From the perspective of BTC and ETH, why is decentralization the future?
Anyone who hasn't lived under a rock has heard of Bitcoin. Are people interested in Bitcoin"just a fashion"The debate has been going on for a long time. We do not claim to be economists, nor are we mind readers. But what we will say is that many analysts are missing one important factor:Bitcoin is just part of a larger revolution that hopes to completely liberate the Internet.
What is decentralization?
What is decentralization?
By decentralization, we mean that the operation of the computer network is not controlled by a centralized node, but by the entire community.
Examples of decentralization are: Bitcoin and other cryptocurrencies, IPFS, and the BitTorrent protocol.
The word decentralized is often confused with the word distributed. A distributed system is when multiple computers share resources and computing power to complete a task. The key idea that separates decentralization from distribution is that a decentralized system is not controlled by a central authority (such as the owner of a server farm), but rather self-regulates. Distributed systems can be centralized, but decentralized systems are always distributed.
Decentralization is also confused with the term peer-to-peer. Peer-to-peer (P2P) systems are distributed systems in which no node has more privileges than another node. A network typically must be peer-to-peer to be considered truly decentralized.
Decentralized systems must include a mechanism to determine the true state of the system in case malicious actors attempt to tamper with the system. Bitcoin uses the blockchain data structure to achieve this; it is essentially a tamper-proof ledger whereby whoever records transactions the fastest is assumed to know the true state of the system. The key idea that separates decentralization from distribution is that a decentralized system is not controlled by a central authority (such as the owner of a server farm), but is self-regulating. Distributed systems can be centralized, but decentralized systems are always distributed.
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The initial phase
The initial phase
In 1980, the decentralized discussion platform Usenet was launched. Users can read and post information to categories called newsgroups. These newsgroups are hosted on various servers, usually owned by an Internet Service Provider (ISP). Usenet was the immediate predecessor to the Internet forums we know today.
Many social apps (Mastodon, PeerTube, etc.) are developed similarly to Usenet and together form an entire ecosystem of decentralized social apps called Fediverse.
In 1999, Napster, a peer-to-peer music sharing platform, was released. At its peak in 2001, it faced several lawsuits for facilitating the sharing of pirated material. It was forced to shut down its entire network in mid-2001 and has since been rebranded as a music store and music streaming service.
In 2001, the decentralized file sharing protocol known as BitTorrent was released. When a file is added to a BitTorrent network, it is broken into pieces and distributed among multiple computers on the network. A client wanting to download the file will retrieve all the fragments and reassemble them. Like Napster, BitTorrent was notorious as a platform for sharing pirated media, but continues to survive to this day.
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Bitcoin
In 2008, a person or group of people known only by the pseudonym Satoshi Nakamoto released the original Bitcoin documents. In it, they describe a digital currency in which transactions are recorded in a tamper-proof ledger known as a blockchain.
Everyone on the network has a copy of the blockchain. As we discussed earlier,"correct"Versions of the ledger belong to users who can record and verify transactions the fastest. This process is called mining. Miners are rewarded in Bitcoin; this is how Bitcoin was introduced into the economy. Every 210,000, the reward for mining is cut in half, so technically Bitcoin has a limited supply.
Ethereum
Ethereum
Ethereum is the most popular cryptocurrency after Bitcoin, but it offers much more than just a digital currency.
Ethereum, which went live in 2015, introduced an innovation that elevated cryptocurrencies above the realm of traditional finance: smart contracts. These contracts are self-executing codes that are recorded on-chain just like normal transactions and are therefore binding and tamper-proof.
What Ethereum introduces is the ability to express concepts like loans and interest in the form of its smart contracts, making it as powerful as traditional currencies. All traditional financial tools can be reinvented to form an ecosystem of DeFi (decentralized finance) applications. Smart contracts can also be used to write entire applications on-chain, known as Dapps.
Finally, Ethereum introduced non-fungible tokens (NFTs), which are single data units stored on-chain that prove the uniqueness of digital assets (photos, music, video game items, etc.). NFTs are best known for being used to sell original works of digital art. In 2020, a series of works by artist Mike Winkelmann"Everyday - The First 500 Days "secondary title
Decentralized storage (IPFS, Storj, FileCoin, etc.)
If you follow tech news, you've probably read about government or giant corporation records being hacked and leaked.
Decentralized storage protocols offer many security advantages over traditional cloud storage providers. These protocols tend to encrypt, split, and distribute files in a manner similar to BitTorrent, so the workstation hosting your files cannot view them. They are also fault-tolerant, as one corrupted node cannot bring down the entire system. Finally, these protocols store files redundantly so that lost data can be easily recovered.
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The case for decentralization
The benefit of decentralization is independence from large tech and financial institutions. This means being able to communicate and exchange assets without any middlemen.
Decentralization keeps the internet free from censorship. there are many"alternative"Social media apps (Parler, Gab, etc.) claim to support free speech, but if they aren't decentralized, can they really be trusted? Remember, it's not just social media companies that control the content on apps; in mobile apps, server owners, governments, and app store operators simultaneously control what's on apps. For example, the iPhone version of Parler now censors hate speech so it can appear in Apple's app store. (We're not condoning the use of hate speech. We're just saying that no centralized app can be trusted to protect it and more benign speech).
Which brings us to the biggest controversy surrounding the decentralized web: what is there to prevent illegal content from being uploaded? In the case of a federated social media application, the server owner is responsible for moderation, but what about a serverless model like IPFS? The truth is, there are no easy answers. Consensus can be used to decide who gets to post, but if existing social media is anything to go by,"Increase vote"The system can be abused.
While illegal content is a legitimate concern, we personally don't see it as a reason to shy away from decentralization entirely. In the worst-case scenario (remember we're talking about very new technology), centralized and decentralized networks will behave like"surface"network and"dark"normal"normal"Like a network, there will be sanitized and unsanitized places to accommodate various users.
Let's move on to cryptocurrencies. Cryptocurrencies essentially usher in a new economy that is free from banking and financial regulation. The middleman has been completely eliminated and the money supply is controlled by a fixed algorithm. The result was the pinnacle of free trade.
Why is this a good thing? It lowers the barriers to entry in the financial industry. It can be used to bypass economic sanctions. It provides an alternative currency for countries suffering from inflation. There are lower transaction costs. A limited money supply means it cannot be devalued.
Of course, there are many concerns surrounding cryptocurrencies, some more legitimate than others. Skeptics have pointed to the volatility of cryptocurrencies, the environmental impact of mining, the prevalence of scams and criminal activity, private keys can still be stolen, and governments are already cracking down. …
Summarize
Summarize
We discussed the two main use cases for decentralization in the section above, but the possibilities are truly endless. There are decentralized voting, games, databases, blah, blah, blah. As we said at the beginning of this article, we are not economists. We’re not here to tell you that decentralized software will make you a millionaire (although we have no apparent reason to believe so). We are interested in decentralization because of the undeniable humanitarian benefits that we believe are being embraced.
This article is reproduced from Encryption Valley Live, reproduced with authorization
