The rise of the internet ushered in the democratization of knowledge that has pushed humanity forward unlike any other time in history. Is this trend going to continue? If so, how far will it go? Decentralization has been a historical trend, but it’s only recently that we have seen an exponential rise in technologies that enable it. The internet and the World Wide Web, invented in the late 1980s, allowed us to connect across continents. In 1994, Marc Andreessen created Mosaic, a browser that allowed people to view website images. This was the start of what we know today as the internet. From here, he coined the phrase, “software is eating the world,” referring to how all aspects of life are migrating to the digital world.
Now, with the proliferation of Web3, blockchains, crypto, and DAOs, can we expect the same in the future?
What is Decentralization?
Decentralization means that there is no central authority controlling a particular network. It is well known in the music world, where it gave everyone access to what was only available through record labels. Today, this could be anything from a currency to a social media platform. But what does this imply? It means control is spread among many people (or computers) across the globe.
When you use cryptocurrencies like Bitcoin or Ethereum, your transaction records across a network of computers worldwide instead of in one central database at your bank or government institution. No single entity can control how your data gets used or how much information they have access to. That is why so many people love this system.
Thanks to blockchain technology, even traditional businesses are starting to decentralize. As decentralization becomes more commonplace, it will profoundly impact the world economy. Companies of all sizes will need to adapt or risk being left behind.
Decentralization has many advantages. For one, it makes systems more resilient because there is no single point of failure. Moreover, it allows for even quicker innovation since anyone can build on a decentralized platform. But the most crucial advantage of decentralization is that it gives power back to the people. With decentralization, there is no need for intermediaries or central authorities. This could profoundly impact how we interact with the world around us.
Current Trends in Decentralization
Many factors are driving the trend towards decentralization. The first is the rise of blockchains. A blockchain is a decentralized database that stores information in a public ledger. This means anyone can view and verify the data stored on the blockchain.
Blockchains are the underlying technology behind Bitcoin and other cryptocurrencies. They’re also used to build decentralized applications or dApps. These applications run on a decentralized network rather than on a single server.
The second factor driving decentralization is the increasing popularity of peer-to-peer technologies. These allow two individuals to connect and interact without needing a central authority. Peer-to-peer technologies are already having a significant impact on traditional businesses. For example, Airbnb and Uber decentralize the hotel and taxi industries.
And finally, decentralization is being driven by a growing security need for control over our data and privacy. With centralized systems, we have to trust that the companies managing our data will do so responsibly. We can take back control of our data on decentralized platforms and keep it safe from third-party interference.
While crypto has had ups and downs, interest in blockchain is growing among corporations and venture capitalists. Blockchain offers a new way for companies to share data, whether it’s between business partners or within an organization itself.
Some of the biggest names in tech are already investing in blockchain-related technologies. IBM, Microsoft, and Amazon have all invested significantly in blockchain research, while Google has announced plans to launch its cryptocurrency.
Implications of Decentralization
Decentralization has many implications that can apply in today’s world. Here are some examples that we see today in modern society.
Government decentralization refers to the transfer of authority and responsibility from the central government to lower levels of government. This can lead to improved service delivery and more efficient resource use. An example is having satellite government offices to cater to people far from the center of government. Giving these satellites access to the same data and information the main sites have offers many conveniences to citizens.
Banking and Investment
In banking, decentralization refers to the transfer of banking activities from central banks to crypto exchanges. This can lead to increased competition and efficiency in the banking sector. Crypto exchanges have merged traditional banking with blockchain technology by holding bank assets while executing blockchain asset trades for their customers.
Introducing decentralized autonomous organizations (DAOs) to banking and investments can lead to a more secure and efficient system where there is little room for error or corruption. DAOs are organizations that run on smart contracts, self-executing contracts with the terms of the agreement between buyer and seller written into lines of code. This means that once the conditions set in the contract are met, the contract is executed automatically.
Data Storage and Public Hosting
Using blockchains instead of closed SQL or NoSQL databases for data storage decentralizes data. With decentralized systems, every user has a copy of the data stored on the network, making it almost impossible to hack. Decentralization can lead to reduced costs as there is no need for expensive hardware or software. Public data hosting on IPFS instead of private servers decentralize the web. This makes the internet more resilient to censorship and attack.
We can expect that decentralization will have a significant impact on many industries in the years to come. It has the potential to make organizations more efficient and secure and to reduce costs. As the world becomes more connected, decentralization will become an important tool to protect data and privacy. We see this with services such as Proton for mail replacing Gmail, Uniswap replacing exchanges like Coinbase, Auguron replacing Google Drive, and many more.
Decentralization is a significant force that is reshaping many industries today. And as the world becomes more connected, decentralization will become critical to protect data and ensure secure service delivery. So far, we have seen that decentralization can lead to improved governance, more efficient banking and investment, and increased security and resilience in data storage and shared hosting.
In the years to come, we can expect decentralization and blockchain technology to have an even more significant impact on how we live and work, particularly in areas where facts and data are in question–immutable data will be the central source of information. As in 2001 and 2008, the “winners” in this recession will be those who deliver decentralized software to the masses to upgrade the internet.
Sam Tarantino, Auguron CEO