Decentralization can solve the issues of social media governance and more.
While crypto assets have incredible potential when it comes to democratizing finance — this is ever more clear now that we’re through the hype cycle — blockchain also has wider, much more far-reaching applications.
In a decentralized world, we don’t have to place our faith in human gatekeepers.
Unchaining the blockchain
It was Vitalik Buterin, the founder of the Ethereum (ETH) blockchain, who first brought the blockchain’s wider potential to public attention.
His original intention was to improve bitcoin’s (BTC) payment ecosystem. But he quickly realized the blockchain could support any type of transaction imaginable. And this opened up all sorts of new possibilities.
The technology that makes this possible is smart contracts: contracts written in code and deployed on the blockchain. These contracts are designed to execute themselves when predetermined parameters are met and verified by the network.
When you think about it, many of our day-to-day interactions have a contractual element. And this means smart contracts have an extremely broad range of use cases.
Some are very simple, like sale and purchase transactions. But the principle can also be applied in complex situations like identity and reputation management, institutional decision-making, and yes, even law enforcement.
Because they’re self-executing, smart contracts are much more efficient than the processes they seek to replace. There’s no need for external monitoring, enforcement mechanisms, or, indeed, other middlemen.
But what’s truly exciting is that, unlike traditional transactions, smart contracts do not require trust or good faith — two things that, in the modern world, aren’t necessarily a given.
If the pre-agreed conditions baked into the smart contract are met and mathematical calculations, verified by the network, confirm everything is valid, the transaction will go ahead and can’t be reversed.
The problem with centralization
Crypto expert Chris Dixon argues centralized systems follow a very predictable S-curved lifecycle. Dixon says:
“When they start out, they do everything they can to recruit users and third party complements like developers, businesses, and media organizations… to make their services more valuable.”
But “as platforms move up the adoption S-curve,” he continues, “their power over users and third parties steadily grows.”
When the curve peaks, the relationship becomes zero-sum. The simplest way for the system to keep growing is then to extract as much data as possible from users and cannibalize services that until now were complementary.
Dixon is of course talking about the perils of centralization in technology. But it’s not a stretch to argue that this also applies more broadly.
Centralization concentrates power in the hands of a few. Over time, their interests start competing with those of their users, with consequences such as lack of transparency and rent-seeking behavior.
Centralization also creates a single point of failure which could potentially cause the whole system to collapse.
This happened in 2008, when the troubles of banks that had become too big to fail triggered a global recession. But as the storming of the US Capitol and social media giants’ subsequent decision to deplatform Donald Trump prove, the potential for widespread failure and unforeseen, unintended consequences applies equally to governments and our wider social contract.
Devastating failures aren’t always due to breaches or hacks. People and organizations — including governments — make bad decisions, whether that’s through genuine mistakes, incompetence, corruption, or other reasons.
The blockchain’s promise for a better future
Buterin distinguishes between three types of decentralization:
- Architectural: how many physical components make up the whole.
- Political: how many individuals or organizations ultimately control the system.
- Logical, that is whether there’s a single interface and data structures or a more amorphous arrangement.
The blockchain’s true potential lies in removing political and architectural centralization, placing power in the hands of end users, and providing a more secure governance mechanism.
A decentralized, trustless, stateless system can make it possible to do away with government influence where this makes sense.
It can open up new opportunities to people who have been locked out of traditional systems due to arbitrary barriers to entry.
And it can help us create better versions of centralized organizations like Twitter: secure, private, and where the narrative can’t be hijacked by vested interests who learn how to game the system.
The blockchain won’t magically solve all of society’s ills. But by cutting out middlemen and enabling true peer-to-peer interactions, we can align interests and incentives much better.
In compliance with the Trust Project guidelines, this opinion article presents the author’s perspective and may not necessarily reflect the views of BeInCrypto. BeInCrypto remains committed to transparent reporting and upholding the highest standards of journalism. Readers are advised to verify information independently and consult with a professional before making decisions based on this content.