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Why centralization invincible

Entrepreneur, venture capitalist and captainvalor Noah Jessop shared their thoughts about how the idea of decentralization has created a new type of centralization.

All the vices of centralized systems, centuries and millennia pursuing humanity and seemed to be indented with the beginning era of cryptocurrency, again raised his head — just in a new guise. I call it “conservation of centralization” and formulate so:

“When a particular element of human systems becomes less centralized, centralization does not disappear, it simply moves to the adjacent part of the ecosystem”.

Let’s look at some examples.

Cryptocurrency exchanges

No matter how free and open you are interested in the asset, to trade them on the market with the maximum number of offers — that is why today the exchange remains the most profitable element of the cryptocurrency ecosystem.

We were promised a decentralised utopia with thousands of different currencies, but to get to the consumer, new tokens, and other types of assets first you need to get on exchanges, which are said to sometimes charge for this service up to a million dollars.

Will today’s stock exchange main arbiters of taste and success?

Nobody knows.


Ethereum is the platform preferred by most developers — not because of the advantages of the language of Solidity, but because of the great ecosystem of developers. There is a test network, browsers, blockchain, various purses, forecasters gas prices, etc.

No need to have a special gift to predict that this network possible for the developer are expanding most quickly — simply because they are staffed with the smartest people, and it is here start your journey for young talent.

Maybe someday we will have a better system to create smart contracts, but while the market one after another out tool kits for developers that is compatible with Ethereum.

The same dynamics, albeit on a smaller scale, is observed in other projects. The blockchain and the algorithms achieving consensus have gradually become the starting point for any new project. Yes, people try to create a more scalable solution, but due to the presence of the conventional technology they have difficult.

Communication within the ecosystem

Extension MetaMask already installed more than a million users, and probably many of them have ether two, and then they can try a particular distributed application. We have compatible wallets, including hardware. Etherscan, which you can use to confirm that the transaction evidenced by the new project, works fine — but only with Ethereum.

And, of course, with the most common blockchains leading integrated exchange and add the new token standard ERC-20 with minimal costs.

What could be a better economic model? Of course, but the spread will be expensive.

We have mentioned only part of the players of the ecosystem, but actually more of them and they all turned to face the other participants and back to new projects.

Cognitive load on the user

Почему централизация непобедима

The above is called the network effect, and it is especially pronounced among the most successful coins and tokens, because centralization is largely due to the psychology of the owners of the tokens.

In 2017 broke into top 500 websites compiled by Alexa, and thanks to him, the order was set, when the capitalization and profitability scriptactive of assets measured in dollars and bitcoins. Maybe someday it will change and we will use to estimate the cost many price pairs, but the situation is completely analogous to the evaluation of real assets in gold and American dollars.


Unfortunately, the hopes of the supporters of absolute decentralization is not justified — we have gone from the egalitarian ideal of financing projects when all the participants are in the same position.

Remember ICO Brave, in which the tokens are worth more than $ 30 million sold more than 30 seconds. We looked at it in real time, surprised at the speed with which the vanished ideals of equality, and many have begun to wonder whether the new world order to imply the winnings of the wealthiest members of society.

What we have got at the present moment, very similar to what it was before, and quite traditional for joint funding of projects. This game is a lot of money, and entrepreneurs are quickly discovering that can maximize future access to capital by launching its own currency, and now that information spreads quickly, “centralization” among investors expressed even stronger than before.


Co-founder of Netscape Jim Clark once said that “in business there are only two ways to make money: to weaken or strengthen the constraints.”

Projects like Ethereum weaken some sort of restrictions in this ecosystem a lot of players can create their own projects without fear of Central authority (as an example of a relationship built on fear, you may recall how early Twitter interacted with developers).

The major exchanges like Coinbase, Bittrex and Binance limit the demand, additional services ecosystems provide a narrow neck on the way to users, and famous investors and strong brands bind the attention of users.

Centralization is invincible, it can only be contained, and developers and investors need to know exactly what the point of centralization in the way of their business or the kind of centralization you’re going to put themselves at the service.

The opinion of the author may not coincide with the position of the editorial Board

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