The Center Will Not Hold: How Decentralization is Reshaping Technology and Governance

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Decentralization is a concept that historically describes local governance structures where the responsibilities of planning and decision-making are not made by a centralized authority, but rather distributed throughout its membership.

Although the terms “centralization” and “decentralization” were not coined until the 19th century in relation to significant political upheaval across Europe, the concepts have existed since the very inception of society. In spite of the obvious benefits of decentralization regarding inclusivity, representation and personal freedom, human history has primarily been a study in centralized authority because of the benefits it provides in efficiency in making decisions and its ability to be effective over large geographic areas.  

However, recent technological advancements have allowed for decentralized principles to be utilized more effectively and many of the historical limitations are no longer applicable as robust mechanisms of governance utilizing decentralization are now available.

A Mechanism and a Choice

In particular, blockchains have emerged as an opportunity for the development of new systems that more effectively embrace the benefits of decentralization as both a mechanism for member representative governance models and as a choice for users to access and develop application functionality within a decentralized economy.

While the historical definition of the term is still useful as a comparative measure to centralization, the term “decentralization” itself has become synonymous with certain features of blockchain technology and a point of analysis in determining their technical, legal, economic and political function.  Although there is still no unified singular definition of decentralization, the utilization of the term within blockchain generally carries certain characteristics that trace back the original Bitcoin whitepaper.

While the term decentralization is not explicitly found within the whitepaper, the ability to construct organizations and processes with “no central authority” absent a “trusted third party” for transaction or otherwise interacting with others has established a stand alone concept utilized within the industry.  Developments in the application of decentralized technology, regulatory actions, legal analysis, economic potential and political theory have provided additional context for what decentralization means as it pertains to public blockchains and the applications built on top of these blockchains.