decentralization blockchain technology

Blockchain technology and the necessity of decentralization

I’ve already written articles about what blockchain technology is and how to define it. I also talked about what blockchain technology can be used for and in what areas it is already used. And I recounted my digital evolution from my first smartphone to my introduction to blockchain technology.

Since then, we can increasingly see in practice that what many considered impossible was indeed possible. I am reflecting on the soaring of Bitcoin’s price and the practical application of more and more rapidly evolving technological innovations. Decentralization is slowly but surely and necessarily making its way.

The price of Bitcoin – and with it its popularity – is reaching unprecedented heights. Many people say that this is just the beginning. In recent months, several large international companies have bought hundreds of millions of dollars worth of Bitcoin. Meanwhile, interest in retail has also jumped significantly. However, sometimes I wonder if Satoshi wanted this? To get most of the 21 million Bitcoins into international companies’ hands, increasing their portfolio? 

However, in some circles, the ignorance about the topic is staggering. Don’t get me wrong. It’s not about the I like/dislike context. It’s about ignorance. The other day, one of my acquaintances posted on his Facebook page that he was looking for someone familiar with Bitcoin among his friends. The answers were: ‘Are you mad?’, ‘I would let go’, ‘I know a Thai girl with a broker dad from London. You just have to transfer a few bucks, and he will double your silver hairs by next week. ‘

The situation is similar with artificial intelligence. I saw the following joke posted on Facebook:

Ordering a Pizza in 2022

CALLER:

Is this Pizza Hut?

GOOGLE:    

No, sir, it’s Google Pizza.

CALLER:  

I must have dialed the wrong number, sorry.

GOOGLE:  

No, sir, Google bought Pizza Hut last month.

CALLER:  

OK. I would like to order a pizza.

GOOGLE:  

Do you want your usual, sir?

CALLER:

My usual? Do you know me?

GOOGLE:

According to our caller ID data sheet, the last 12 times you called, you ordered an extra-large pizza with three kinds of cheese, sausage, pepperoni, mushrooms, and meatballs on a thick crust.

CALLER:  

Super! That’s what I’ll have.

GOOGLE:

May I suggest that tyou order a pizza with ricotta, arugula, sun-dried tomatoes, and olives on a whole wheat gluten-free thin crust this time?

CALLER:  

What? I don’t want a vegetarian pizza!

GOOGLE:  

Your cholesterol is not good, sir.

CALLER:  

How the hell do you know that?

GOOGLE:

Well, we cross-referenced your home phone number with your medical records. We have the result of your blood tests for the last seven years.

CALLER:

Okay, but I do not want your rotten vegetarian pizza!  I already take medication for my cholesterol.

GOOGLE:

Excuse me, sir, but you have not taken your medication regularly.  According to our database, you purchased only a box of 30 cholesterol tablets once at Lloyds Pharmacy, four months ago.

CALLER:  

I bought more from another Pharmacy.

GOOGLE:  

That doesn’t show on your credit card statement.

CALLER: 

I paid in cash.

GOOGLE:  

But you did not withdraw enough cash, according to your bank statement.

CALLER:  

I have other sources of cash.

GOOGLE:

That doesn’t show on your latest tax returns unless you bought them using an undeclared income source, which is against the law!

CALLER:    

WHAT THE HELL!

GOOGLE:  

I’m sorry, sir, we use such information only with the sole intention of helping you.

CALLER:  

Enough already!  I’m sick to death of Google, Facebook, Twitter, WhatsApp, and all the others.  I’m going to an island without the internet, TV, where there is no phone service and no one to watch me or spy on me.

GOOGLE:      

I understand, sir, but you need to renew your passport first. It expired six weeks ago…

I think it’s funny.

And the reactions were, ‘This is scary’, ‘Scray, how much data they collect about us’ and so on. But I think there’s only one thing scary here, and that is ignorance. Again.

For those who wouldn’t know, artificial intelligence has been part of our lives for years.

And with that, we come to the issue of centralization vs. decentralization.

What is centralization?

Centralization is a process in which an organization’s activities — such as planning, decision-making, developing strategies, and regulations — occur in a specific geographic location and by a group. 

It means the connection of the management or administration to a central body. It can apply to state administration, corporate administration, but really to management or administration by any group or organization. Be it political, economic, or social. The point is to concentrate power in one hand.

It also means the state, corporate, etc., most matters are handled by a central institution, such as a ministry. 

In the legal sense of classical administration, there are three essential elements of centralization:

1. power – concentrated in one hand (central state bodies)

2. hierarchy

3. right of control – the right of those at a higher level of the hierarchy over those below them

I think no more definition is needed. Everyone understands and can apply the above description to today’s political, economic, and social system. Where, of course, it is present.

The advantages of centralization are that:

  • The issues of responsibility and obligation are clearly defined, so in principle, there is no loophole.
  • Decision-making is direct and straightforward.
  • Holders of central power tend to show great interest in the well-being of those under control, as they are the necessary basis to maintain and/or increase their power.
  • Bureaucratic leadership, where those lower down the hierarchy (such as employees) cannot creatively contribute to the organization’s decision-making process as they are only executors of a decision made at a higher level.
  • Managers are under tremendous pressure to make decisions and have no control over the implementation process. Monitoring the implementation of decisions is hugely time-consuming. It can lead to resistance from those under control. Therefore, leaders can make too many decisions that are either poorly implemented or ignored.
  • Centralization causes delays in work. Co-workers rely on information provided from above, and there will be a loss of working time if decisions are delayed in the transmission of decisions.
  • Lack of loyalty of the managed.

Now that we have a closer look at centralization let us examine its opposite pole. 

What is decentralization?

Decentralization is the reduction, elimination, and lack of centralization.

Concerning decentralization, concepts such as devolution and delegation are worth mentioning.

Deconcentration means that administrative tasks are placed at a lower level in the hierarchy. Although the functions are performed on behalf of the central government, this is done at the local level.

During the delegation, decision-making itself is taken to a lower level. However, the decision-maker at a lower hierarchical level is always accountable to the central authorities.

The benefits of decentralization are:

  • It greatly relieves senior executives of the burden of performing various functions.
  • Facilitates risk sharing.
  • Leaders are given the opportunity to develop their talents through initiative, which also prepares them for leadership positions.
  • It provides better control and oversight, as even the lowest levels have the power to make independent decisions. This way, they are thoroughly familiar with all the tasks under their control and can make changes or take corrective action.

However, keep in mind the disadvantages as well:

  • There are mostly no uniform and predictable procedures or regulations. Leaders meet and develop guidelines commensurate with their talent.
  • Coordination of activities can be problematic.
  • Hiring more experts can be an immense financial burden or useless if there are no trained and competent staff.
  • It can often cause conflict between managers.

Blockchain technology and decentralization

In the case of blockchain, decentralization is the transfer of control and decision-making to a distributed network. Decentralized networks seek to reduce participants’ trust in each other and limit the exercise of authority, influence, or control. 

The main features of a decentralized blockchain network are:

Network resourcesResources are owned and shared by network members, challenging to maintain because no one owns them.
SolutionAll members have the same copy of the distributed general ledger.
DataIt can only be added by group consensus.
VerificationNo one owns the data, so everyone owns them.
SecurityIncreases as the number of members in the network increases.
PerformanceDecreases as in the network the number of participating members are increasing.

Centralization and decentralization in our everyday lives

I will not provide great solutions; I just want to evoke some ideas.

In my opinion, we are all born into centralization at the social level. Most of us follow the same path from the moment we are born into the world. That is what we are socializing for. We start at child care or kindergarten, then go to school. How far one goes into education is an individual decision. Then comes the endless work, family, kids, car loans, mortgages, and credit cards.

Then life happens, and most people complain about work, family, children, car loans, mortgages, and credit cards.

Minimum responsibility, maximum expectations. Towards the state. I wonder when someone still believes and even directly expects the state, or the current government, to save him. With money, aid package, moral support. 

Nobody will save us. However, you have every opportunity to peek out of the box. You will need to add a good hefty dose of responsibility, willingness to learn, and common sense.

We are so accustomed to living by the rules that we forget our freedom and dignity. Can’t we exist without regulation on every level of our lives? I suggest taking responsibility. We are adults.

The education system is also to blame for the situation. For example, children do not receive any useful information about money at all. So they will necessarily get into the circle of ‘learn to get a good job to be credible for a mortgage’

And here we come back to a friend of mine who asked for help on Facebook from someone familiar with Bitcoin. Do those who react negatively, or even more contemptuously, think about the possibilities offered by the blockchain technology behind Bitcoin? Do they even know about it? No, I am not thinking about money laundering and illegal drugs, making the media echo so enthusiastically.

I am thinking of decentralization in finance, education, health, and real estate, and I could list more. I am thinking of our responsibility and the end of corruption. I am thinking of the justice of a transparent and immutable system.

And my other example is the outraged who are afraid of data collection. I have good news for you! You can always opt-out, reject, unsubscribe, stay out.

Your life may not be as comfortable as it used to be.

We need to realize that we have plenty of opportunities in all areas of life. One is decentralization itself. 

We can protect ourselves, but we must be willing to learn. Our most important material value is no longer private property but personal data.

So less complaining, more thinking, and decentralization!

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