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Crypto Comics – What is Decentralization

I tried to explain what decentralization is in comic strips.

TL;DR

I explained what decentralization is and how you can apply decentralization in the crypto space.

Some Takeaway

The idea of decentralization is not new.  The core concept is to distribute power from centralized authority to lower levels so that it maximizes participation in the decision–making process to make the system sustainable to avoid single-point failure events. There are four aspects of decentralization: political, administrative, fiscal, and market. It may seem to distribute power to a different level but it is to distribute influence to each level so that the system can dynamically interact and capture necessary corrections before progressing.           

Political Decentralization

The idea is to give each citizen more influence in public decision-making rather than concentrating power on individuals. The Ukraine-Russian war is an example of centralized power that creates dilution of the future while creating a single point of failure as the society may move backward from this event because of one person’s vision about how the world is supposed to work the way he believes. Of course, the decentralization political system will not guarantee the future of successful political resolution, but it can surely prevent a single point of failure that collapses the system as a whole.

Administrative Decentralization

The idea is to apply more in the private sector in which corporations will deconcentrate decision making, delegate such decision making to others, and devolve responsibility to participants. The purpose is the same as to prevent a single point of failure that can collapse the corporation. However, such a setup gives everyone an opportunity to grow and participate in the business process. It makes the business more sustainable. 

Fiscal Decentralization

The idea is to give lower levels the capability to raise their own funds to accomplish their own projects. Rather than giving funds to selected projects, everyone works to raise their own funds. Because no one will know how much it will cost for the project to complete, it is better to raise their own funds and progress as needed.

Market Decentralization

The idea is to give everyone a chance in the market to grow. The distinction between fiscal and market decentralization is that fiscal focus on the funding process while the market focuses on competitiveness. 

Why Decentralization 

Inequality is a big problem in the modern economy. The problem seems that rich people are getting richer while poor people are left behind. Decentralization is a solution to bring back the wealth gap and helps to share voices from the poor people. In reality, it is not the case. Simply distributing power to a low level does not resolve the core problem of inequality. Decentralization only gives influence to participants but it does not give them a tool to express their influence. 

The Decentralization Tool

One application to implement decentralization is blockchain technology. Since the written rule cannot be mutated, it gives fairly equal rules for everyone to participate. Of course, it is not an ultimate solution to the problem, it offers some insight that we can do to improve such technology and tailor it down to the need. 

In conclusion

Decentralization is a wonderful theory. The application of decentralization seems a bit away from the theory promise it can do. However, we have a way to improve and make it work as long as people continue believing it.

Check out my other article

Crypto Comics – What is Bagholder

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