Here is my counter to these thoughts: Decentralized internet was not created by a myriad of decentralized decisions. A centralized authority came up with the idea and created TCP/IP. Just like centralized decisions were made to create the decentralized/balance of power democratic systems we have today.
Capitalism itself is naturally centralizing. That is why we have anti-thrust laws. We don't just leave it to consumers to make sure centralization does not happen in the market. It is the job of the government to prevent it.
I agree with you that centralization is the natural order or things. But I disagree with your implication that it is somehow the individual users who are responsible for keeping a system decentralized.
In much of Europe, a large number of cell phone service choice and broadband choice was created because government mandated that companies with infrastructure had to let other companies borrow it and offer services on it.
Capitalism and free markets exist because a centralized government maintains it.
The solution IMHO is not to blame the individuals but to combine in collective action and collectively agree/decide we want a different arrangement. In other words one has to bring this to the political level. That could mean anti trust action against google, facebook etc.
> Capitalism itself is naturally centralizing. That is why we have anti-thrust laws. We don't just leave it to consumers to make sure centralization does not happen in the market. It is the job of the government to prevent it.
Centralized social systems such as Governments, Banks etc exist mostly because we need someone we trust (Bank) to arbitrate interactions between two peers, if you remove these kind of trust with the help of tech (eg cryptography) the bank and governments become obsolete because we can now verify things for our self without a 3rd party.
Faith in cryptography will not help anyone with fraud, theft, and trust.
Naive neo-liberal libertarians and anarchocapitalists attempt to claim deregulation will just work because they've never encountered abuse, fraud, negligence, or read any history.
One important point: if we actually include all 7 billion
people on the earth, most of whom have zero BTC or
Ethereum, the Gini coefficient is essentially 0.99+. And
if we just include all balances, we include many dust
balances which would again put the Gini coefficient at
0.99+. Thus, we need some kind of threshold here. The
imperfect threshold we picked was the Gini coefficient
among accounts with ≥185 BTC per address, and ≥2477 ETH
per address. So this is the distribution of ownership
among the Bitcoin and Ethereum rich with $500k as of July
2017.
In what kind of situation would a thresholded metric like
this be interesting? Perhaps in a scenario similar to the
ongoing IRS Coinbase issue, where the IRS is seeking
information on all holders with balances >$20,000.
Conceptualized in terms of an attack, a high Gini
coefficient would mean that a government would only need
to round up a few large holders in order to acquire a
large percentage of outstanding cryptocurrency — and with
it the ability to tank the price.
With that said, two points. First, while one would not
want a Gini coefficient of exactly 1.0 for BTC or ETH (as
then only one person would have all of the digital
currency, and no one would have an incentive to help boost
the network), in practice it appears that a very high
level of wealth centralization is still compatible with
the operation of a decentralized protocol. Second, as we
show below, we think the Nakamoto coefficient is a better
metric than the Gini coefficient for measuring holder
concentration in particular as it obviates the issue of
arbitrarily choosing a threshold.
...However, the maximum Gini coefficient has one obvious
issue: while a high value tracks with our intuitive notion
of a “more centralized” system, the fact that each Gini
coefficient is restricted to a 0–1 scale means that it
does not directly measure the number of individuals or
entities required to compromise a system.
Specifically, for a given blockchain suppose you have a
subsystem of exchanges with 1000 actors with a Gini
coefficient of 0.8, and another subsystem of 10 miners
with a Gini coefficient of 0.7. It may turn out that
compromising only 3 miners rather than 57 exchanges may be
sufficient to compromise this system, which would mean the
maximum Gini coefficient would have pointed to exchanges
rather than miners as the decentralization bottleneck.
Conversely, if one considers “number of distinct countries
with substantial mining capacity” an essential subsystem,
then the minimum Nakamoto coefficient for Bitcoin would
again be 1, as the compromise of China (in the sense of a
Chinese government crackdown on mining) would result in
>51% of mining being compromised.
- Balaji S. Srinivasan (the CTO of Coinbase)
Capitalism itself is naturally centralizing. That is why we have anti-thrust laws. We don't just leave it to consumers to make sure centralization does not happen in the market. It is the job of the government to prevent it.
I agree with you that centralization is the natural order or things. But I disagree with your implication that it is somehow the individual users who are responsible for keeping a system decentralized.
In much of Europe, a large number of cell phone service choice and broadband choice was created because government mandated that companies with infrastructure had to let other companies borrow it and offer services on it.
Capitalism and free markets exist because a centralized government maintains it.
The solution IMHO is not to blame the individuals but to combine in collective action and collectively agree/decide we want a different arrangement. In other words one has to bring this to the political level. That could mean anti trust action against google, facebook etc.