Centralization as a Testnet

7 Min Read
1482 words

truthliestrust.gif

The Trust Debacle

We hear the same tired old arguments over and over in crypto:

  • That's centralized.
  • That's not decentralized.
  • You can't invest in that because of XYZ.
  • You should invest in that because it's decentralized.
  • Innovation.
  • Disruption.
  • Fiat
  • Disrupting fiat with innovative disruption.
  • Blah blah blah blah blah!
Most people have no idea what they are talking about.

Everyone knows that 'decentralization' is 'good', but they don't know why it is good or what problems that it solves. Then when they try to explain the concept or extrapolate it they end up being completely wrong because they don't understand the foundations of what they are even talking about.

decentralizedcentralizeddistrubutedspectrum.jpeg

A decentralized system looks exactly the same as a centralized system, just with more centralized nodes connected to each other. That's because centralization and decentralization are not tangible measurable things, but rather fully subjective spectrum and open to extreme interpretation. Central banks are decentralized because there are a lot of them all connected to each other, and each one is connected to several banks.

image.png

Four central banks connected to 20 banks is decentralized.

So it's not really all about decentralization, is it? There are way more variables that come into play that most people conveniently ignore because that would make the problem far more complex and harder to navigate.

Take Hive for example.

Bitcoiners look at Hive and claim it is a centralized shitcoin because there are only 20 nodes that control the entire network. Meanwhile Bitcoin has even less than 20 mining pools that control the entire network. However, the governance of Bitcoin is also split up into stake holders, node runners, and developers in addition to the miners, so the comparison doesn't even make sense in a lot of ways.

Hive is also controlled by stake holders and block producers, but we've also seen first hand how easy it would be for the underlying community to just break away and create their own fork if the situation warranted it. At the end of the day all cryptocurrencies are inherently centralized in distribution because we haven't even come close to mainstream adoption yet. Soon™

But what about the REAL centralized projects?

If we look at projects built on Hive like HiveEngine or LEOfinance, we can see that these things can get much much more centralized than Bitcoin or Hive or whatever else. Does HE / LEO have no value proposition because they are "centralized"? Of course these things have value. There are too many people running around thinking that centralized services can't have value. That is absurdist thinking.

What is the value of centralization?

There is actually very little drawback to centralized service. This is the default state. This is how we optimize and make things more efficient, by centralizing and streamlining them over and over and over again iteration after iteration.

The only drawback to centralization, is trust.

That is what we are scaling here in Crypto-land: trust.
That is the only thing that these centralized services are missing.
That is the only thing they can't compete with.
On every other metric, crypto loses.

And thus we can see that trust and the inherent corruption and exploitation that comes along with it is basically one of the biggest problems of society today. Hell, it was the biggest problem even in ancient societies like Rome and insert_empire_here. At a certain point all centralized entities implode under the weight of their own corruption. This is the problem that crypto seeks to solve. There are no other problems that need solving other than this one. It's the biggest problem in which all other problems are a derivative.

But what if you actually trust the person in charge?

Then there is zero drawback to centralization and every advantage under the sun. I for one trust @khaleelkazi quite a bit to continue grinding away day by day trying to build value for the Hive and LEO ecosystems.

There was even one day that everyone was joking around and Khal was creating custom emojis for anyone that asked. I jokingly posted this picture and it has been the :edicted: emoji in LEO Discord for over a year now.

frymoonfuturama.jpg

Caption: "Moon"

More to the point Khal's emoji is a bit more dark humor:

:khalbus:

image.png

Yeah, because if Khal gets hit by a bus we are all wrecked over here at LEOfinance. That's just how it is. There is no one else to pick up the pieces, and that's fine. It doesn't have to be a robust decentralized system in the beginning, and we wouldn't want it to be that anyway.

The advantages in prototyping and experimentation and leadership and efficiency and focus and value creation are simply too good to just jump into a decentralized system that could get co-opted by bad actors. How silly do you think Dan Larimer feels for losing control of everything he's ever built? That's gotta be a weird feeling, and yet he just keeps grinding away trying to make a better solution. Admirable, but perhaps misplaced energy.

This is why centralized crypto is quite simply just an amazing testnet for prototyping and testing stuff out. We don't have to worry about decentralization until we scale up and start getting the attention of regulators looking to capture and control the space.

bitcoinshield.png

The more decentralized networks are acting as a shield for the centralized ones. There's a reason we don't see companies like Facebook or Amazon or Google launching a cryptocurrency. They are already too scaled up to avoid the regulators, and their entire mode of thinking is a centralized one of absolute control and regulation of intellectual property. Everything about these companies is the opposite of crypto.

And at the same time, just because a crypto or a community is centralized today doesn't mean it will be that way tomorrow. We are going to see this first hand many times down the road. Centralized dev teams will get their hands slapped or even shut down, but then the network will upgrade into a decentralized state and become unregulatable. This is an inevitability when it comes to scaling up. These things will either become decentralized enough to govern themselves or they will be captured by a small group and fail to scale.

There's a HUGE difference between a crypto that isn't decentralized today and one that can never be decentralized ever. How hard would it actually be to run the LEO network on multiple nodes on another network or on the second layer? Today, there is little advantage to putting in the work it would take to accomplish this development (and it's also probable that infrastructure will be built that makes the transition easier to achieve, IE Hive Application Framework). Ask again in five years and see where we are then.

Again, it's all a spectrum, and there's no reason to move into more decentralized inefficient chicken-with-its-head-cut-off territory unless it's actually necessary to do so.

chickenheadcutoff.gif

jacksparrowcan do cant do.jpg

LEO was able to launch a token on HE and then branch out to EVM. That's impressive. You know who CAN'T do that? Every single Big Tech company in the world. Even dozens of random famous people have been getting hit with lawsuits left and right for promoting random shitcoins. There's a reason NFTs became so popular so quickly (zero regulation and immune to securities law).

Are centralized networks inherently more risky than not? Yes. Do they get rugpulled often? Yes. Are they worthless? Of course not. Great work is being done every single day. Just because testnets aren't mainnets doesn't mean they are pointless. Prototyping is just as important as anything else in this arena. Everyone is looking for the secret sauce that will power that rocket ship to the moon.

ricketyrocketmoon.jpg

Conclusion

Decentralization is a completely subjective spectrum. A coin that is 'centralized' today won't be if and when they manage to scale up. In crypto, decentralization is a requirement for scaling up, as ironic as that might sound (because scaling up is the biggest problem for an inefficient system). Constant tradeoffs are being made every day to try and find the perfect combinations that create the most value and galvanize the most people into the system.

The great thing about crypto is that it is an opt-in governance system. If you don't like how the government works, then take your value and leave. The attention economy is here, and the whole centralized vs decentralized argument is so misrepresented It's difficult to know which end is up.

Rule of thumb: like anything in capitalism, financially support the products and communities that you actually use and participate in. We all vote with our money (even more so in DPOS). Make your vote count.

Posted Using LeoFinance Beta