Abstract

Decentralization is heralded as the most important technological design aspect of distributed ledger technologies (DLTs). In this chapter we’ll analyze the concept of decentralization, with the goal to understand the social, legal, and economic forces that produce more or less decentralized techno-social systems. We first give an overview of decentralization as a political ideology and as an ideal and natural endpoint in the development of digital technologies. We then move beyond this discourse and treat decentralization, its extent, its mode, and the systems which it can refer to as the products of particular economic, political, and social dynamics around and within these techno-social systems. We then point at the concrete forces that shape the actual degree of (de)centralization. Through this, we show that the extent to which a techno-social system is (de)centralized at any given moment should not be measured by its distance from an ideological ideal of total decentralization but should be seen as the sum of all the social, economic, political, and legal forces that impact a techno-social system.

Highlights

  • We first give an overview of decentralization as a political ideology, and as an ideal and natural end-point in the development of digital technologies

  • A small group of miners control more than 51% of mining power in the network, so it is relatively cheap and easy for them to prevent any changes in the protocol that might hurt their interests through coordination and collusion

  • If we look at the history of the internet, of the open source software domain, of privacy enhancing technologies (PETs), or of file sharing networks, existential threats emerge to be the most effective drivers of technological decentralization

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Summary

Distributed ledger technologies and the ideology of decentralization

In the history of internet there seems to be a recurring hope that open source, decentralized, and distributed digital technologies would give rise to novel, revolutionary modes of social, political, economic organization, which build upon, and reflect the intrinsic characteristics of the underlying technology. Blockchain technologies brought together long existing ideas in a new constellation (Narayanan & Clark, 2017), which created an opportunity to see this new technology as a point of discontinuity, a revolutionary moment, rather than a marginal advance in, for example, the science of cryptography or the design of peer-to-peer systems Such moments of perceived discontinuity create uncertainties around the unexplored, unknown potentials of the technology, which, in the case of DLTs led to widespread and enthusiastic speculation about an imminent political, economic and social disruption. The term “decentralization” enjoys an almost mythical status in the discourses around DLTs in particular, and digital technologies in general This is partly due to the original design of the internet architecture, which found an effective safeguard against a nuclear attack on a communication network by eliminating central points of failure or control. A web that’s locked open for good.” Decentralization is a technological architecture that replaces existing modes of control and reverses their negative effects. We outline some of these forces which shape the degree of centralization of a techno-social system in different dimensions

The logics and dimensions of decentralization
Internal control and governability
External recognition
External existential threats
Endogenous and exogenous economic incentives
Findings
Conclusion
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