What is Decentralization and Why it Matters Today

Did you know that there are invisible borders on the internet?

China for example severely restricts data transfers within its border. If you’re doing business in their country, you have the extra cost of setting up a localize data storage facility and filter.

Many countries are in fact setting up more and more of these restrictions to impose something similar.

Companies like LinkedIn and Apple are required by law to hold Chinese users data on local servers.

The latest Facebook/Cambridge Analytica scandal pushed fresh concerns over the export of data for foreign individuals.

If you notice the tons of emails labeled GDPR, which stands for the General Data Protection Regulation, they are sort of designed to reset all the previous consents you agreed on with these internet companies, a majority which are US-based.

It may be a good thing for us consumers, but it is a bad thing for businesses because the enforcement of these rules will likely mean that companies will have to wipe out all their half-dormant users.

Also it would mean extra added cost to enforce these new laws, with fines of up to $30m for non-compliance.

Stripe CEO Patrick Collison voices his concern over the fact that this increases the barriers of entry for new businesses to comply with new data protectionism laws.

It would mean that new comers to the arena would be at a disadvantage.

So what’s all the fuss? I’m not trying to build a global business.

To understand why it affects you and me, lets take a look back at the history of the internet.

In the 1980s to the early 2000, internet services were built on open protocols that were controlled just by the internet community. There were no government oversight or regulation.

This meant that people who were interested to develop their presence online with websites could do so knowing darn well that the rules of the game wouldn’t change later on.

If you build the foundation of your house, you better be sure the land under it wouldn’t be submerged under water a 100 years in the future.

That’s how small web companies back then started. Companies like Yahoo, Google, Facebook and YouTube grew into giant multinational companies all out of these free open protocols.

And so later on, these companies started developing advanced and cute softwares and services that attracted millions of ordinary consumers (you and me).

The smartphones greatly accelerated this trend, mobile apps became a way to socialize, communicate and build relationships across the world.

What happens next?

Millions of users eventually migrated from these open protocols to these advanced and sophisticated, centralized amusement parks.

Even when all of us have free and unrestricted access to the web, we now rely of these huge companies to access them (Google, Yahoo, Firefox)

Yes, these companies re-organized the complicated, messy web and made it easier for all of us to use. We have access to amazing technologies, many of which are free to use.

But the bad news is that now these giant for profit companies who are holding millions of users data from all over the world have become soft targets for oversight and regulation.

New startups, publishers, writers, creators, artists, etc are now riddled with bullets of restrictions and rules that make it harder for them to grow their presence on the web.

This results in more centralization, monopolies, censorship, permission-based networks that stifles creativity and innovation.

In effect, centralization of the web has created broad societal tensions. The fake news, biased-state-sponsored bots, national privacy laws are all the by-products of the centralized state.

What is the response to this?

One of it is to start regulating these large companies.

Impose laws and rules like what we did with telecommunication companies, the radio and television.

These hardware based networks are vastly different from the web.


They are fixed, once built, they are very difficult to change.

Software-based networks on the other hand can be easily re-programmed through entrepreneurial spirit and creativity. They can evolve to suit our needs on a global collective level.

The internet is essentially a software-based network.

It is fully programmable and nearly unbounded by the constraints of space.

Anything you can think of can be encoded on the web.

Your handheld device when connected to the web, can easily and freely access & run anything built by anyone who can code.

The internet is our only sovereign space for all our vision, imagination and creativity to have sex with one another to create something out of this world.

It is where all our ideas intersect and make love unbounded by borders and physical limitations.

And that is why it should remain that way, being community-governed and not bounded by rules and regulation that our old kings of authority laid upon us.

We shouldn’t have to ask permission just to connect with someone from beyond the great firewall.

All the more we shouldn’t have to live in a world full of censorship born out of the need to prevent certain information from reaching “certain” people.

If one bad actor controls the flow of information, disinformation and lies can be disseminated.

What are the consequences of centralization of the internet?

The Facebook scandal that divulged the data of 87 million users. Your data was sold to Cambridge Analytica and was then used by Donald Trump’s election campaign tied to Russian intelligence.

Twitter exposed over 330,000,000 passwords on an internal server.

What’s more, 150,000,000 MyFitnessPal accounts were hacked in March. Not to mention the ol’ MySpace leaked 360,000,000 emails just last summer. The list goes on and on.

Your super-secret password has probably already been compromised and a hacker is just waiting for the right moment to strike.

Let’s face it, hackers will never stop trying to steal all your data. As long as you entered any information into any social media or website willingly, do not think for one second that it will be safe.

Anyone within the company or organization can easily access your data or sell it to third parties.

On a centralized fabric of the information super highway, this types of incidents will happen over and over again until one day you find yourself a victim of a hack.

So it’s only up to you to protect your own data. But how.

How can we have total control over our own personal data and yet interact with vast networks on the internet?

Enter the concept of decentralization.

Decentralized – No one company or organization is in control of your data.

Why decentralize?

Is it because internet communities want to resist government censorship; have the freedom to say and do anything?

Is it purely being fought by libertarians who just want limited government intervention?

Partly. But that’s not the sole reason why decentralization has gradually become such an important movement.

You see centralized platforms follow a very well-defined S-Curve life cycle.

Many of these web companies start out from the garage, at least some of the prominent ones do.

They do everything they can to attract users by developing their platforms and offer advanced features, customization and premium solutions to meet all our needs.

Then as more and more users flock to use them, they gradually earn users trust’. Now the data of these vast networks are like assets to these companies.

What started out as a positive-sum game for users gradually becomes a for profit taking competition.

How do companies like Facebook and Google keep on growing after they hit saturation?

By extracting and selling user data to the highest bidder.

Instead of cooperating, these companies are not competing against one another in a race for more users and profit for their shareholders.

It has turned out to be a zero-sum game where for one company to do exceedingly well, the other must fall and perish into obscurity.

Over time, some of the smartest people on the planet realize that building on top of centralized platforms will only end up in a let down.

We have already witnessed the collapse of companies like Netscape being replaced by Microsoft. Friendster, MySpace, GeoCities, Yahoo… More here.

There’s also enough evidence to suggest that building a bank vault of data will inevitably end up being breached. Like keeping a jar full of honey in a honeypot would attract the most vicious bees.

All these problems will only get amplified in the near future.

Enter decentralized Crypto Networks

Decentralization of any kind at 100% is often very difficult to achieve and quite impossible before.

Hundreds of thousands of hours of research and hundreds of billions of dollars on hashing power have been spent with the sole intention of achieving, maintaining and improving decentralized networks.

Cryptocurrencies are the networks built on top of the internet that incorporates economic consensus mechanisms via the blockchain.

It is a system that is trust-minimized, border-less and permission-less, users do not need to ask a middle man to use the network.

For user A to send data/value to user B, A do not need to know B, and vice versa. B also do not need to verify whether A is sending an authentic transaction because the consensus mechanism ensures its authenticity.

Remember the early internet protocols where groups of people or communities work together on their common interest. Well this strategy worked in the very early stages of the Internet, but very of them ever gain any widespread adoption.

Cryptocurrency networks such as Bitcoin fixes the problem by incorporating simple economic supply and demand incentives by rewarding participants in the network with tokens/coins.

Network participants are aligned together because they are all part of the network working towards the common goal of attracting world wide adoption.

When they do, they get rewarded by the simple appreciation of their coins/tokens that they hold simply because of the growth of the network.

This simple and robust mechanism is why Bitcoin has defied skeptics for 10 straight years. Never once taking a break and never once being breached.

Some of the world’s brightest people have consistently tried breaking in and cheat the network which is worth hundreds of billions of dollars, and till this day, no one has ever succeeded in doing so yet.

We have been far to reliant on centralized platforms and governance that we’ve simply forgotten about the beauty and value of the decentralized internet in the early stages. The chaos and drama we’ve seen for the past decade is the result of these systems failing.

It is high time that we understand the limitations of centralized systems and governance and rediscover the founding principle of the internet and its glory.

Bitcoin software is complicated, and any attempt to explain it in so short a space oversimplifies the technology. I encourage you to delve deeper into existing research to fully understand just how revolutionary Nakamoto’s White Paper was by checking out One of – if not the most – comprehensive resources for learning about Bitcoin with over 20 categories ranging from history, to buying BTC, setting up a wallet, technical information, mining, security, and trading:

Chris Dixon
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Winson Ng

I Started hearing about bitcoin only in November 2017. As a solo-preneur who has build around the Maverick Philosophy, I found bitcoin to be just the tip of the spear. I watched to see who was getting into it, some of the smartest entrepreneurs who has made their fortunes being the first movers allocated portions of their investment portfolios to Bitcoin. I studied and realized that if it worked, bitcoin was going to be the first global decentralized currency. And that has never existed before. Ever. I was Hooked!
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