Decentralization & Trust

101 condensed

*Ethereum's structure is based on a decentralized p2p computing architecture.

*Centralized computing networks rely on a command and control structure of a central entity to perform their function

*This central entity can be corrupted, or be destroyed which in turn destroys the whole function of the system (diagram of central entity with x and whole system being x)

*Decentralized computing networks are strictly peer-to-peer and rely on no central entity to perform their function

*If one or even many parts of the decentralized network are destroyed the system can still perform its function. Decentralized systems are more resilient and secure because there is no single point of failure or "no head to cut off"

*Ethereum can create things called Decentralized Applications or Dapps. Dapps are applications that can't be destroyed or censored because there's no central point of failure.

*Ethereum can also create what's called Decentralized Autonomous Organizations or DAO's. A DAO is an Organization that can exist anywhere over distance in range of internet. The main difference between a DAO and a normal organization is that its governance system is maintained by algorithms instead of humans.

*All of this is possible because of blockchain technology, the technology allows a way to trust code rather than humans who may be lying.

*Like Dapps, In theory DAO's can not be shut down

*Smart Contracts, Decentralized Law, Open Source Law VS Human Law, Trust, Ai-to-Ai transactions

#Intro to Decentralization

Systems Theory

• If a system’s function is dependent on a central entity, it’s generally considered centralized. e.g. The Solar System is dependent on our Sun.

• If a system functions without the need for a central entity, it’s generally considered decentralized. e.g. The Universe.

• Decentralized systems are more secure and more resilient than centralized systems because there’s no “head to cut off”.

• Centralized systems can be more efficient but they’re also more susceptible to corruption and existential threats.

The Ambiguous Nature of Everything

• Decentralization is a natural phenomenon and emerges from the constant flow of merger and division.

• It’s important to note that all systems can be both centralized and decentralized at the same time, depending on which reference point we use.

• For example, if our reference point is computing networks, Ethereum is decentralized, because it uses a peer-to-peer network rather than centralized servers.

• But if our reference point is the existential threat of a large asteroid destroying Earth, Ethereum is centralized.

The Decentralization of Power

• For the purpose of simplicity we’ll ignore Earth’s existential threats and focus on decentralization as a trend in our socioeconomic structures

• The decentralization of power can be summed up very easily, it’s about taking away power from corrupt centralized institutions, and redistributing it to the people who entrusted that power in the first place.

• The decentralization of power is inherently linked to the notion of Trust, there are two forms and it can not be stressed enough that this is the crucial thing to understand two forms of trust People-Based Trust and the unprecedented emergence of Technology-Based Trust

People-Based Trust

• Millions of years ago we lived in decentralized tribes that functioned without the need for a central authority. Everyone knew and trusted each other and therefore lived in a naturally decentralized social structure.

• But our brains have a cognitive memory limit which limits the amount of people we can know and therefore trust, so as civilization grew anonymity did too.

• In order to scale humanity the public entrusted power to Representatives & Centralized Authorities with the prospect of reaching consensus for various issues and affairs.

• Acting with good intentions the public allowed highly closed and centralized entities to form like, Governments, Courts, Banks, Schools and Corporations.

• Though these entities helped scale Humanity, and arguably made many better off, there remained one large problem, there was no way for the Public to know if the Representatives or Central Authorities are lying or not, and there still isn’t.

• This lack of transparency in a Closed and Centralized environment invariably breeds kleptocratic behaviour, corruption, cultural genocide, poverty and war; regardless of political ideology. History has proved time and again that countless Revolutions have ended in vain, always “revolving” one Centralized system for another.

#UNTIL NOW!

Technology-Based Trust

• The invention of the blockchain allows for people to agree on issues and affairs without the need for a central authority. The network is open source, cryptographically secure, peer-to-peer and autonomous. No representatives or middlemen needed.

• Would you rather trust the words of a person you don’t know, or a line of open source code that can be audited by the public? That’s the difference between people-based trust and technology-based trust and is crucial to understanding the significance of the blockchain. Peope store information in their brains and can therefore choose to disclose it or not. Our brains are closed source.

• Though it is true we’re simply transferring trust from words to code there is more trust because even though you would need to be an economist or technologist to audit it, we know any technologist can read it. That’s still a huge improvement from trusting a person smiling behind a podium.

• Digital Scarcity, Scales Globally

Transport

• Boats
• Cars
• Planes
• Spaceships

Communication & Information

• The Printing Press
• Libraries
• Telegraph,
• Telephone,
• Radio

Democracy Movements

• French Revolution
• American Revolution

Decentralization as a Megatrend

• 3D printers privacy is enemy
• Solar Energy
• The internet
• Tiny Houses
• Electric Cars
• Open Source Ecology
• Decentralized Technology

Blockchain Technology as a Devolution Together with the Megatrend of Decentralization and Open systems Blockchain Tech will likely fuel a Planetary Devolution *Socioeconomic Devolution (Never existed since decentralized tribes)Trust the Math! Only trust is in Open Source Math and Encryption that is auditable by anyone who wants to Flips the Pyramid upside down (Subverts Hierarchy Systems distributes power to the public) This means anyone can be their own Bank & No Central Banks manipulating money supply) 2 Billion people are unbanked in the world, a smartphone and internet can connect them to the global Tradenet that is forming. Transcends National Barriers, DAO’s Allows ground for Polycentric law, individuals being sovereign + lowlevel Ai becoming legal entities Because it’s decentralized there is no “head to cut off” secure blockchains can not be stopped by central governments.