Historical case studies of decentralization vs. centralization are analyzed to glean insight into Bitcoin's potential impact on established omni-present hierarchical authority structures

Ten years ago, the Bitcoin protocol was first conceived and freely published on the Internet. It promised to be the first scalable, decentralized consensus network. Since then, there have been thousands of other such coins forked and cloned from Bitcoin, though none have been so far been able to match Bitcoin's degree of decentralization, security, growth, and adoption. The emergence of truly scalable, decentralized networks directly threatens the long term dominance of the largest systems of centralized authority: national and global fiat currencies, finance, and banking. What impact will these newly created decentralized consensus networks have on the omni-present hierarchical authority structures that have existed for thousands of years?

Writing about the future is of course, by its nature, speculative, and such prediction must rely heavily on estimation and probability; however, this by no means negates the value of a piece of well researched, reasoned, and supported prediction. Such speculation can offer important insight, at best, or interesting food for thought, at least; I don't claim to accomplish anything but the latter here but will do my best to draw a few logical conclusions supported by a number of relevant historical case studies that follow.

Case studies of decentralization vs. centralization

The ubiquity of centralized control structures makes it difficult to find examples of completely decentralized organizations; thus, many of the example illustrations of decentralization do have important elements of centralized authority—albeit to a far less degree than their counter-parties. Of course, no examples are completely analogous to the advent of truly decentralized consensus networks, but hopefully they prove insightful nonetheless.

Single celled organisms vs. multicellular organisms

Most fossils recovered from the Precambrian period are single-cellular in nature. Then something miraculous happened during the Cambrian explosion: multicellular life forms burst on the scene, and all the major multicellular phylums suddenly appeared in the fossil record. Despite the severely limiting nature of the fossil record, it's abundantly clear that evolution hit on a spectacular new design that allowed single cells to join together and form multicellular organisms. Single-celled organisms are much simpler and obviously more centralized than are multicellular organisms. Though the comparison of single- and multicellular organisms to centralized and decentralized networks, respectively, is flawed in many ways, it is likely congruous enough to be illustrative.

In order for individually governed cells to have evolve the ability to coalesce into functional multicellular organisms, they must have first evolved the ability to work together in more loosely cooperative relationships (e.g. commensalism, mutualism, symbiosis). Such organizational networks require a means of communication and consensus between the comprising individuals. Speculating on the specifics of such is far beyond the scope of this article; but there is no question that such decentralized communication, no matter the form, was vital to the emergence of multicellular lifeforms. Multicellular organisms in turn allowed extreme cell specialization, and the evolution of other higher-level control structures, such as central nervous systems and brains, which quickly evolved to more firmly consolidate multicellular lifeforms.

Now although central nervous systems certainly appear more akin to hierarchical authority structures, its not at all clear that the brains of higher level organisms are rooted in centralized authoritative structures, quite the opposite in fact. Modern research in neuroscience indicates vastly decentralized structures within the brain at many levels. Although many specific processes are centralized within certain regions of the brain (evidenced extensively by studies of brain damage), the vast interconnection and feedback structures within these regions indicate that, at the most fundamental level, neuronal networks are built on principles of decentralized consensus. Also, research into neuroplasticity strongly supports this theory, because such plasticity requires decentralized (re)organizational structures rather than central points of failure that are inherent in centralized control structures.

Key takeaways from evolutionary case study:

  • Emergence of decentralized networks of single cells kicked off single greatest evolutionary event in the history of life on Earth: the Cambrian explosion, which can perhaps be likened to the recent Crypto explosion.
  • Rise of multicellular organisms by no means extincted single celled organisms, but the scalability and adaptability of multicellular life was impossible for single-celled life to achieve.
  • Interdependent, nested levels of centralized and decentralized networks emerged within multicellular organisms, e.g. cooperative single-cell networks -> central nervous systems -> specialized brain regions -> decentralized neuronal networks.

Democracy vs. Totalitarianism

By no means is democratic society altogether free from central forces of authority, which continue to underpin the most fundamental levels of governance. Beneath the illusions of the free and democratic elections and the 'American dream,' those with the most wealth and power routinely collude to monitor, manipulate, game, and outright control the systems in secret. Still, modern history has shown that the decentralized forces at work in democracies, despite the presence of authoritative controls, have proven much more successful and stable than the forces at work within totalitarian systems of governance.

Democracy is the worst form of government, except for all the others.

― Winston S. Churchill

United States vs. Soviet Union

Although it's obvious now which system of governance ultimately triumphed, during the height of the Cold War, it was anything but. As dramatically illustrated in the sudden collapse of the Soviet Union, beginning in 1989, it's clear that democracy continues to be a far more stable and long-lasting form of governance relative to totalitarian communism. Apparently despite its flaws, universal suffrage is a more powerful force than systematically and indiscriminately disappearing your citizenry to the Gulag Archipelago. Who knew?

South Korea vs. North Korea

Likely the clearest example of how the structure of governance can define the success and failure of a country, all else being equal, is the dramatic divergence of South and North Korea, since the end of the Korean War. Before the establishment of the Demilitarized Zone (DMZ), Korea was homogeneous and united in geography, race, resources, governance, and nearly all other meaningful demographics. Fast forward a couple decades: the fascist governance of North Korea has utterly decimated the country and its citizens in every way imaginable, while the democratic governance of South Korea has raised it to the highest levels of global prosperity. Not much more can be said here that isn't amply illustrated in the extreme juxtaposition of non-propagandized media from within the two countries and a perfunctory comparison of their current demographics.

In fact, in order that its citizens don't completely succumb to starvation, the North Korean fascist regime has had to turn a blind eye to the 'illegal' emergence of local, decentralized marketplaces where people can trade their most basic staples for survival.

Key takeaways from political case studies:

  • At the level of nation states there is great potential for direct or indirect violence.
    • This should come as no surprise as the state is widely regarded as an entity with a monopoly on violence within a region.
  • Globally, democratic states, however flawed in practice, have historically triumphed over totalitarian states.
  • But, by no means has democracy 'stamped out' competing political ideologies, many of which remain enormously powerful.
  • However, it's becoming ever harder for centralized regimes to compete with decentralized global, political influences, e.g. Fall of Communism, Arab Spring, North Korean defection, Iran protests...

Decentralized vs. centralized media networks

Early Internet vs. traditional telecoms

The Internet was deployed on the existing national and global telephone line infrastructure built and controlled by existing telecom companies. This made sense, because the telephone network already existed and was compatible with Internet protocols; it would have been a much lengthier, wasteful process to build a superfluous physical network. As a result, the telecoms were in a position to become the default Internet providers. Increasingly, the net has become their primary business: who talks on the phone anymore? Today, the giant telecom monopolies remain the gatekeepers of the Internet. Thankfully (miraculously?), at least in most democratic nations at the time of writing, they have for the most part been kept from exerting censorship over the Internet and peer-to-peer networks, in part by net neutrality laws (which they've continually fought to overturn). However, even in the absence of net neutrality, the decentralized nature of the Internet does appear powerful enough to resist attempts at censorship, at least on a global scale, as the futility of the Great Firewall of China has demonstrated.

Thus far the Internet has remained censorship resistant; however, other extremely dangerous controls have been imposed on it by the centralized gatekeepers of the Internet. Know your customer (KYC) prerequisites are required to get online, and all communications networks are mass surveilled at such breadth and depth to make George Orwell appear a naive school-girl. I'll refrain from going tangential here, on the deeply disturbing global surveillance state, except to highlight that it's made possible because the centralized telecom monopolies act as the gatekeepers of the Internet. The telecoms are central points of failure that the world's intelligence agencies have too long exploited, wholesale and in secret, to strip away your and my every right to privacy.

News Media vs. Reddit

News media giants, such as the New York Times (NYT), British Broadcast Company (BBC), etc., although theoretically based on principles of free-speech and independent commentary, have in reality become indistinguishable from machines of corporate and state propaganda. Over the past few decades in particular, authoritative forces have steadily been consolidating the mainstream new media into centrally controlled media conglomerates. These conglomerates now effectively control national and global narratives, sentiments, propaganda, and news.

In contrast, the Internet has championed the formation of social media platforms, such as Reddit (the self-proclaimed 'front page of the Internet'), where popular content is generated via a decentralized voting system. Unfortunately, the other currently dominant social media platforms, such as Facebook, Youtube, Twitter, etc., have successively succumbed (in varying degrees) to corporate and state control, by choosing to base their business models on such despicable practices as privacy invasion, sale of personal information, paid advertising, censorship, propaganda, etc. Reddit too has inherent structures of centralized governance, in the form of subreddit moderation; however so far, the platform as a whole has admirably maintained a culture of neutrality, free-speech, openness, and inclusiveness, while largely not tolerating advertising, hate-speech, propaganda, spam, and the like.

Despite the shortcomings of social media platforms, their global adoption has put enormous pressure on the more centralized media conglomerates, by stealing away eyes. In order to survive and stay relevant, newspapers have had to shift their focus toward more accessible online distribution channels, news media outlets have had to focus more on trends in social media, and corporate advertising budgets are shifting towards emerging, decentralized forms of media. Of course, traditional media organizations will continue to play an important role in producing high-quality researched, professional, editorial, investigative, journalistic media content. Because of their resources, structures, and incentives, such organizations can often consistently produce higher quality content than more decentralized sources. That said, a surprising amount of two-day-old front page Reddit news shows up on centralized media platforms also.

Key takeaways from media case studies:

  • Centralized media platforms are in many ways uncompetitive with more inclusive, decentralized social media platforms.
  • However, centralized media institutions remain important for creating content that is often superior in quality to more distributed sources.
  • To avoid competition, central authorities will attack any central points of failure existent decentralized organizations through buy-outs, take-overs, pay-offs, regulation, manipulation, coercion, collusion, etc.
  • Given the opportunity, central authorities are usually successful in usurping full or partial control over decentralized competitors, platforms, and entire networks.

Opensource vs. proprietary operating systems

Linux vs. Microsoft vs. Apple

Currently, Microsoft continues to dominate the personal computer (PC), operating system (OS) marketplace, with approximately 90% of all desktops and laptops running Windows, 8% running macOS, and 2% running Linux. Microsoft and Apple allocate a significant portion of their resources to marketing their products, while Linux allocates nothing to marketing. Compared to the proprietary macOS, which runs only on Apple hardware, Windows is rather more decentralized in nature, as it runs on diverse PC hardware. Microsoft has pervasive partnerships with these PC manufacturers to ensure Windows comes preinstalled on all their hardware.

Although Microsoft's OS is somewhat less proprietary in nature than Apple's, Linux is obviously the most decentralized OS—as it is free, opensource, adaptable, and capable of running on pretty much all modern hardware. Despite zero marketing or partnerships, it currently controls 37-66% of public server market-share and 100% of supercomputer marketshare. Linux is the foundation of a diverse ecosystem of offshoot software platforms, including Android, with a mobile market-share of 68% and tablet market-share of 53%. To put this capitalism in perspective, a few months ago mobile alone overtook desktop/laptop as the new leader of device market-share. Linux has also, has become the de facto standard OS for the Internet of things (IoT): Raspberry Pis, TVs, microwaves, fridges, home automation systems, drones, cars... In fact, Microsoft, Apple, and Google incorporate the Linux kernel in many of their own products and services.

Key takeaways from software case studies:

  • Free, decentralized, opensource software (of the most complex variety) is more than capable of thriving in direct competition against the largest of corporate proprietary competitors.
  • Centralized organizations often exploit decentralized, opensource organizations for their own proprietary gains.
  • Decentralized, opensource software offers huge gains in adaptability and flexibility over centralized, proprietary competitors.

Overarching themes in above case studies

  • Competing organizational structures can certainly co-exist within the same ecosystem, however, there is high propensity for fierce competition.
    • When nation states are involved, there is high potential for violent conflict.
    • In order to thrive, competing models must specialize and exploit their own niches within a space.
  • Centrally governed bodies are often more efficient and decisive in exercising their control than are decentrally governed bodies.
  • Decentralized structures are far more flexible, adaptable, and diverse than their more rigid, centralized counterparts.
  • Emergence of decentralized organizational structures often enables expansion into spaces unavailable to traditional, centralized organizations.
  • Complex combinations of and associations between centralized and decentralized structures are typical.
  • Given a level playing field, decentralized organizations tend to out-compete centralized competitors.
  • Central authorities will almost always attempt to exert their power and resources to usurp control over decentralized organizations.
    • Any central points of failure present, in otherwise decentralized organizations, are primarily targeted as attack vectors.
    • Such exploits are usually successful.
  • More often than not, a single organizational model cannot succeed in completely eliminating other competing models within a space.

Implications for the future of Bitcoin: the immanent power struggle for global dominance

In my next article, I'll apply these conclusions from the above case studies to the emergence of decentralized peer-to-peer networks and more specifically to Bitcoin. How successful will Bitcoin be in grabbing marketshare from the central banks? How large a threat does it pose for existing centralized governance structures and the authority of nation states? What is the likelihood for violent conflict between central authorities and the proponents of decentralized organizations? If there is a power struggle for global dominance, which side will ultimately triumph?

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@landonmutch — traveling, trailer-dwelling, software developer, writer, geologist, autodidact, traditional hacker, subversive, Bitcoin maximalist, contributor to Lightning Network protocol.

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