The world has operated on centralized systems for centuries, from giving rulers power over their people to large companies controlling financial systems, communication mechanisms, data and more. Decentralization at its core is simply removing the possibility of a small number of individuals to overwhelmingly influence the majority.
This seemingly simple concept has the potential to positively disrupt the way much of society currently operates. Decentralized technologies can solve the problems of centralized systems in a number of ways, but the primary benefits include removing single points of failure and providing new ways to organize as communities in which the power is redistributed and interests align with its members rather than a single entity.
Community ownership and censorship resistance
The core benefit of decentralized technologies and arguably the hottest topic when it comes to the downfalls of centralized systems is the ownership of data. As the internet has become a central part of daily life over the past 20 years, censorship has increased and users’ ownership of their data has diminished significantly, particularly as Big Tech companies have become financially incentivized to collect, store and monetize the data.
When it comes to data ownership and censorship online, centralized social media platforms are the most obvious and culturally relevant examples. Facebook’s continuous collection and use of community members’ data for its own gain is just one illustration of the unyielding power it has over its users and their information, while Twitter’s removal and censorship of tweets points to content suppression happening across multiple social network platforms.
Blockchain technology is the future because it allows for secure communication and censorship resistance, providing communities the space to freely organize and communicate in a manner that upholds users’ data ownership. Unlike Web 2.0 platforms like Facebook and Twitter, decentralized social networks also remove opportunities for censorship. If no single person or entity controls the network servers, then they do not have the ability to use data or censor content without the consensus of the community as a whole.
Removing single point of failure
Beyond data ownership and censorship concerns, the recent WhatsApp outage glaringly exposed the woes of centralized social media and messaging platforms, blatantly showing that the primary communication method of millions of users is at the hands of large centralized networks dependent on a single point of failure. Centralized choke points are not only attack vectors for leaks and hacks but also for outages similar to WhatsApp.
Decentralized technologies like blockchains and distributed protocols remove centralized choke points, drastically reducing the possibility of outages and hacks. Data on the blockchain is immutably recorded and stored across a network of computers, preventing unauthorized activity and making it exponentially more difficult to hack than its centralized counterparts. This removal of a single point of failure enhances trust in the technology and encourages widespread adoption as the community looks for safer digital outlets to organize, communicate, transact, and more.
Encouraging financial autonomy
Self sovereignty and personal autonomy in relation to finances is a foreign concept to the masses. When it comes to the traditional financial experience, people tend to trade their autonomy for personal convenience, allowing traditional financial institutions to be in charge of password management and fraud protection. The use of mobile payment apps further cements this reliance on centralized technologies. Although these apps allow users to freely engage in commerce globally, they are monopolized by a handful of companies, putting users at the mercy of stakeholders. With the rise in popularity of decentralized technology, particularly in the area of finance, self-sovereignty and personal autonomy no longer have to take a back seat.
Decentralized finance (DeFi) technologies give control back to the owner of the funds, providing them with the ability to have true ownership of one’s worth while transacting with the global market. DeFi eliminates the middleman and enables users to exchange money directly, reducing barriers to entry. The rise of stablecoins and DeFi lending protocols across the world signal a growing consciousness of the potential this technology could provide.
In addition to financial autonomy in a traditional sense, money also has the ability to incentivize the creation and maintenance of decentralized social communities. In organizations such as these, community members must hold that platform’s tokens to be a part of the organization. This means that each member of the community is invested in the community’s success and has the ability to participate in unique ways such as using tokens to vote, exchange value and more. Essentially, the infusion of money and financial autonomy adds additional incentive for people to socially organize and coordinate.
The opportunities for decentralized technologies and how they can solve the problems of centralized systems are endless. Centralized systems may hold the advantage of familiarity, but the increased privacy, decreased censorship, removal of single choke points, and encouragement of financial autonomy make decentralized technologies the most attractive option for the future.