Should a fully decentralized economy ever be achieved?
Decentralization was meant to represent the next evolution of our lives and surely a lot of things have changed ever since Bitcoin came into existence. From building a new payment system in DeFI to a new way of interacting with one another in Metaverse, communities have had a glimpse of what a decentralized system feels like. Although some might argue that the Decentralized system is the next best invention after the internet, others may have an opinion that “too much of a good thing is not good for you” So can a fully decentralized economy ever be achieved?
Decentralization or No Deal….
The day 18th August 2008 might seem like a normal day for everyone with the USA inching towards the conclusion of its financial crash and Iron Man taking the box office by storm but it also marks the date where the Bitcoin White paper was released to the public. Although the white paper never mentions the word “Decentralization”, the word “Peer to Peer” gives us an insight into what the blockchain is capable of. This blockchain capability was further expanded six years later with the release of the Ethereum Whitepaper which also introduced us to the concept of smart contracts.
Even though the term “Decentralization” has a simple meaning, the perception of the community differs across different groups of people. In the blockchain, decentralization essentially refers to the transfer of control and decision-making from a centralized entity (individual, organization, or group thereof) to a distributed network. Some see this transfer of authority as freedom while others see this as a potential to do more harm than good.
Decentralized networks aim to reduce the level of trust that participants must place in one another so people are free to distrust one another while still allowing the outcome to be unbiased towards any individual. In a way, it also reduces the ability of any single entity or individual to exert control and authority over another and instead leaves the community to make a consensus of decisions that will benefit the majority of the participants.
In a way decentralization and Blockchain are always deciphered to be a freedom from the authority and it always dates back to the 2008 Financial Crash. The crash was the result of the greed of the financial system but impacted the whole world because of its massive scale, probably this is also the reason why Bitcoin was created. Bitcoin introduced us to a concept of decentralization which is now possible due to the help of the blockchain system.
So why does decentralization matter? Well, as mentioned before a lot of people see a decentralized system as a solution to our current traditional system. For the community and its members, a decentralized system offers the trust and transparency that sometimes are missing from the centralized authority even though their decisions impacted everybody. It also represents creativity and collaboration as every member gets to contribute to making the network and its system better so it can benefit all parties.
Yes, Decentralization is great and the continued existence of Bitcoin is proof that even in the face of crypto bans by nation states, it speaks volumes about the power of decentralization (and public-key cryptography). It is something marvelous and has given rise to a Trillion Dollar Asset Class that never existed before. But the question we need to ask ourselves is, does a fully Decentralized System possess any harm to its community?
The answer is yes, Decentralized networks aren’t a silver bullet that will fix all the problems. This is why the stance of “Decentralization or No Deal” should be pondered upon as getting the solutions right will have significant implications for the future of the digital asset economy. A Centralized System does also bring the aspect of governance and legality that sometimes isn’t present in the Decentralized system.
It’s worth noting, too, that centralization does offer other benefits such as quick decision-making and accountability which sometimes, we don’t come across in decentralized systems like DEXs. Decentralized Exchanges, although an innovative invention as it relies on a fully decentralized system using smart contracts have also found their system exposed as many Rug Pulls occur. Even though a decentralized economy that is run by a cohesive community is an amazing idea, it also is hard to put it into reality as long as there are bad actors involved.
Should a fully decentralized economy be materialized?
The future success of this new system should not rely on being on the opposite extremes of Centralization or Decentralization but instead on whether the community can find the proper balance between decentralization and governance. A proper Decentralization system allows its members to receive proper transparency on what is happening within the network and be involved in the decision-making while also ensuring that proper governance is maintained for the betterment of all parties involved.
Should a decentralized economy ever be achieved? The answer is not really, as the industry is already successful because it is built on the back of decentralized technologies AND centralized organizations. In fact, meaningful innovations are being made daily because of these two systems working together so it shouldn’t have to be about Decentralized vs Centralized systems.
Of course, part of what consists of a centralized system is also the Governments, who form the missing link to help blockchain and crypto technologies continue to grow. Governments will be the key in forming the right regulations to ensure that the governance aspect is in place while the community on the other hand has a role to play in ensuring that a transparent decentralized system does not get diminished.
“With Great Power comes Great Responsibility.” — Uncle Ben, Spiderman
A decentralized economy might give the necessary freedom to everyone and this freedom can also be harmful in the wrong hands. With the blockchain being deemed the greatest invention since the internet, we need to make sure that this technology is not misused and only utilized by responsible entities. The question we need to ask ourselves is not whether a fully decentralized economy can be materialized. But instead, how do we extract the best of both worlds to benefit the community?
We in Nagaya Technologies Pte. Ltd believes that there is still so much untapped potential in the crypto space for it to grow exponentially in the future. This is why we created the world’s first hybrid crypto asset called Nagaya, which is relatively more stable and tends to increase over time. We hope that the combination of a gold backup, subsidiary projects, transparency, and legality will create a more sustainable value for all of you our long-term HODLers. For more information regarding the latest updates on Nagaya and our whitepaper, you can visit us at nagaya.io
Or you can talk to us at t.me/nagayaofficial
