543snotParticipant
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…are i.m.h.o the most important ones. To be clear, most crypto are NOT decentralized in the ways that matter; Bitcoin is one of few or perhaps the only one that is.
Among these important decentralized aspects are the facts that (1) no one can print more Bitcoin in any way other than through the inherently limited, limiting means set up by Satoshi, and that (2) if you keep your coins on a hard wallet, no one can take it away from you. That doesn’t mean you can’t lose your investment in it – among other things, if no one were willing to accept it in exchange it for dollars, goods, etc., it could become worthless – true of any currency or store of value.
Also, or maybe this is a way of unpacking part of the above, blockchain is a protocol or method for encoding transactions in a way that is transparent and self-authenticating. It’s sort of like a built-in, digital version of the systems for recording title to real estate or automobiles: your title epends on the title of the person who sold it to you and so on, and there’s a recording system such that every step in the chain of title can be verified by anyone who cares to look, so that it’s difficult or in the case of blockchain, impossible to sell what you don’t own or have permission from the owner to sell. So blockchain is decentralized to the extent that you don’t have to go to a centralized building or platform to check the public ownership record; rather, since the record is more or less built into the coin and/or the protocol that must be used in order to transfer it, you don’t have to worry about who controls the public record building or platform.
All of that said, the vast majority of crypto including Ether and the digital currencies that central banks are hoping we’ll adopt, ARE or will likely be centralized; the code governing their manufacture and/or transfer CAN be altered by some central group or agency and your your coins CAN be either inflated into nothingness through over-“printing” or simply be removed from your wallet.
Also note, I’m not sure all digital currencies use blockchain. And again, a crypto can use blockchain and still be centralized in crucial ways – e.g., a central bank digital currency could very well use blockchain but still be set up in a way that would allow the feds to easily inflate the currency or take your money out of your wallet; all the blockchain aspect would be doing for you in that case is preserving a record of whatever transfers were involved.
Very important to understand all these distinctions, because the feds are actively trying to confuse us about them and to get us to accept their central bank digital currency, which would be far worse than what we’ve got now with the dollar!
Destruction is easy; creation is hard, but more interesting.
October 26, 2021 at 1:43 PM #451618VoltairineParticipant
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and as you imply, the biggest and most important challenge is decentralized p2p governance of blockchain ecosystems, governance that is not impediment of smooth evolution and self-correction of the ecosystem but organic part of it. Naturally, for advanced self-governance you need Turing complete – or more advanced computation – with “smart contracts” etc.
My most practical idea for governance evolution is “Panarchy MMORPG”, user friendly dial/platform for creating all sorts of governance systems for blockchains that the game creates, for very fast practical testing of theoretical ideas.
October 26, 2021 at 1:50 PM #451620VoltairineParticipant
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The Elders network of First Nations of Turtle Island is a distributed and decentralized social form of shamahood.
Humanity outside of Eurocentric bubble of stagnated slavery to centralized bureaucracy of the scribe class and class society is more familiar with decentralized social models. 🙂
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