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Decentralisation: Why It is so important for Democracy?

Decentralisation refers to the distribution of power away from the centre of an organisational structure. It is not a new concept and has been understood and applied through a variety of lens; from federalisation in Syria and the delegated operations of the East India Company to internet hosting services and blockchain networks. To demonstrate the intrinsic link between decentralisation and democracy, this article looks into the past, present and future of decentralisation.  

The History and Theory of Decentralisation

Multinational organisations, both internally and geographically, have historically favoured modes of decentralisation, often through a delegated authority method. In the times of the East India Company, methods of communication had not evolved to facilitate the organisation’s centre (i.e. its shareholders, many of whom sat in the Privy Council) guiding administrative decision making at each stage. Consequently, the responsibility of decision making was often delegated, within this decentralised structure, away from its centre.  

Moving a century ahead, decentralisation remained popular with large organisations, particularly banks. Methods of communication still hadn’t progressed to the level where centralised control could be manifested on a day-to-day level. This was particularly the case for the multinational banks run by the Morgans and the Rothschilds.

As the telephone and telex became mainstream, centralisation was favoured throughout the 20th century. There were exceptions to this though, with some companies retaining decentralised models to cater to multidivisional, diversified structures such as the American chemicals corporation, DuPont.

Around this time, the key duality within decentralisation became emergent. Centralisation had advantages of coherency, structured hierarchy and institutional accountability. Decentralisation offers efficiency, particularly horizontally, and better representation. While the principle of decentralisation supported the complete devolution of a structure’s components away from the centre in an independent and autonomous manner, many believed that a middle ground was more attractive. One of the main proponents of this school of thought was E F Schumacher, who argued that centralisation and decentralisation could be reconciled with each other, with a balance between the two resulting in maximum economic efficiency for organisations.

The underlying premise remains as true today as it was then. If decentralisation requires power to be shifted away from the centre of an organisation, even where this is done in a manner where the distribution remains subsidiary to the central controlling body, the spirit of decentralisation and delegated authority, responsibility and control must be maintained in order to accrue any advantages thereof.  The degree of this balance between the two concepts of decentralisation and centralisation dictates what advantages and pitfalls an organisation may run into.

The Need for Decentralisation

The internet began as a completely decentralised structure. It has no owner, any person can host data on the internet, and protocols for its use may be proposed by anyone, with democratic adoption denoting leading standards. The internet today demonstrates an organisational structure where while the concept of decentralisation remains a dominant label, its spirit remains severely lacking.

As the internet progressed through stages of development, the main mode of operation became that certain users would host websites which would attract user traffic. As time progressed, user traffic was capitalised upon through the collection of user data. The landscape today is such that a handful of hosts now control most user traffic and data. They capitalise on this data to their advantage with little regulating their behaviour. Examples include Google, Facebook and Amazon; three of the largest website on the internet with unparalleled access to user traffic and data.

Most recently, Google shared that it was working on a censored version of its search engine for China, despite the country’s numerous human rights abuse cases, for instance the imprisonment of over 1 million Rohingya Muslims, and the government’s policy of censorship. Similarly, Amazon has built itself into a global retail giant such that online purchases often have to be made through the company despite the fact that many would prefer not to, particularly given the organisation’s appalling working conditions and aggressive tax avoidance mechanisms.

An analysis of the internet’s current state of decentralisation would be remiss without mention of Facebook. The organisation acts as one of the main nodes attracting and collecting user traffic. It is so powerful that the data breach resulting from Cambridge Analytica, a company which worked with Trump administration to spread fake news in order to target polarised voters, lead to the released of 50 million Facebook users’ data.

It remains worth noting that the centralisation of data in a few companies’ hands makes it easier for data to be hacked and for governments to conduct surveillance and levy censorship. Control has been relinquished from users to centralised corporations in a system that was designed to be decentralised.

Decentralisation Today

The current landscape of the internet demonstrates that despite its decentralised template, its development has rendered some companies the gatekeepers of user traffic and data. There continue to be issues of predatory practice, data protection and privacy and the reliance on intermediaries to connect us. Some are developing a decentralised internet, and perhaps thus, a more decentralised society. This includes work being done towards a decentralised internet, ledger technology and applications. The core principles behind newer decentralised technology, in an effort to stay true to the underlying principle, include peer-to-peer connectivity and changes to how data is stored and retrieved.

In the case of the decentralised internet, different protocols are used to make links identify information from their content rather than where it is found. This makes it possible for websites and data to be stored and passed through a connection of users’ computers rather than a central conduit, such as Google. Much work is being done to make the decentralised internet a reality. OpenBazaar acts as a decentralised marketplace, Textile Photos allows for comprehensive photo management, DTube acts as a YouTube alternative, Matrix as an alternative for WhatsApp, and all of these can be accessed through the experimental, peer-to-peer Beaker Browser.

In terms of blockchain technology, a secure and encrypted decentralised public ledger of transactions is being used by almost every cryptocurrency project. This environment validates transactions, maintains consensus across the ledger, and acts as a record for ownership in a trustless, decentralised and adaptable manner. While earlier projects such as BitCoin found their core in the very concept of a decentralised peer-to-peer ledger, newer projects are taking additional advantage of decentralised data networks through Smart Contracts, Proof of Stake and Decentralised Applications.

Smart Contracts are contracts made over a blockchain network such that when certain prerequisites are met, the contract will be executed. Proof of Stake is a consensus mechanism where users contribute to blockchain maintenance by allowing the network to hold their Coins in escrow. These Coins are attributed an arbitrary mining power and are used to validate transactions, with their provision of escrow incentivised through the possibility of earning rewards. Proof of Stake acts as a decentralised version of Proof of Mining as it prevents the congregation of mining power in the hands of those with the most computing power, although it does suffer from Coin Whales controlling staking power. Additionally, decentralised applications act as a direct connection between users and providers. These can include those targeted towards transactions, the use of money in addition to other application components and voting and governance systems. The key benefits of decentralised applications are that they cut out middle men and act as unchangeable, peer-to-peer and transparent mechanisms of data entry and registry.

Various blockchain projects are seeking to counteract the consequences of centralised data collection. Minds is an increasingly popular social networked based-off blockchain technology, Brave is seeking to revolutionise how users attention and traffic is commodified, with users being rewarded for using the project’s browser, the incorporation of Smart Contracts within the Ethereum Network could prove to be a secure and trustless environment for national elections to be conducted, and Elix acts as a user-friendly peer-to-peer lending and crowdfunding platform with functional mobile applications.

The Future of Decentralisation

With all applications of decentralisation, constant vigilance is necessary to ensure that power remains outside of central control, whether that results through design or operation. Many criticise BitCoin, one of oldest decentralised blockchain projects, of being a repetition of the internet. These critics argue that most of the mining power of BitCoin is controlled by countries like China, Russia and Georgia, and as a consequence control has been centralised in questionable nations. While it is true that significant mining power exists in these countries, it is equally true that a greater investment into allocating computing power towards BitCoin mining, at an institutional level, could mean that mining control is drawn elsewhere. This would have advantages of cheaper transaction costs and quicker times, and helps demonstrated that within a decentralised network, resources and consequent centralisation remain variable, even if static in the moment.

Additionally, it is worth noting that the use of decentralisation within blockchains has moved on from basic ledger applications. Most projects nowadays are innovating in a variety of industries but are using blockchains for recording data in a decentralised, transparent and verifiable way. This can serve the purpose of decentralising records of data. This is  advantageous where censorship is an issue and where it would be useful for users to have verifiable record of data, whatever that data may be. Alternatively, the trustless and secure environment of a decentralised blockchain is being used by projects like Monero to provide anonymous and opaque transaction mechanisms for users concerned about their privacy.

The recent Facebook leaks, the centrality of Google in our lives and its well-documented data collection practices, and the common knowledge of extensive government surveillance post-Snowden are demonstrative of the need for us to shift to a more decentralised and democratic system; one where not every facet of communication and interaction with each other is monitored and monetized for the advantage of an eavesdropping middleman claiming legitimacy through facilitation. The recent manipulation of the US election through users’ Facebook data further demonstrates the need for us to divorce ourselves from centralised modes of communication.

Through a more macro lens, it seems that decentralisation will be the flavour of the coming years. Most organisations and governments recognise the advantages of user-verifiable, transparent and decentralised data. It bears the stamp of legitimacy. It is likely that we may begin to see decentralised methods of voting with the passage of time, particularly in countries where vote tampering is a real issue. From a similar lens, the core of decentralisation may soon find root in countries where there exits a multitude of ethnicities, such as Syria. It has recently been proposed that federalisation of the country may be an effective mechanism of quelling dispute and allowing various ethic identifies to share mutual respect and recognition. This proposal is particularly favoured by Syria’s Kurdish residents.

As the world turns to a more peaceful and democratic leaf, it only seems natural that control must be relinquished from central authorities and distributed to the people in order to facilitate greater transparency, representation and meaningful democracy, whether that is on a national scale or how we choose to communicate and transact with one another.

By Murtaza Farooq 

Nouvive: Home of Crypto Beginners, Traders & Investors. Nouvive provides Cryptocurrency trading news, Analysis and indicators for beginners, traders and investors.

Information on these pages contain speculative statements that involves risks and uncertainties. Crypto-Assets profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell. Nouvive does not in any way guarantee that this information is free from mistakes, errors or material misstatements. It does also not guarantee that this information is of a timely nature. Crypto-Assets involve risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing or trading are your responsibility alone. For more information, please view the Risk Warning Below.

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