Why decentralization matters

Decentralization comes with trade offs, but solves some sticky problems for humanity.

Decentralization fights the accumulation of power

Power has a gravity to it. Those that have some are usually able to use what they have to gain more. Which, in turn, increases their ability to gain even more.

We feel this intuitively when we see regulations accumulate but rarely be removed. We see this when taxes go up but rarely come down. We have experienced this when political entities take on "temporary" powers to do what hasn't been allowed before and they rarely give up those powers.

This is why the founding fathers of the US attempted to decentralize power: they reduced the scope of the government (the Constitution is pretty small and narrowly scope) and split that power across three branches of government.

By spreading power into many hands, a small group of the most powerful people will never have a majority of the power, and the chances of tyranny go down.

Decentralization forces consensus

When power is spread into many hands that means there are many decision makers. This leads to decentralized systems evolving slowly because they need near unanimous agreement to make even small changes.

Compare your average tech startup (centralized) to Bitcoin (decentralized):

Your average tech startup is run like a dictatorship because a small group of people make all the most important decisions. That allows them to move fast. It's why you hear stories about insane growth and innovation from startups (AirBnB going from launch to a billion dollar valuation in 3 years).

On the other hand, Bitcoin is so decentralized that adding functionality is like herding cats. That's why there've only been 4 major upgrades to Bitcoin since it's inception, while other more centralized projects (like Ethereum) are constantly being tweaked.

For better or for worse, only extremely popular ideas tend to be implemented in decentralized systems.

Decentralization promotes resilience

Centralized system can be disrupted more easily. Whether due to accidents or by the edicts of governments, there are fewer places that need to be compromised to disrupt the whole network.

Decentralized systems act more like biological ones. As long as there is a seed of that decentralized system alive somewhere, it will grow back.

For example, in 2021 China banned Bitcoin mining. The Bitcoin network saw over half of the resources powering the Bitcoin network disappear in a matter of weeks (source). The network was able to adapt quickly to the short term issues, and within a year recovered to its previous levels (source).

More decentralization = better ?

Not every system can be improved by decentralization. Many of today's most beloved products (Google Search,  Apple products, running water) would be hard pressed to decentralize and still perform at the level that society demands (with current technology).

But there are many situations where decentralization is the best option to provide a service and prevent abuses of power.

Technology unlocks decentralization

Some parts of society desperately need to decentralize to prevent abuses of power (journalism, energy, etc). They are waiting for technologies that will allow decentralization without degrading service.

The internet is a good example, technically it's just a protocol for computers to communicate. But in conjunction with cheap computing power, we were able to build the resilient, decentralized system for near-instant communication that we see today.

The effect has been a proliferation of information and knowledge to all corners of the globe. As well as unlocked a staggering amount of commerce that wasn't possible without near-instant communication.

The blockchain is an invention that in conjunction with the Bitcoin community was able to introduce a better money. There are many examples throughout history, these are just some of the most recent ones.

When should we decentralize?

We should decentralize when abuse of power is commonplace, negatively impacts people, and we have the technology to decentralize without degrading the system.

Using our above examples:  The ruling class historically gatekept access to knowledge and information to keep themselves in power. Technologies like the printing press and the internet made gatekeeping more difficult and more expensive to the point of being foolish.

Countries, and usually only a select few of those, have historically been in control of money, and it's been used to keep weaker countries poor. Thanks to the invention of the blockchain and the creation of Bitcoin, we now have the potential for a better money that isn't controlled by anyone. A money that can't be used by the strong to keep weak in poverty.

There are many systems right now that could use some decentralization: journalism and news, energy, the music industry, medicine, running for political office (to name a few). All of which are waiting for new technologies, entrepreneurs, and activists to make a better way.