Decentralization is the core advantage of blockchain technology, and it is also a topic that cannot be avoided in technological progress. In more than ten years of development, decentralization has been hotly debated by practitioners. From the previous centralization problem of optimistic proof in Layer2 to the centralization risk of Ethereum staking protocol Lido, technological progress is accompanied by the birth of new protocols, and many centralization risks are also derived.
Some people believe that as long as it can promote technological progress, it is okay to sacrifice some decentralization, while others believe that decentralization is the soul of blockchain technology, and sacrificing decentralization will eliminate the advantages of blockchain technology. Perhaps you also have such questions, what is decentralization? Why is it so important? Now, please join us to unveil the veil of decentralization.
From Web1 to Web2
Web1 was from 1980 to around 2000, when Internet services were built on open protocols controlled by the community. This means that people or organizations can expand their Internet influence without worrying about changes in rules. Important Internet companies were born in this era, including Yahoo, Google, Amazon, Facebook, LinkedIn and YouTube.
Web2 is the software and services developed by for-profit technology companies from the mid-2000s to the present, represented by Google, Apple, Facebook, and Amazon. This trend was accelerated by the explosive growth of smartphones and the emergence of mobile applications as the main form of Internet use. Ultimately, users moved from open services to these more complex and centralized services.
The good side of the transition from Web1 to Web2 is that billions of people have gained access to the Internet, and many of these technologies are available for free. The bad side is that it has become increasingly difficult for startups and creators to expand their influence on the Internet without worrying about centralized platforms changing the rules and taking away their audience and profits. The Internet has gradually become a means for those in power to control news, consumption, and entertainment, and it is highly centralized.
Centralization and Decentralization
Centralization is a structure where power and control are concentrated. In traditional financial systems, Internet platforms, social media, and other industries, power is usually in the hands of a few organizations or individuals. For example, banks are responsible for processing users’ financial transactions, and Internet companies can control user data. These centralized institutions have management rights over the system, including approval, supervision, and handling disputes. With the rapid development of the Internet, the problem of centralization has become increasingly prominent.
Decentralization distributes power to multiple nodes in the network rather than concentrating it in the hands of a certain entity. Blockchain is a typical representative of this decentralization. Whether it is Bitcoin, Ethereum, or other public chains, they all rely on distributed ledger technology to ensure the transparency and security of transactions.
Decentralization has several significant advantages:
- Higher security: Because data is distributed on multiple nodes, decentralized systems are more difficult to attack. Even if an attacker compromises a node, other nodes can still keep the network running normally.
- Transparency and trust: All transactions on the blockchain are public, and anyone can review the activities on the chain, which establishes a strong foundation of trust.
- No intermediary required: The decentralized system allows users to conduct direct peer-to-peer transactions, reducing the participation of intermediaries, reducing costs, and improving efficiency.
Why must blockchain be decentralized?
As the foundation of Web3 (the third generation of the Internet), blockchain technology has one of its most important advantages of decentralization. Before answering this question, we can imagine what advantages Web3 has compared to Web2 if it is not decentralized.
Web3 has token economics that can incentivize developers and community participation? There are global nodes that jointly maintain the network? Is the on-chain data open and transparent? But without decentralization, these advantages will disappear, because centralized institutions can manipulate these and make them unreliable.
For example, the Layer2 decentralized sorter that was discussed a lot some time ago, if a network is decentralized, but some of its components and participants are centralized, then the network also becomes unreliable.
So decentralization is essential for some applications and protocols in Web3 to succeed. At present, Web3 is still in its early stages of development and has great potential and innovation possibilities.
First, software and network services are built by developers. There are millions of developers in the world, but only a very small number of them work in large technology companies, and only a small number of them are involved in the development of new products. As Bill Joy said: “No matter who you are, most smart people work for others.” Large technology companies have won a few smart people, but open decentralized protocols will win the favor of more entrepreneurs and developers.
In the competition of the future Internet era, the victory or defeat of centralized and decentralized systems will ultimately depend on who can build the most attractive products. This in turn depends on who can gain the support of more outstanding developers and entrepreneurs. Large technology companies have advantages in funding, user groups, talents, and infrastructure, but Web3 networks are more likely to win people’s hearts.
About Starcoin
Starcoin provides the utmost security from the origin via its enhanced PoW consensus and Secure smart contract, using the language of Move. Through layered and flexible interoperability, it optimizes the building of ecosystems such as DeFi, NFTs, Gaming, etc., with higher efficiency and convenience. This process redefines value by empowering every participant in the ecosystem to enjoy the multiplication of values.
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