The journalist Ilya Klishin tells readers of Insider.pro why modern cryptocurrencies have decision-making centers and what to expect in the future - in the world of money and, as always, in the world of people.
The philosophy of blockchain, which we have already discussed in detail, does imply inevitable decentralization. Not anarchy, I repeat, but decentralization, which promises much greater freedom for all of us.
And here is the question: can today's biggest cryptocurrencies such as Bitcoin (TIKER: BTC.EXANTE) and Ethereum (TIKER: ETH/USD.BITFINEX) be considered sufficiently decentralized?
Well, I’d say yes and no. Unilluminating it may seem, the answer is somehow accurate: the current standing is noticeably better than it used to be, but it’s still too far from being perfect. The existing state of affairs reminds me what Soviet-era textbooks said on bourgeois revolution: it promises freedom to everyone, but brings it only to the upper strata of society.
God forbid we ever stoop to the level of conspiracy theorists; neither I wish to suggest that the half-mythical figure of Satoshi Nakamoto (or, to be more real, Vitalik Buterin) is really not different from any authority such as the Fed. Of course, they are different. At least they haven't appropriated the right of coinage to themselves, and this alone is a very significant step, even a “leap for humanity."
Still, it sounds confusing. At the end of the day, is Bitcoin decentralized or not? Have we already stepped into a new era of economic freedom or have we not? Our brain always tends to make binary divisions. We’d like to know for sure there’s black and there’s white, that we’re with the good guys. Well, I only can rephrase what I’ve just said above: it is no longer black, but still far from white.
In my last column about the New Middle Ages, I speculated that YouTube is a good example of the decentralization in media. Everyone seems to be shooting random videos with whatever turns up, and if the content is good, it will gain traction to the channel.
Well, I again consider it to be a good metaphor.
You see, YouTube just seems to be decentralized. Where it counts, it’s actually quite a regulated area with quite strict community rules and legal requirements. It has administration, it has an owner (which is Google, if you somehow need to be reminded of this), it even has its own penal system, as it were.
Let’s call it Schrodinger's decentralization: as a participant, you’re seemingly your own man, but there’s always someone to bring you down a peg if you take it too literally.
Now let’s return to cryptocurrencies. Yes, they provide a significant degree of freedom compared to traditional financial systems. But they are still not free, still not completely decentralized. Large mining pools and nodes naturally shape the status quo, just as in any oligopoly.
Just look at the mining pools distribution (https://blockchain.info/pools: if someone wants to take over the Bitcoin, it will be enough for them to persuade or buy up the three or four largest. And this is not decentralization. I don’t want to dig too much into technical details, but while you're at it let me notice that the forks are barely a solution (read an explanation here)).
The beautiful blockchain of the future, having flourished completely, will not anymore be “more decentralized” than anything. It just will be decentralized. This is very, very difficult state to reach, so for now, dare to laugh in the face of anyone who tells you that bitcoin is decentralized already.
In the information and culture field, the struggle against centralization, or logocentrism, as post-structuralists call it, has been going on for quite a long time, at least since the mid-twentieth century. It was from this struggle that postmodernism was born; it was this struggle that shaped the modern postindustrial society that survives by oppressing any violent entities. (One of which, by the way, is White Heterosexual Man, seen as a reflection of the repressive and patriarchal figure of God the Father).
The finance sphere, of course, has its own repressive and patriarchal parental figures, namely the Central Bank, the Treasury, and the Ministry of Finance. We are used to believe that they are the pillars of modern economy, and it seems legit as for thousands of years only a legitimate state has a right to issue its own money. The only other option that we are used to thinking about is natural exchange, which would throw us back to the Stone Age.
Well, forget the Stone Age. Decentralization of all aspects of life is a revolt against the fact that we gave up too much freedom in exchange for psychological comfort. Sure, it's easier to live having a church, an army, a government and a manager to guide and supervise you. You just have to do what they tell you.
What is happening now with society reminds me of young men having just graduated from highschool and entered into adulthood, as they see it — a bit scared, but finally free, and for the first time realizing that freedom is first and foremost responsibility. So, mankind is somewhere close to the end of its puberty.
This is a very traumatic period, so we will need some plaster and crutches. We will need milestones and transition stages. Like what YouTube is for media, or what Bitcoin is for blockchain. We strive for freedom, but still want to have a way back.
But one day we will burn the bridges, and then everything will really become way more interesting.