When it comes to Centralized and Decentralized there are varying levels of interpretation. When it comes down to it, is decentralized all that it is meant to be or is it some fallacy we pretend we want but when we get it, its not exactly what we expected. From my casual observations, I’ve noticed many people tout the benefits of decentralization but when it comes to it, they still need or want centralized decision.
In order for the decentralized network to make it to main stream there’s a long way to go. The ease a person can lose money or hijacked is one thing that keeps people away. Then there’s governance, like the bitcoin saga or if a business is considered centralization? This is part of the problem because people are expecting things to work but don’t realize that in order to be completely decentralized there’s no central authority and without a central authority things can happen where funds get lost or stolen. In other cases, there’s a stalemate when deciding on the architecture to scale bitcoin to support increased users and transactions. Such is the case with bitcoin. Bitcoin is going through a transition in the community in order to scale. The biggest problem is not everyone agrees. The very nature of decentralization is that people can and should break off if they don’t agree and in other ways they’re supposed to reach a consensus first before deciding to split up. Currently, some devs and some users are pulling for BTC Core Segwit while some business/miners and other users are pushing for Bitcoin Segwit2x. Unfortunately, there’s 4 sides to this and for the most part is evenly split between core, segwit2x, and bitcoin cash.
What we’re seeing now is a mass exodus to bitcoin to maximize the fork on October 25th, 2017 with bitcoin gold which raises bitcoins dominance which has steadily increased over 50%. Once these forks are over, I expect those number to drop and head right back into alt coins. People won’t say no to free money especially if its air dropped like bitcoin cash. When S2X hits, there is likely to be a bigger impact as they fight.
The four stake holders in bitcoin are:
When the November hard fork hits with Segwit2x, we’ll see how distributed the consensus model is. The lack of a decision maker in a decentralized world is what led up to this confrontation where the future of the “bitcoin” brand is up for grabs. People will argue that the current implementation is bitcoin but lets let the 5th stakeholder decide and break the balance; the market and time. Between the two, we’ll see which chain will have the support it needs to survive and continue forward. With miners supporting Segwit2X, this will put a considerable amount of pressure on the Bitcoin Core chain. While Bitcoin Core and Segwit 2X battle it out with mining hashpower and business support. Bitcoin Cash can sit out the fight with its safety protocol EDA, Emergency Difficulty Adjustment. There’s been a lot of tweets, articles, reddit posts on the subject but none of that really matters as much as which chain will be used more.
The balance of who controls bitcoin is an interesting one. Multiple parties all want the name, many of whom, contribute or have contributed to the growth of crypto currency. The energy wasted talking about each other would be better spent pushing the technology forward rather than repeating the same argument over and over. In this case, if there were a centralized authority, it would be nice to see a decision made but as with most things someone will get upset no matter what. Thankfully, there’s a way out, may the better bitcoin win.
The result of this battle for both users and hash power will be interesting. Since both version of Bitcoin Segwit and 2X do not have replay protection and no difficulty adjustment, whoever has the hash power will likely for the other to make drastic changes. This could lead to a big problem for the Core chain unless some other miner decides to step up and spend the money $ to invest in mining hardware. Without hash power, one chain will starve slowly as it tries to get to the 2016 blocks it needs to lower the difficulty. This could lead to an even larger backlog and even higher fees in the short term. Will there be more miners? Maybe, Russia, Japan have stated interest as well as some developments in Iceland and the U.S.. If Segwit2X gets moving in business and takes its users along, what will happen to the Core chain? There will be a big change coming and it needs to happen. People want to know who has the larger consensus. As of now, there’s so much vitriol and derogatory statements you would think that neither of them like crypto currency. However, we know these people are very passionate and just look at scaling in a very specific way.
It’s hard to make decisions in a decentralized world. In this way, people disagreeing and going their own way is a decentralized decision. A centralized one would’ve imposed their values on the other. Miners being centralized is one thing but can become more decentralized. Same with users and merchants. In specific scenarios everyone shares influence over a given portion of the network. When people exercise their influence in the decision chain, that is not centralization, even if they control a particular section. Same for when developers disagree, when there is an impasse then a decision must be made to move forward and A B test.
After the hardfork is done, I believe it will take some time for the fallout to happen and money will still swing wildly. If you’ve been waiting, it might be an interesting time to pick up some beat up alt coins. Either way, it was time for this to happen so we can put it behind us and/or move on with the next phase of crypto currency which will I think should move towards main stream crypto applications; centralized, decentralized, and hybrid outside of pure trading. Eventually, being technology, another coin/token is likely to displace the current leader. Before we get there we’ll learn a lot about the pros and cons of decentralization and centralization in specific points in the crypto ecosystem. The macro environment changes rapidly due to the price action in a small pool of short attention span buyers/sellers. The micro environment of these crypto ecosystems moves a bit slower and should develop over time.