Why Decentralization is Valuable - Principles #13

Publish Date
Feb 8, 2022
Principles Series
Last Edit
Mar 23, 2022 12:53 AM
Word Count
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Last time, we covered ❇️Decentralization - Principles #12 - what it is and a bit about why it is valuable.
Today I want to dig into that a bit further because it is important to fully grasp the benefits of decentralization.
A quick reminder:
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As humanity has advanced, we’ve largely moved humanity from (C) to (A). Where we started as a thousands of disparate tribes roaming around the world, we now have a United Nations and various other governmental and non-governmental entities that increasingly tie the fate of all ~8 billion humans together. As we’ve nationalized and then globalized, we’ve also centralized.
Undoubtedly, that centralization has brought many gains, but it has made us fragile. Financial crises in one country can impact the rest of the world. One disease (or one group-thinked response) can cripple the world for years. And we could easily keep going.
But while technology has brought us globalization and centralization, it also gives us the tools to unwind the centralization while keeping the gains we’ve made.
The benefits that we can get from decentralization are immense:
  1. Robustness and anti-fragility: decentralized networks are inherently better equipped to handle a failure in any single part of the network. Over the long run, this becomes essential as the probability of a network facing a failure approaches one.
  1. Distributed networks also tend to reward more players and can bring us back from the winner-takes-all endpoints that centralized networks tend to create. Put another way: decentralization should decrease inequality. While that by itself isn’t an inherent good, it is a perk when it comes in a pro-growth package.
  1. Decentralization also combats corruption: a huge and enduring problem in much of the world. Bitcoin provides a good example of this: as every transaction exists on a public ledger, it is actually a lot harder to execute bribes with it.
  1. Last, but certainly not least, decentralization can provide much more purpose and meaning to people, relative to the cog-in-the-wheel machinations that are common to large centralized systems. Case-in-point: anyone can participate actively in the Bitcoin network by mining or running a node. Contrast this to banking where relatively few people work at them, often as cogs, while the rest of us are left at their mercy.
These benefits may seem abstract. But these effects will be HUGE when added up over time. It would be naïve to say that we can avoid all failure, all corruption, and all inequity. But dramatic reductions in those are world-changing benefits that will make the world more stable and allow us to innovate much faster in all other areas.
Hence, our future needs to be distributed. We need to be on multiple self-sustaining planets, obviously. But before that, we need a power grid that wouldn’t fail if we’re hit by a sufficiently strong coronal mass ejection (CME). And of course having a monetary system at risk from one sufficiently bad central government would be a good thing as well.