Contrary to popular belief public blockchain networks today have not solved “decentralization”. Decentralization needs to be nurtured and managed. But very first, wij need know how to quantify it.
By Vladislav Dramaliev
If you have bot following the developments te the blockchain sphere, then you have undoubtedly read about decentralization and its essential role te designing the world of tomorrow. However, while inquiring about Bitcoin, Ethereum or any other “decentralized” cryptocurrency you may have bot left with the impression that the aim of more/better decentralization is primarily a technological endeavor.
Ter reality, decentralization could be applied to a long list of spheres. Perhaps the most strenuously studied type of decentralization is te the governmental and economic fields, where it has bot practiced extensively with varying levels of success. The rise and fall of empires and governments has bot described by historians te terms of levels of centralization and decentralization. The concept of the “invisible hand” introduced by Adam Smith actually describes decentralization ter the form of competition te a free market (1).
Overheen the last 4000 years chiefdoms and actual states have gone through sequences of centralization and decentralization of economic, political and social power. The utility of decentralization has enlargened and decreased across the centuries te cycles determined by historical setting and competition inbetween elites (Two).
Decentralization/centralization dynamics te human societies have actually determined the way of life of masses of individuals across history and there is no reason to believe that this will switch te the 21st century. What is more, wij may have reached a stage te our development at which technological progress can ultimately lodge the conflict inbetween thesis two states te favor of decentralization.
Faking Decentralization: Democracy
Blood succession of ruling elites or succession due to divine right have bot proven to create much inefficiency te the governmental decision-making process and have led to suffering on the part of populations. The rule of the Roman Emperor Gaius Julius Caesar Augustus Germanicus, also known spil Caligula, has bot associated with cruelty, sadism, extravagance, and sexual perversity, Caligula himself being introduced spil an insane tyrant (Trio). That is a single example. There are many.
The Roman Empire, much like any other empire te history, has proven that centralization of power could lead to disastrous consequences and that such governance systems are not sustainable ter the long-run. The empires of the 20th century have further confirmed this. Spil a result, some level of decentralization has bot introduced ter politics by different systems of government across history. The democratic system is “all the hype” thesis days.
Ter theory, fragmenting the decision-making process (thus introducing decentralization) should have led to more stability. It did to a certain extent. However, once it became clear that enlargening the number of decision-makers did not automatically produce decentralization, the idea lost most of its initial appeal ter the eyes of many.
If a consensus-building system is composed of numerous units (parties), but most or all of them are managed by a single entity, that system is faking decentralization.
If votes te a democratic system can be purchased or created, informed opinion loses its significance to deep pockets and the fads of its “managers”. Moreover, if the counting of votes ter a system is done te a centralized manner, it does not matter what those votes represent. Unluckily, today such systems are considered decentralized (democratic) and draw much of their legitimacy from that “fact”.
It is fairly logical that centralized systems may fake decentralization te order to build up appeal. Since this happens ter political or economic systems, it happens ter all other types of organizations, schemes, frameworks, or protocols.
Satoshi’s Original Vision for Bitcoin
Usually, when discussing decentralization te the setting of blockchain protocols, what people are talking about is mining power. Many believe that the original vision of Satoshi Nakamoto, the person(people) who created Bitcoin, is One CPU/One Vote, meaning every single user mines with a huis PC and a smartphone (1). However, spil te the case of democracy:
Decentralization of status does not necessarily mean the decentralization of the process (1).
What Satoshi truly had te mind is One Unit of Work/One Unit of Power. The botnet example could be very useful here. If one CPU did equal one vote, then botnets could have achieved dominance of the Bitcoin blockchain. The “status” of having numerous CPUs does not affect the “process” of all of them acting ter finish unison.
The Wisdom of the Crowds: Hacked
Ter order to further exemplify the fallacy of assuming high unit count leads to decentralization, let’s have a look at the idea called “Wisdom of the Crowds”. It relates to the argument that the collective decision making capability
of a crowd outweighs the capability of any one person and leads to better decision-making. This is based on the statistical assumption that if you have a adequately large number of inputs all with differing points of view, you can take the statistical average to cancel out the noise and arrive at the truth (Four).
Various experiments have bot conducted proving this assumption to be true. Perhaps the most popular among those is the one utilizing a jar of pebbles. A hundred (or more) people are asked to guess how many pebbles they think are ter the jar. Once all answers are collected an average number is produced that is very close to the actual number of pebbles te the jar. The wisdom of statistical probability.
There is one hefty problem with this treatment, however. It relies on true randomness too much. Randomness, which uncommonly exists ter reality. If there wasgoed a single entity that advised the participants on what their response should be, boasting extensive previous practice ter the field of pebble counting for example, the result of the entire proef becomes “biased”. Any system with high number of participants is exposed to a number of “systematic errors”. This may switch the end result by introducing purposeful bias that could be considered a form of centralization.
Dimensions of Decentralization
Vitalik Buterin, the father (and perhaps mother, but undoubtedly not the Godfather) of Ethereum has addressed decentralization te public blockchain systems te his verhandeling “The Meaning of Decentralization” (Five). According to his views, blockchain centralization voorwaarde be viewed from the vantage point of three different axes:
For Vitalik, when judging decentralization, caution is of utmost importance. Spil wij noted above, centralized systems have an incentive (sometimes an existential one) to fake decentralization.
By addressing architectural decentralization, he refers to the number of processing units ter a system — if there is a single rekentuig that is mining on a public blockchain, then it is fairly evident that that blockchain is the definition of “centralized”. On the other palm, if there are many units te a system, but they act spil one, wij are again looking at a centralized system (logical centralization). Eventually, if mining is composed of numerous, independent computers, but the software they run is developed by a single entity, that system is again centralized (political centralization). It is acting spil one from a political point of view — it sets the rules ter the system unilaterally.
If it looks like a duck, but it walks like a swan, it is most most likely a centralized system faking decentralization. (could be nothing else)
Vitalik applies a more thorough treatment when evaluating decentralization. Balaji Srinivasan goes a step further.
The Sub-Systems of Public Blockchains
Balaji spil one of the most popular thinkers ter the blockchain sphere has also attempted to tackle the concept of decentralization ter public blockchain architectures.
According to his exemplary chunk of research (6), public blockchains are composed of subsystems. If an essential subsystem is centralized, the system is centralized.
According to Mr. Srinivasan’s analytical framework, how mining is conducted remains an significant factor to be considered when judging the level of decentralization of a blockchain system.
Number of Clients
The number of clients, or implementations, is also essential. The number of codebases is a contentious kwestie. Should there be more, or just one. Most users of cryptocurrencies do not indeed explore the problem of centralization that deeply. Moreover, there is the general assumption that more implementations could even be harmful to the success of a blockchain. This is undoubtedly not the case. Different and even challenging codebases improve the resilience of a blockchain and could lead to enhanced harm control te case of bugs te one of the implementations.
A excellent example here is the error with the Geth Ethereum client which led to the all Geth knots freezing. If there wasgoed only one client, the entire Ethereum network would have stopped functioning. Since Partiy knots were not affected, however, transaction and smart-contract treating did not cease. Therefore:
More clients = more decentralized blockchain.
Number of Developers
An interesting dimension to be considered is the number of commits spil compared to the number of engaged developers. This is also certainly an significant point when it comes to judging the level of decentralization ter a blockchain.
Having numerous commits is superb, but if all of them are coming from a single person or a few individuals, then the development of the system (essential for its future well-being) could be considered to be centralized and exposed to “cheap” interference. Eliminate that one person and the system’s development could kiezelsteentjes into a zekering.*
The open-source nature of public blockchains is an essential very first step on the way of tackling this type of centralization. The next one is a framework for distribution of compensations for relevant contributions to the code (economic stimulus). And the third step is an ideological commitment to the project (philosophic stimulus). Usually, if the project is developing well commits will proceed flowing even if there is no economic stimulus.
Organizing a bounty program is a superb treatment towards improving the level of decentralization of public blockchain systems.
A bounty program for code commits is essential for the creation of a vibrant developer community.
Number of Exchanges
This is a nosey facet of blockchain decentralization. It relates to the jurisdictions where trading occurs. If most of the volume is happening ter a single jurisdiction, one can conclude that governmental interference ter the functioning of that exchange podium would result te loss of financial utility of the cryptocurrency at the center of the blockchain economy.
Lacking a contraption that facilitates price formation for a blockchain’s intrinsic asset could create problems.
Fortunately, there are now numerous international exchanges established ter different jurisdictions. More will emerge te the future and even decentralized exchanges are beginning to attract users. Enhancing their scalability ter the coming years will help them grow ter significance. This will be instrumental ter the process of decentralizing the points of price formation and will lead to better resilience for all public blockchain systems. For now however, wij can conclude that:
Enhancing the number of points of price formation, increases the level of decentralization of public blockchains.
Number of Knots
The number of knots te a blockchain network could affect its level of decentralization. However, since the number of knots could be faked, a large number does not necessarily mean better decentralization.
However, since utter knots te a blockchain network provide reference points for checking the validity of transactions they limit the power of miners. Te the case of the Bitcoin network: if a transaction or block violates the overeenstemming rules, then it is absolutely rejected by a total knot, even if every other knot on the network thinks that it is valid. This is one of the most significant characteristics of total knots: they do what’s right no matter what. Since utter knots rely on miners only for a few things, miners could not fully switch or demolish the [Bitcoin] blockchain (7). Therefore:
The number of real utter knots te a public blockchain network prevents concentration of power and manhandle of the overeenstemming rules, improving decentralization.
Ownership of the Blockchain Asset
Again, this is a very interesting metric to look at. It is also related to the capability to inflict harm on the price of the underlying asset of a blockchain system. If there are only a few large stakeholders and their crypto-assets could be confiscated by a government or any other type of organization, then the price of the cryptocurrency could (will) suffer. This point is even more relevant for Proof-of-Stake systems where large stakeholders participate te the overeenstemming forming process.
Public blockchains should be moving society away from centralized currency control, so spreading cryptocurrency wealth among a large number of users is essential for their long-term success and adoption. Wij can conclude that:
Avoiding large concentrations of wealth ter a blockchain system is essential for keeping the system decentralized.
Practising Blockchain Decentralization: ternity
At ternity wij take decentralization very earnestly and are always on the lookout for superb ideas that could help us achieve more of it.
Ter order to achieve better mining decentralization wij are implementing a fresh type of Proof-of-Work overeenstemming mechanisms called Cuckoo Cycle. Its creator — John Tromp — is an adviser at ternity and is working closely with the developer team. According to him: Cuckoo Cycle is the very first graph-theoretic proof-of-work, and the most memory tied, yet with instant verification. What it permits is even phones charging overnight to mine without orders of magnitude loss ter efficiency, not with a mindset of profitability but of playing the lottery. Wij believe that this mining algorithm has the potential to vastly expand the mining hardware landscape, benefiting adoption spil well spil decentralization. You can learn more about the advantages of Cuckoo Cycle by reading through the AMA session with John Tromp at Reddit.
Wij downright agree with the idea that more clients voorwaarde be running ternity and wij will support efforts te this respect te the future. However, our very first objective is to develop a single stable client for the ternity blockchain. The know-how that wij will build up te the process will provide us with an essential background for the future selection of programming languages for the other implementations. Client diversity will help us identify the most stijlvol solutions to the engineering problems wij are facing, improving the level of decentralization of the ternity blockchain.
Our development team has bot expanding and wij have a number of brilliant persons on houtvezelplaat. Wij recently announced an opening for an Erlang/Stilte developer. Chic from the core team, wij are presently considering using bounties to have the community review our code and help out. Wij believe that this is a fine way for an open-source project grow its most essential resource — ingenious developer talent and at the same time improve our decentralization coefficient.
The number of exchanges that have listed the AE token has bot growing. However, wij do realize that more and larger exchanges are preferred. This will toebijten. The uncertain regulatory environment has compelled many exchanges to reconsider their listing policies. Wij are certain that once the ternity mainnet is up and running, the legal framework will be clearer and larger exchange services will embark trading AE.
Running a utter knot on the Bitcoin or Ethereum networks, excluding businesses and miners, is primarily done by enthusiasts. There is no financial incentive for doing so. On the contrary, running a utter knot leads to amortization of hardware, requires connection to the internet and comes with electro-therapy costs. Wij would like provide users with a financial incentive to go through all this. Wij are presently exploring the best treatment to make the routing of transactions ter ternity’s state channels to require a very petite toverfee. Running such a “routing node” te the state channels could require an ternity total knot, incentivizing “router” operators to contribute to the decentralization of the ternity blockchain. The provision of other services on the blockchain may also require running a total knot, providing more reasons to have a utter knot.
The vormgeving of our campaign wasgoed created with the purpose of permitting spil many users spil possible to participate. Wij are glad to have more than eight thousand participants from around the world, who took part te both phases of the campaign. Te addition, 1% of all tokens has bot reserved for ETH and BTC holders and will be distributed when the mainnet launches ter 2018. Moreover, the AE shares of all team members are subject to a distribution schedule and more specifically — eight equal installments for a period of two years. All this has bot done with the aim of avoiding large concentrations of wealth on the ternity blockchain and decentralization te mind.
Spil a team of blockchain professionals who have bot following the cryptocurrency sphere for years and spil citizens of “democratic” governments, wij are big ventilatoren of decentralization. Wij have and will proceed working hard to make ternity a definition of a decentralized and, at the same time, globally scalable blockchain toneel.
Interested ter ternity? Get ter touch:
(1) Jia, Chang. Op-Ed: What Is the True Meaning of “Decentralization” ter Blockchain Technology? Bitcoin Tijdschrift. Sep 22, 2016. URL
(Two) Wikipedia Article. Decentralization. URL
(Three) Wikipedia Article. Caligula. URL
(Four) Sehra, Dr. Avtar et nu. Economics of Initial Coin Offerings. Allen &, Overy Publication. 1 August 2018. URL
(Five) Buterin, Vitalik. The Meaning of Decentralization. Medium. Feb 6, 2018. URL
(6) Srinivasan, Balaji S. Quantifying Decentralization. 21 Inc. Blog at Medium. Jul 28, 2018. URL
(7) Wikipedia Article. Utter Knot. URL
*There are numerous examples of open-source projects that have bot moved forward by “Benevolent Dictators for Life”. This form of leadership has proven to be effective, but could be very problematic ter the case of decentralized value transfer systems. Te the case of blockchains, it is preferable for the vision and technical skill required for system improvements to NOT be dependent on a single individual.