In 2019, Satoshi Nakamoto founded Bitcoin. On this basis, the concept of blockchain was born.
Gartner management consulting company believes that the blockchain has five elements: distributed, encrypted, non-tamperable, generalized, and decentralized. "Decentralization" is the most important concept.
(Source: "Real Business Opportunities in Blockchain")
Why is "decentralization" so important to the blockchain? This starts before the creation of Bitcoin.
01, traceability
In 1993, Eric Hughes and several other people created an encrypted email system called “cryptopunk mailing list”, referred to as “cryptopunk” , To counter Internet e-mails that are monitored by the government. Eric Hughes explained the mission and goals of cypherpunk in the "Cypherpunk Manifesto":
"Cypherpunk is committed to establishing an anonymous system...in the electronic age, privacy is indispensable to an open society...we cannot We expect governments, enterprises or other large anonymous organizations to protect our privacy... If we expect privacy, then we must defend it personally. We use cryptography, anonymous mail forwarding systems, digital signatures, and electronic currency to protect our privacy. Privacy.”
It can be seen that cypherpunk is to protect privacy and resist censorship by governments, companies, or other large institutions. The common feature of these large institutions is: high degree of centralization.
Satoshi Nakamoto said in Bitcoin's creation white paper:
This paper proposes an electronic cash system that is realized entirely through peer-to-peer technology. It enables online payment to be directly initiated by one party and paid to the other party,There is no need to go through any financial institutions in the middle.
The most fundamental problem with traditional currencies is trust. The central bank must make people trust that it will not devalue the currency, but such credibility has never existed in history. The bank must make people trust that it can manage money well and let these wealth circulate in the form of electronic money, but the bank uses money to create a credit bubble and shrink private wealth.
Traditional financial institutions and central banks are centralized institutions. In Satoshi Nakamoto's view, the existence of these centralized institutions is the reason why private wealth cannot be guaranteed. In other words, only decentralization can better protect private rights.
Protecting private rights is the mission of the blockchain, and "decentralization" is the most important means. For those blockchain fundamentalists who regard Satoshi Nakamoto as the leader of the "Bit Godism" and the Bitcoin white paper as the Bible, "decentralization" is an unshakable core concept.
02, definition
Gartner management consulting company's definition of "decentralization" is: the maintenance of network information and network operation rules is the multiple computers in the distributed network, or more Nodes. In specific practice, decentralization means that there is no single entity that controls all computers and information, or that a single entity makes rules. Each node maintains the same encrypted copy and saves records in the network. The consensus mechanism run by all full nodes is responsible for the verification and approval of transactions. This decentralized, consensus-driven system architecture means that it is no longer necessary to organize and govern by a central authority, and it can also prevent fraud and malicious transactions.
03, classification
From the definition of Gartner management consulting company, "decentralization" has at least two types of meaning.
First, physical decentralization. block chain system is composed of distributed computer network,There are multiple nodes, and no node has absolute control over the entire network. A small number of node failures or malicious acts will not affect the safe operation of the entire network. This is the decentralization of the blockchain network.
Second, the decentralization of governance. Different nodes in the network are controlled by different stakeholders and rely on the consensus mechanism to coordinate operations without the need for a central authority. This is the decentralization of blockchain politics.
Actually, decentralization has another meaning besides reducing the influence of the central authority: disintermediation. Intermediary agencies are also a kind of centralized agencies, and the main feature of intermediary agencies is information centralization. In the world of blockchain, except for the information that needs privacy protection, it is transparent. The role of information matching is performed by code, and intermediary agencies are no longer necessary. Therefore, with the popularization of blockchain, the living space of intermediary agencies is getting smaller and smaller. Decentralization also means disintermediation.
In fact, the blockchain is not decentralized in all aspects, and its code logic is centralized. The underlying code of the blockchain is fixed, although it is open source, it cannot be tampered with. This is the centralization of blockchain logic.
04, consensus
Common consensus mechanisms for decentralized governance include POW, POS, and DPOS.
POW: proof-of-work mechanism, such as Bitcoin (BTC);
POS: proof-of-stake mechanism, such as Ethereum (ETH);
DPOS: authorization proof-of-stake mechanism, such as EOS.
Blockchain magnate Chang-chan proposed the impossible triangle theory of blockchain in 2014, which is widely used. The theory proposes that any blockchain cannot meet the three requirements of security, performance, and decentralization at the same time.The above three consensus mechanisms also have their own characteristics in solving the impossible triangle problem of the blockchain. POW has the best security, but its computing power tends to be centralized, and its performance is poor. POS is basically in a compromise state in three aspects. DPOS has the best performance, average security, and the worst decentralization.
(source: network)
The above three consensus mechanisms are all used on the public chain. The nodes of the public chain are open, and the nodes do not need to be authorized, and can freely decide to join and exit. Decentralization is the basic guarantee of this freedom. Corresponding to the public chain is the alliance chain. The nodes of the alliance chain must be authorized by a centralized authority to join, and the alliance chain is suitable for use in industries or large enterprises. Therefore, the degree of decentralization of the alliance chain is relatively low.
Because of the existence of a centralized authority, the alliance chain can handle it better in terms of performance. The alliance chain generally adopts the Byzantine fault-tolerant consensus mechanism, namely the BFT-POS mechanism. This mechanism can be divided into practical Byzantine fault tolerance (PBFT) and proxy Byzantine fault tolerance (DBFT). These two consensus mechanisms have their own characteristics. The former is suitable for alliance chains with a large number of nodes, and the latter is adopted by alliance chains with a small number of nodes.
05, Governance
Most people don't care about the decentralization of the network, that is the job of computer professionals. The decentralization of governance is closely related to everyone.
The blockchain world has a proper term "DAO", which refers to a distributed autonomous organization, and its management model is decentralized governance.
Centralization and decentralization cannot be said to be better, we can only say that each has its own characteristics . Generally speaking, centralized governance is more efficient and decentralized governance is fairer.
There are three attitudes towards "decentralized" governance.
The first attitude is thatFairness comes first. Blockchain projects must be completely decentralized (especially public chain projects), and any attempt to centralize is a deprivation of freedom. After all, Bitcoin was born for freedom and privacy. Hope that the blockchain can build a more free utopia. People who adhere to this ideal are blockchain fundamentalists.
The second attitude is that efficiency is the priority. Traditional corporate governance regards performance as its core goal, and performance includes efficiency and effectiveness. Fairness is secondary. The slogan that my country put forward in the early stage of reform and opening up was also "efficiency first, taking into account fairness." Now, fairness has been mentioned as important as efficiency. This is the progress of national governance. For a company, if the company is considered to be a shareholder (as it is legally recognized), performance is still more important than fairness. And decentralized governance seems inefficient. I call this type of people classical managerialists.
The third attitude is to balance the relationship between efficiency and fairness. It is necessary to look at "decentralization" dialectically. Give priority to efficiency while giving consideration to fairness. Because the efficiency of is related to the life and death of the project, it is meaningless to talk fair about a project that cannot survive.
Changzheng believes:
"Decentralization" is not a word describing the result, but a word describing the process. The decentralization of the result does not mean the decentralization of the process...
The original meaning of "decentralization" refers to the freedom of everyone to participate in consensus. He has the right to participate and also the right to withdraw. Under the premise of open source code and symmetric information, the freedom of participation and decision-making means fairness. It can be seen that "decentralization" is not a new word, it is actually the invisible hand of Adam Smith : free competition in the market.
Decentralization is neither to eliminate the center, nor to have political meaning as understood by liberals. It is a completely neutral word, and the core idea is free competition.
I agree with the third attitude. I call this kind of people a pragmatic managerialist.
06, enlightenment
Because of the emergence of blockchain, "decentralized governance" has become an important topic of management. I think DAO is the general direction of management innovation. Today the theory of DAO is still very fragmented, and management needs to establish a complete theoretical system around DAO.
Since Taylor put forward scientific management a hundred years ago, management thought has always been innovating and developing. So is there something that remains the same behind these changes? I think there is. If you use one word to summarize management thinking, I think it is "the golden mean". Even with the emergence of "DAO", the doctrine of the mean is still valid.
is not partial to the middle, not easy to be called the mediocre. The golden mean is to find a balance between extremes. Management is the wisdom of the mean and the wisdom of balance. For "DAO", both absolute centralization and decentralization have problems, and neither is the golden mean.
Moderation to DAO has two main meanings:
One is multi-centralization. From the absolute single authority in the past, it has evolved into multiple power separation and co-governance. While ensuring efficiency, it can also take into account decentralized democracy and moderate fairness.
Multi-centralization is a bit like the U.S. political system. Horizontally, the three powers are separated. Vertically, there is no subordination relationship between the central government and local governments. Multiple independent power systems operate in coordination.
The second is weak centralization. The power of the central organization is weakened, and multiple distributed organizations have more power. This can to a large extent limit the corruption of central institutions due to excessive power, and can also avoid the great evils that may be caused by too much power.
Weak centralization is a bit like the EU government. On the surface, there is a central government representing Europe, but in fact, the member states still have a lot of sovereignty.
Multi-centralization and weak centralization are different from the one-word dictatorship, nor is it a completely decentralized utopia .They are the golden mean of decentralized governance.
I believe that the correct attitude for entrepreneurial projects (even public chains that pursue decentralization) should be: stick to centralized startup, actively embrace decentralization, and implement "gradual decentralization" in the process. Decentralization is a long process and must not be rushed.
Summary:
1. "Decentralization" has advantages and disadvantages;
2. "Decentralization" is a means, not an end;
3. "Decentralization" is a process. Not the result;
Fourth, "decentralization" is the future, not the present.
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