Decentralization, an unknown concept for most of the population before the cryptocurrency boom. A concept in systems architecture that became a buzzword for marketing teams of several startups, ventures and projects in the cryptocurrency space. So, what’s decentralization and why is it important? To address this topic I will use the analogy of one of my favorite movies Kingdom of Heaven (2005) by Ridley Scott. (If you haven’t seen it, I highly recommend watching the director’s extended cut). SPOILERS ahead!
The movie tells the story of Balian, a blacksmith who travels to Jerusalem in search of forgiveness. There, he becomes a knight and must finally defend the holy city from Saladin’s attack. The film analyzes the military-religious conflict that has plagued the “promised land” for centuries. The protagonist is plunged into a new world of political, economic and religious interests. Where nothing is black and white, but different shades of gray. However, Balian is able to keep his moral compass intact in the face of ever changing political winds which generates conflicts with the rest of the characters, each of them with their own agendas.
Towards the end of the film, Balian is presented with the choice of marrying Sibylla, the queen of Jerusalem, becoming king himself and avoiding a war with Saladin. But in the process he must execute Guy de Lusignan (the main antagonist who wants war with Saladin) and his followers. This choice presents a moral and ethical conflict, since Balian traveled to Jerusalem to ask God’s forgiveness for having taken a life, even though it was in self-defense. This time Balian has the opportunity to choose, he can either execute his enemies and thus avoid a war that will cost many lives or choose the moral path not to marry Sibylla, as that would mean being responsible for more bloodshed. Balian finally makes the right decision, the end never justifies the means, which leads to the best scene in the movie:
Sibylla tells Balian “someday you’ll wish you had done a little evil, to do a greater good” and Balian responds “no, it is a kingdom of conscience or nothing”. The promised land and the kingdom of God was the place where everyone would be equal. A land of new opportunities where everyone could have a second chance to start their lives anew. However, for this to become a reality it’s necessary to stop committing the sins of the old world, this is what Balian refers to when he says “a kingdom of conscience”. Without being conscious of the mistakes committed in the past, it is impossible not to repeat them again.
You may be asking yourself by now, what does this have to do with decentralization and cryptocurrencies? Well, following the analogy I’ve presented, blockchain technology and cryptocurrencies are the promised land for billions of people that have been left out and discriminated against by the traditional financial system. The victims of the fractional reserve banking system and the modern monetary policy. But just like the real life “promised land” of old, it must be built, maintained and nourished by mere mortals.
Satoshi Nakamoto gifted humanity with a new general purpose technology, the blockchain, that makes it possible for the first time in history to have a system of account that doesn’t rely on a centralized authority to keep track of transactions and enforce the rules. This technology was built to provide an alternative to the centralized financial systems, so people could opt-out of the old system that wasn’t providing them with any value and opting into a new one where they are the ones in control.
However, like it often happens when humans get together to achieve a goal, the original objective is forgotten overtime and replaced with new interpretations or concessions. What started as an obscure cypherpunk project quickly became a global phenomenon which initially attracted like minded people looking for alternatives to the broken banking system. But as adoption grew and more people started to see the value in bitcoin and other cryptocurrencies projects like Cardano, price started to reflect this and the smell of quick and easy money lured in vultures and wolves in sheep’s clothing. This is in part due to the nature of permissionless systems and we wouldn’t have it any other way. That’s why it is important to stop and reflect on the path that this new industry has taken until this point, to ask ourselves if we are truly building a kingdom of conscience or repeating the same mistakes of the previous system we are trying to replace.
Here is where the concept of decentralization comes into the picture, the cornerstone of why blockchain and crypto exists in the first place and the source of its value. In the last couple of years of crypto adoption we have seen numerous project launch blockchains, wallets, decentralized applications and protocols claiming to be decentralized but when looking at them closely, trained eyes realize they are everything but decentralized. The misuse of this concept not only has an impact on newcomers to this space but it’s also starting to become a fundamental argument regarding regulation of cryptoassets.
The most useful tool available right now to determine how decentralized a blockchain is, is the Nakamoto Coefficient or MAV (minimum attack vector). This is a measure of how many entities would need to collude in order to take over a distributed system such as a blockchain. Although the consensus among regulatory bodies seems to be that bitcoin is decentralized and therefore a commodity and not a security, when taking a look at bitcoin’s nakamoto coefficient one realizes it would just need the two biggest mining pools to collude in order to take over 51% of the network’s hash rate (at the time of writing this article).
https://blockchair.com/bitcoin/charts/hashrate-distribution
Meanwhile Cardano’s MAV has been climbing from a low of 15 on epoch 239 to 34 on epoch 415. Although in proof-of-stake blockchains the threshold is lower than in proof-of-work, in PoS an entity needs to hold 33.4% or one third of the voting power to censor the production of new blocks.
https://www.balanceanalytics.io/chartboards/decentralization
This is why it’s so important that the barriers to entry for running a validator are as low as possible, so more ordinary people can set up their validators, securing and decentralizing the network. To run a Cardano validator you need at least two nodes, one block producer and one relay. At the time of writing this article the minimum requirements to do so are 24GB RAM, 2 cores CPU at 2GHz and 150GB of free storage. However, there are community groups that work together to make running a Cardano validator even more accessible. For example, Armada Alliance provides documentation, guides and pre-compiled binaries to run a validator in a Raspberry Pi with as little as 8GB of RAM. These may seem trivial or obscure things to discuss if the audience is not tech savvy and that’s why education is a fundamental part of the crypto revolution.
Educating newcomers to the space about decentralization is one of the main objectives at Latin Stake Pools, where I provide educational material in Spanish about Cardano, blockchain technology and cryptoassets. Just like many other people around the world creating free and quality content in their native language to keep pushing this revolutionary technology to the margins. After all, the phrase “knowledge is power” is an old latin phrase which has been true for most of humanity. But during this age of information we are currently in, it’s truer than ever.
The danger we face right now, as crypto and blockchain gains more popularity and adoption, is the establishment co-opting the functionalities that work for them while disregarding and ignoring the ones that attempt against their power. We can see this at work with the rise of personalities such as Sam Backman-Fried, beloved scammer of Washington DC. Many centralized blockchains are being pushed by venture capitalist firms that are nothing more than expensive and hyped SQL databases and ponzi schemes like Terra Luna by the infamous Do Kwon.
But the most dangerous of all are the abominations that Central Bank Digital Currencies (CBDC) represent for freedom and democracy around the world. The fiat cartel realized that the only way to effectively fight against real cryptocurrencies was to adopt the functionalities from the blockchain that can be used for surveillance and control of the population. After all public blockchains are public, meaning anyone can see the transactions from all wallets at all times. This is the basis of transparency that works as a double edged sword. That’s why privacy coins such as Monero, Zcash and Dash have been the first casualties of the war against crypto worldwide. With the excuse of being used by terrorist groups for financing and money laundering. Although it has been reported numerous times that this is done primarily by well-established and “respected” banks such as HSBC.
Conclusion
Going back to the analogy from Kingdom of Heaven, we are currently facing an ethical and moral challenge just like the main protagonist Balian did. Satoshi Nakamoto gifted a revolutionary technology to humanity and disappeared. Now it’s up to us, the day to day users of blockchains and cryptocurrencies, to make a conscious decision to where to take this industry. Decentralization is at the heart of this challenge, it’s the reason for the existence of this space and what gives value to blockchain and cryptoassets. But as we already discussed, this proposition presents a direct threat for the powers that be. We must not sacrifice the principle of decentralization as the space continues to expand and onboard new users. We will face old and new challenges along the way that will tempt us to disregard decentralization for faster transactions, more users or use cases but we must remember why we embarked on this journey in the first place. Just as Balian traveled to Jerusalem for forgiveness and a new life, when presented with a tough choice he made the right decision to stick to his chivalric code and we must do the same.
