Why is Decentralization Important?

Why is Decentralization Important?

So why bother decentralizing? What's wrong with "centers"? In this short video, shot in downtown Miami, I discuss the goals of Bitcoin and Counterparty, and ...


What's up, party people? Chris DeRose here, Community Director of the Counterparty Foundation. And today, I want to talk a little a bit about why decentralize. When does decentralization make sense? Why is it that we're doing this in our movement and why is it important to all of you? What's wrong with centers? So let's begin. Decentralization obviously was a movement that really started to take a major effect when Bitcoin was announced in 2009 and as that movement itself became larger, we started to talk about decentralizing all of the things. And while certainly there's a lot of work to be done in that respect and certainly it's a wonderful goal, I think we need to really limit the practicalities of when and where we can decentralize. Certainly, all of you know that not everything can be decentralized.

You need to have basic centers. Geography is always going to be important and for that reason amongst others, you're going to take up space and perhaps people will need to be trusted and have custodialship over things. There's a sort of superficial level and we're going to be dealing with centers for a very long time, so let's talk about where it makes the most in a immediate application. And certainly we look for places that themselves are having problems getting redressed from the current state of law or the current state of the financial system. We look for places where it's inefficient. So, obviously I'm an American and here it's a much easier place to do business than other countries but you look at places like India where corruption is rampant.

There's still places where the centers are a bit rotten, where they had to be trusted or they are a source of major inefficiency. These are institutions that aren't doing their job very well. These are institutions that can't be trusted with your money. And in these types of applications we see that finance would probably seek a greater solution into these decentralization movement. And we look for decentralization in a lot of the places here in America where counterparties are currently kept. Counterparties have been useful in many terms, and I have videos on what a counterparty is but just as a quick overview, these are people that hold money or they hold an asset for some period of time while two independent parties debate and they'll ultimately enact a transaction.

Well, that's a good place where decentralization can make sense, particularly in this case of a stored unit of value such as Bitcoin or some other virtual tokenized asset as you would perhaps see in Counterparty. It makes sense there because if the network can do it for a price that's cheaper, they can be more reliable and more trusted. That would be a good application of decentralization. We will see decentralization in other ways. Certainly smart contracts are one such way. Currently in the centralization movement or the state of centralization as it is, we have to rely on arbiters and we have to rely on courts.

We have to rely on attorneys who perhaps aren't necessarily as reliable as computer code. These are areas where decentralization will probably make a lot of sense as a source of efficiency and reliability going forward. And so these are some of the overall themes of the decentralization movement. I know there's a lot of people who want to decentralize perhaps YouTube and some of these other information repositories and I think there's probably a lot of promise in there ultimately. But that's a little bit further down the road than where we're at now. We're in the financial space, we're releasing some immediate abilities to start decentralizing things that were previously centralized.

So that's the overview of where I see decentralization being useful and I don't know, did I miss something? Why don't you write to me. I'm Chris at On Twitter, you can tweet me at DeRoseTech and certainly ask me any questions that you have. Certainly bring to me anything that you think I left out. I'd love to hear from you.

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