Proponents of cryptocurrencies like Bitcoin and Ethereum argue that we need to have fully decentralized systems. While these systems are operational and decentralized, they have an abysmally low performance. At the moment Bitcoin can only process 3 transactions per second, and Ethereum can only handle 15 transactions per second globally for all applications.
At the same time, we already have less decentralized systems like Ripple (for payments) and NEO (for decentralized applications and smart contracts). The performance of these protocols is orders of magnitude higher than the performance of fully decentralized systems. For example, NEO at its current state can process around 10,000 transactions per second.
It is hard to speculate if Ethereum and similar systems will ever outperform other blockchains, but it can be reasonable to assume that fully decentralized systems will always have lower performance since they need to provide stronger guarantees. In this case, if less decentralized systems will have higher performance, are there any practical reasons to strive for full decentralization?
"Decentralized systems" != Cryptocurrencies.
Email, BitTorrent, Git are all "decentralized systems" and they have nothing to do with finance and do not use blockchain tech.
I realize crypto is hot right now, but lets try to have some perspective.
Decentralized systems allow you to formalize market dynamics. Eg how selling/providing works. Through this you can create marketplaces to which everyone can connect to but nobody can leverage their own position to change the rules.
A (naive [in details] weak) example i regularly use is electricity:
Imagine you own solar roof panels and produce more electricity than you need. You want to sell it back. But you want to sell it at the highest possible price to the best payer.
The centralized concept is that you sell it to your main provider and hope they pay the best price (or that your are able to move cheaply/quickly enough). Or that you sell it to a intermediary (or price-comparison service) that hopefully has the lowest rate (or that your are able to move cheaply/quickly enough).
The decentralized approach to this is to announce the sale on the network/market and pick the best offer.
Society doesn't really "need" blockchain technologies...
That is, until the government screws up the economy and something like hyperinflation occurs.
Or some system gets hacked, and information or money gets leaked/lost.
The appeal in Bitcoin/crypto isn't capacity or speed, its security (from the state, from bad actors, etc.) That has a very high-value proposition and is worth investing in. In time, I think scaling solutions will make crypto much more practical.
Dencentralized does not equate to block chains or crypto currency...
I would agree current and popular crypto currencies are not that efficient.
However, look at bit-torrent and it can exceed what centralized hosting can provide.
Email is decentralized, heck even http is decentralized.
Dencetralization is quite common. Even the US government is dencetralized to a degree. You have state, county and city governments. Its just a property that things may have.
I'm predisposed toward decentralization and personal control, but I have to admit centralization has benefits. It depends on the situation / market.
A concrete example is AirBNB vs. craigslist for apartment bookings. I'm going on a trip to the east coast for a few months (from SF).
Now craigslist has existed for a long time, and in theory I could book an apartment I found on craigslist for a month. Indeed, I looked on craigslist.
But I've been advised not to do that, for reasons of trust. But I'm comfortable doing it with AirBNB, since I've used them before and had more or less good experiences. They do provide some service in case things go south (last minute cancellations, etc.)
(And the AirBNB I booked is a legal one where the person owns the place, since I don't want to risk being kicked out during my trip.)
Craigslist is more decentralized than AirBNB -- anybody can post a listing and anyone can contact you and try to book your apartment. But the decentralization doesn't mean it's a better system.
I think it boils down to the details of a particular market, and decentralized vs. centralized is not always a helpful way to think about it.
With regard to currency, I imagine BitCoin is better than the currencies of some governments. I don't think it's better than US currency, by a long shot. US currency has flaws, but I don't see that BitCoin actually addresses them. It's morphed into something else. Maybe a different system could address those problems.
Yes and No. Look, I think that decentralization has a lot to offer and has many applications where it makes sense, but lately I've heard a bit too much decentralization-for-decentralizations-sake talk going on. The internet still goes through backbone nodes (which are the important interconnects of ISP's deep in datacenters). We are still transversing a physical medium limited by the laws of physics. That said, this is why meshnets for example are a great proper project for decentralization to overcome that sort of physical layout root issue (taking it to p2p radio comms of some sort).
Everybody talks about the cloud likes it's a new magic. It's fucking not. It's just servers in datacenters like it always was, but with nicer interfaces for remote customers. Except the cloud providers lock you in, by design. The ISP connects the servers of the cloud providers in datacenters to the public internet, but those servers reside in datacenters.
Servers which run in prime conditions, with good hardware, and have the proper infrastructure and people to support them and give them uptimes in the four 9's depending on datacenter tier. Decentralization might be able to approach this though due to the strength of it's topology.
Another issue is privacy. The ISP and the state level actors have your data and you know it... and are entities you at least theoretically have legal options for recourse against. Everyone knows your IP when you start running p2p decentralized platforms. That's why for example you should not be running a tor exit node from your home network. In this day of easy data on people, your IP is a hop skip and a jump away from you being doxed. Or ddossed, or various other things.
I could go on, but the point is decentralization has a place. Use the right tool for the right job, and stop trying to make a multi-tool that does everything cause it always fucks something up.
That's why Bitcoin has just implemented the Lightning Network and Ethereum is implementing Sharding and Plasma. Lightning is projected to be able to maintain 50,000 TPS in practice and billions of TPS in theory.
Furthermore, PoS systems such as Nano and IOTA aren't really more centralized than PoW systems such as Bitcoin and Ethereum, since only 6 entities possess more than 51% of the hashing power in Bitcoin. That's definitely more centralized than Nano or IOTA.
That's also the reason why Ethereum is moving to a PoS/PoW hybrid.
In a nutshell, near instant transactions with very high scalability and a very high degree of decentralization are already here(Bitcoin, Nano, IOTA). However, these technologies have not yet proven themselves and need to show their resilience against black swan events and hacks of all kinds.
We will see the results within the next year.
Take it from someone who has been studying distributed systems while architecting his own for a year — https://intercoin.org
You can have both.
The SAFE network uses Kademlia to select a group of computers based on a content address. It achieves security by not allowing computers to set their own IDs in the system but having them be kicked around sections from time to time.
The XRP consensus algorithm is essentially what you would want when implementing crypto currency. It is also pretty good for storing files.
The trick to scalability is always one thing: horizontal partitioning, also known as sharding.
As long as you can partition your data, you can scale up the wazoo.
The tough part with crypto-currencies is verifying the history because coins can mix, whether it’s UTXOs or account based systems. So the coin you hold may be the product of transactions among millions of other coins.
So I think the only way to really do sharding is to emulate how cash has $100, $20, $10 etc. in other words have tokens that never get subdivided but only exchanged in an operation to “get change”.
Instead of subdividing tokens, you first check with a given address whether it has enough change, borrow the change, do the transaction, and then the recipient will send the change back to that address and get back a larger denomination.
All this happens behind the scenes but reduces the growth of UTXOs which is a huge problem for Bitcoin and others.
What I talked about here is a FULLY distributed system, that is nevertheless super fast.
Bitcoin / Blockchain are not distributed in one important regard. A truly distributed currency would allow one to transact while offline, and allow merging subgraphs of transactions, etc etc. Bitcoin chooses consistency over availability. Real world commodities can always be transacted, regardless of network connection.
Decentralisation is oversold. I have a couple of arguments against it: a) the more users who compete in decentralisation, the more commodity like returns they will get for their time and resources; b) there is a real cost of making decisions, so decision fatigue is a real thing and you can’t expect all users to be completely engaged in decision making that’s expected for decentralisation projects; c) the history of how platforms like YouTube evolved shows us that there is tendency to move from individual users having meaningful contributions to groups dedicated to those platforms outcompeting users in their contributions.
I blogged about it last month https://invertedpassion.com/decentralization-continuum/
NEO can't do 10,000 tps. The entire network has gone offline, multiple times, when handling a single token sale:
It's easy to benchmark massive tps rates on a closed testnet, as in this case of removing all safeguards from an Ethereum private network to get it to 1.5 million tps:
I've read dozens if not hundreds of threads (on HN) about the benefits of decentralization. Can some of you give me the run down on the benefits of centralization?
I think that discussion needs to happen as well for both discussions to be valid.
NEO will be fully decentralised at some point according to roadmap with voting for node operators. It will still be faster by design and its somewhat current centralised state is not the reason of its speed.
Torrents were fast - they still are if you can use something like popcorn time.
What about upload speeds? They are universally awful - that's an impediment to decentralization and something that should change.
We’re just learning how to build decentralized systems. It’s a difficult challenge and most of the current attempts will fail, but some will succeed.
Meanwhile centralized systems can solve many practical problems. The two approaches are not in opposition to each other. Are you trying to solve a practical problem today, or are you trying to build a very challenging zero-trust system of tomorrow?
I don't think there's middle ground. Either there's someone in control or there isn't. If you want to trust the system it must be fully decentralized by design. You can't trust people in the long run.
it’s possible to be both. society is structured in layers, some centralized some not. same with the human body.
One of the visions that tech people (including people who should know better, like Eric S. Raymond) like to masturbate to is that of a fully decentralized internet, entirely supported by mesh networking with short-range radio transceivers in everyone's PC/cellphone/tablet/other. It'll never happen, and the few times it's been tried, scalability, throughput, and reliability were all HUGE issues. Decentralization introduces friction, because you have to expend bandwidth/energy just looking for peer nodes to talk to, handshaking with them, determining optimal routes through the ad-hoc network, etc. All of this is Done For You in the hub and spoke/backbone model of a centralized network.
And that's not even taking into account the problems of available spectrum and interference in the wireless mesh networking case.