To decentralize or not decentralize?
May 23, 2020•1,064 words
I discovered cryptocurrencies in 2017. First it was not even Bitcoin, but Bitcoin Cash. Then Ethereum and its merry flock of tokens. Then I caught the virus. The virus spread. I eventually went beyond cryptocurrencies and got interested by the technology itself: Blockchain. Cryptocurrencies remain my favorite use case. Therefore I deliberately expose myself to a significant amount of information and news related to cryptocurrencies. Decentralization has always been one of the most (if not THE) discussed subjects within the community as it is also the most dividing one. Indeed decentralization is such a good example of a classical Manichean narrative.
Narrative
Like any good Manichean story, it boils down to a fight of Good against Evil. Vilains threat to destroy the Good. While most are sinking into despair, some Heroes discover some secret weapons and decide to put up a fight against the Vilains. Let's have a look at a couple of techologies used as Weapon by Heroes to fight a War against Vilainst. Will the Heroes emerge triumphing? That is not the point of this post. The point is: these ingredients make a damn good plot, don't they! As proof that the plot is good: there are already movies or documentaries on all them...
| Heroes | Vilains | Weapons | Wars | Movies |
|---|---|---|---|---|
| Timothy C.May, Eric Hughes, Julien Assange, Edward Snowden | Governement, State, Corporations, Big Brother | Cryptography: link1, link2 | privacy & anonymity vs surveillance, free speech vs censorship | Fifth Estate, Snowden |
| Richard Stallman, Linus Torvalds | Software & OS sellers | GNU, Linux | sharing vs selling, "friendship vs "obey the law", freedom vs being at the mercy of, destruction vs creation | Revolution OS |
| Satoshi Nakamoto | Banks | Bitcoin | hard money vs soft money, deflationary vs inflationary, P2P vs intermediated, borderless vs national, financial sovereignity vs financial slacevery and coercion, centralized vs decentralized | Banking on Bitcoin, Cryptopia, The Rise and Rise of Bitcoin |
| ... |
Software developers fight evil software sellers shooting at them Open Source Licenses.
Jounalists and activists fight censorship from a repressive State using encrypted connections.
Citzens fight against crooked bankers for their financial sovereignity firing Bitcoins transactions.
In the context of the 2008 financial crisis, multiples privacy leaks scandals, massive inflation in Venezuela, people being dismissed access to basic financial services... how can one not being triggered when being presented these technologies in such a "Darth-Vader-vs The-Rebellion" way?
I was personnally totally triggered.
Today
Decentralization, or the fact of being controlled by a random crowd instead of by one lucky individual or group, fits perfectly in this narrative which confronts bad guys and good guys.
Unfortunately, this narrative has lead to the development of a decentralization dogma: decentralized is good/better/safe, centralization is bad/worse/unsafe.
Dogmas make people rely on beliefs and opinions instead of critical analysis to find what is actually better. Because of this particular decentralization dogma, some blockchain projects make the mistake of focusing on being decentralized before actually building something useful. Conversely, useful but centralized projects have sometimes been illegitimately dismissed.
The mistake: decentralization is the weapon, not the war.
The mistake (that I have made) is that decentralization is a means to an end. It shall not be the goal. Decentralization is a way (Weapon) for a product or system to get some properties and eventually become resistant to some threats (Villains & War).
| Product/System | Threats | Required properties to resist the threats | <-- Can be enabled by |
|---|---|---|---|
| Software | Software not improving, not being able to customize or fix, not being able to teach, high license costs, privacy issues.Losing users. | Reliability, secure, open source code | decentralization |
| Website | Downtime, being hacked, censorship, data loss, no privacy, surveillance... Losing users | Reliability, secure, censorship resistance, distributed, data redundancy | decentralization |
| Currency, Money system | Debasement, theft, unfair taxes, limited to 1 country, system shutdown or collapse, not available 24/7, high fees, no privacy, surveillance | Reliability, secure, resistance to censorship, to Denial of Service attacks, borderless, open, sovereignity, P2P, tamper-evident ... | decentralization |
| Media, Press, Information | Censorship, being used as propaganda, misinformation | Reliability, censoship resistance, independance, self-hosted, distributed, P2P, tamper-evident... | decentralization |
| Oracles | Wrong price feed, wrong infos being communicated. Leading to $xxx costs | Reliability | decentralization |
In the end, it is all about threat analysis, risk management and making tradeoffs between different possible mitigation solutions.
"Is it decentralized?" is the wrong question.
| Question is not | Question should be |
|---|---|
| Is the software open source? | What are the costs of not being able to share the code? What are the costs of the license? What are the costs of the software being malicious and not being able to check it myself? |
| Is this currency decentralized? | How likely may the currency be debased unexpectedly? How likely may someone take control of my funds? |
| Is this Dapp decentralized? | How likely may the app be down? What are the costs of the app execution being manipulated? |
| Is this oracle decentralized? | What are the costs of being lied to? Of getting a wrong price feed? What are the risks of believing a manipulated oracle? |
| Is this governance model decentralized? | Will the governance be more efficient if it is decentralized? |
| Is it decentralized | Will decentralization increase my returns? |
| Is it decentralized? | Will I be able address bugs and attacks quicker by becoming more decentralized? |
Bitcoin: A Peer-to-Peer Electronic Cash System was created in 2008 to become an alternative to the current traditional payment system. Previous attempts like DigiCash failed especially because it was centralized and it lead to bankrupcy.
So a first threat is that the network may die due to an unsustainable security/operations model. Another serious threat that Bitcoin faces is the threat of simply being shutdown.
These threats motivated the choice of decentralized system. Indeed decentralization significantly reduces or suppresses them.
The result of a thoughful threat analysis and answering the right questions tell which solution is best: the best solution is the one which decreases the most the total costs associated with identified risks.
That solution won't be black or white but will be the optimum on a decentralization "spectrum".
Mea Culpa & Conclusion
People should care first about whether something works under the threat model they care about.
Decentralization should not be the primary goal. Innovation, building better products and a better digital infrastructure should be. Decentralization is a means among others towards these goals.
It is about building new things worth decentralizing, or make existing things better by decentralizing them.
It is not about making a "decentralized-version" of an existing product that is overall worse, or building decentralized products not worth using in the first place.
Personally, the "threat model I care about" still makes me lean towards decentralized solutions in several situations. But now I can rationalize why.