Decentralization VS Centralization

decentralization vs centralization

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The debate of decentralization vs centralization is always polarizing. Decentralization is seen as a good thing in the cryptocurrency world. It turns anything that’s normally controlled by overbearing centralized authorities into a slippery eel that’s hard to shut down on. You get the same access to platforms like OpenBazaar and Blocklancer as everybody else because there’s no centralized third party controlling these platforms and telling you that you have to provide this bank account information and that photo ID card before you can download them. Nobody’s going to yank your listing just because some snowflake got offended or shut down your account just because you received an unusually large payment. That’s a good thing if you’re into buying and selling high-priced items and/or items that might run afoul of the Terms Of Use of popular mainstream platforms like eBay.

By being censorship-resistant and based on blockchain technology, Blocklancer and OpenBazaar can reach the markets that might be vulnerable to unfriendly governments and their regulations. In another article, I dished on how politicians don’t always get that the free market can provide tools that lift the less fortunate out of poverty. They may resent the implication that new technologies like distributed ledgers can do the job that they failed to do if they just keep their mitts off. That’s the value of having a decentralized platform that has no single, noticeable head.

But Decentralization Isn’t Perfect

Of course, this does not mean that decentralized power structures don’t have its flaws, and this is especially true if everybody gets the same vote on any issue that comes up. One of the weaknesses in a democracy is that people who don’t know what the heck they’re talking about usually get the same vote as people who are actually qualified to make the decision or at least care enough to educate themselves about the issue at hand. The “tyranny of the majority” can be as harmful as an overly centralized power structure if the ones making the decisions, or casting votes, can’t be bothered to comprehend the potential consequences of their decisions.

It may help if the voters have a financial incentive to make the right decision. Blocklancer, for instance, intends to settle disputes with a Token Holder Tribunal in which stakeholders can act as a type of jury and vote on disputes between clients and freelancers. This adds just enough centralization back into the mix to ensure that the “majority” – clients and freelancers who use the platform – can’t start some kind of a virtual civil war with one another and destroy the usability of the platform.

Sometimes voters will vote against their own self-interest and then act surprised because the politician that they just voted into the governor’s office because he opposes abortion and same-sex marriage decides to gut welfare programs. Because Blocklancer isn’t the federal government of the United States of America, it can get away with limiting voter eligibility to those who have an actual stake in the outcome with fewer howls about racism, sexism, and classism.

The stakeholders have incentive to avoid driving away the platform’s users by making unfair decisions in this scenario. To its credit, Blocklancer stakeholders will likely be diverse enough that any possible rogue stakeholder may not have as much power as he or she thinks. This, of course, assumes that most stakeholders are actually paying attention and ready to shut down on an ideologue who decides that his or her belief system is more important than making fair decisions that protect stakeholder value.

Centralization Has Both Benefits And Flaws

If there’s any benefit to centralized power structures, it’s that decisions get made with fewer histrionics from angry voters and frustrated activists – and, yes, I do criticize liberal snowflakes as often as I criticize hardcore Christian conservatives. One of the benefits of having a centralized or semi-centralized system is that decisions can be made more efficiently and without having to consult people who aren’t qualified to influence the decision in any way.

It’s just understood that a team leader might choose to get input from his employees, but at the end of the day, the flight director doesn’t have to poll NASA’s janitors and receptionists before making his call. A truly good CEO of a Fortune 500 company won’t dither around about making a decision even if he (or she!) knows that it might make some employees unhappy. Even given worst case scenario, an abusive, power-mad workers’ union won’t score any brownie points by going on strike against a corporation whose C-Suite executives were willing to be reasonable.

Again, centralization can run afoul of having someone who is incompetent or simply can’t be bothered to do the job well in an important position. The office manager in The Office is funny because a lot of people have had a boss like that and he gives us something to laugh at when we can’t laugh in the face of a real-life boss who may not exactly be playing with a full deck.

Every once in a while, you’ll hear stories about a toxic work environment and an unreasonable HR, and employees aren’t exactly sure what they can do to stand up for their rights. This is one thing that makes the Blocklancer Token Holder Tribunal so attractive. It’s a neutral third party that, unlike the Human Resources department or even Upwork’s dispute resolution department, doesn’t exist to protect an employer’s assets from liability. If the Tribunal can keep the ideologues under control, then Blocklancer can take full advantage of its decentralized nature to ensure that disputes can be resolved as fairly as possible.

“Containers” May Have A Function

Elon Musk may have been on to something when he said of choosing somebody to run a tech company, “The path to the CEO’s office should not be through the CFO’s office, and it should not be through the marketing department. It needs to be through engineering and design.” If you want your company to be able to stay on the cutting edge of the fast-moving tech sector, the CEO have to at least understand what the heck the engineers are even talking about. This is a partial answer that acknowledges that the CFO usually don’t have a degree in engineering, and engineers get frustrated because the CEO who used to be a CFO refuses to approve an R&D project that would give the company a competitive edge ten years from now because it costs a lot of money now.

Satoshi Nakamoto was one of the rare people who had a decent grasp of both cryptography and economics. Elon Musk is a good tech person who has a good flare for marketing. However, most people are specialists who might not be qualified to make decisions outside their field. That’s a good case for a semi-decentralized organizational structure in which each “department” can just do what it’s good at without much interference from a big boss that might not know what he’s talking about because he doesn’t have a background in the right specialization.

DASH has a pretty good way of handling the problem that combines the best elements of centralization and decentralization. The overall direction of DASH can be voted on by stakeholders that have a stake in the outcome, and then the work of making that direction happen can be split up into hyperfocused groups that are centralized within each particular group. The groups can communicate but don’t interfere with one another very much. Front-end developers aren’t going to tell marketers what to do and vice versa. Somebody who doesn’t have much to do with Dash Force News would have a difficult time using the DASH system to force it to take down an article expressing an opinion that they disagree with. This avoids the trap of the CFO-turned-CEO making the engineers’ lives difficult and causing them to quietly hit Dice to find their next job by demanding things that are impossible or an engineer trying to come up with a marketing plan that won’t work.

These groups are basically containers. They’re all off doing their own thing, maybe occasionally communicating whenever necessary to make sure that everybody’s on track and keeping the big picture in mind. Because they combine centralization and decentralization, an attack on one group might be able to interfere with that group’s activities, but usually won’t be able to cause critical damage to other groups’ activities.

This concept shouldn’t be so terribly unfamiliar to technology experts, especially those who work in IT. Advanced Linux users might be familiar with the concept of “Containers” that are not quite virtual machines, but have their own dedicated processing power, memory, block I/O, network, and other resources and might be able to “talk” to other containers under conditions set by the administrator, but can’t interfere with the infrastructure as a whole without permission. An attacker that gets into an unprivileged container, for instance, won’t be able to interfere with the host machine even if the attacker causes major disruption to the functions that the container is responsible for. The idea of “containers” that can’t cause critical damage to the entire network if they are compromised in some way is a concept the DASH team uses to get work done without being accused of being overly centralized.

The container concept used by DASH works because centralization can work well for small groups and that’s why you’ll usually see a group leader emerge in any given group project if somebody cares enough about getting the project done, but decentralization works well for large groups in which no one person is qualified to make all the decisions.

It might be hoped that, in the theoretical case of the rogue ideologue, the Blocklancer stakeholders realize what’s going on and try to discourage him through sheer voting power before he can cause too much damage, for instance. A decentralized democratic model relies on alertness, participation, and participants bothering to inform themselves about any issue that might come up. A centralized model relies on the CEO being able to speak the employees’ language and willing to listen to advice from qualified employees. Both can fall short if there is a flaw that prevents decision-makers from making reasonable, fair, and realistic decisions. However, as DASH proves, a combination of the best qualities of centralized and decentralized models can be combined to take advantage of the strengths of both.

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