Comment by jasode | Hacker News Reader

Comment by jasode | Hacker News Reader

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>The “why” is not technical.

This is one of thr few essays about decentralization that understands that the problem isn't technical.

However, I'd go further than his explanations of incentives and say that the fundamental problem is that decentralized technical protocols do not solve the centralization of how money is spent.

Examples of that misunderstanding:

- SMTP the protocol is decentralized (technical) and yet we have giant email providers GMail/Hotmail/Yahoo which is centralized (money). The big providers spent $$$ on 1 gigabyte mail storage + backups + convenience. SMTP specifies how fields are laid out but it doesn't put money in everyone's bank account so they can run residential SMTP servers so the email ecosystem stays decentralized.

- Git the protocol is decentralized (technical) but Github the service is centralized (money). Why? Because Git the technical protocol is not a bank fund that gives every programmer a free $10 VPS account to host their own git repo. The centralization of money spent (Github invests in a datacenter but individual programmers do not) results in centralization.

- Bitcoin protocol is decentralized (technical) and yet the phenomenon of giant China "mining pools" emerges which is centralization (money). The ability to spend money on liquid cooled ASIC chips in a datacenter located near the Artic Circle is "centralized" to the entities that can spend that vast amount of money. The exceeds the ability for the home enthusiasts to compute hashes on a spare computer in their bedroom.

The common theme: technical protocols can be decentralized but the real-world implementation of those protocols end up centralized because physical things like cpus, harddrives, network bandwidth, etc cost money.

This pattern of decentralized technical protocols vs centralized economic behavior is ignored by virtually all decentralization enthusiasts.

So the real puzzle to decentralization is, "How do we _decentralize economic behavior_ when everybody doesn't have the same amount of money to spend?" Nobody I've read about so far has figured that out . That includes Sandstorm/IPFS/Filecoin/Mastadon/Diaspora/Ethereum etc.

> The common theme: technical protocols can be decentralized but the real-world implementation of those protocols end up centralized because physical things like cpus, harddrives, network bandwidth, etc cost money.

I agreed with you up until here. Not convinced that centralization is due to the economics of running a computer on a network. It's also a due to reputation and trust.

People use gmail and hotmail, not just because they don't want to pay for the computer, it's because they trust these companies will do it properly and reliably.

Github isn't the best example either. It didn't spring up because of the economics of running a git server. It got big largely because of its social features, and also because it was a pretty trustworthy git repository. I feel far more confident pushing to a git repo than to some physical server somewhere. There's a trust aspect.

I'll skip Bitcoin and got to another mostly decentralized system: paper currency. Exchanging paper currency is largely decentralized, but most people deposit it in a bank, in part due to interest, but largely due to the trust the bank provides.

The common theme to centralized services isn't the cost of computing hardware, but rather raising trust/reliability in the service, outsourcing expertise, and risk mitigation. Big central service providers are good at exactly this.

Seems there's an angle of trust that includes Zipf's law.

Given that attention is limited, if there are some n services, any one individual's awareness of the ith service is likely 1/i. And the general population awareness will also fall with 1/i. If trust is a function (among other things) of familiarity, then there's simply limited trust in a universal-service market (that is: no subpopulation-specific grouping of service, e.g., by geography).

Exactly. This is how society works. One does not go to twenty farms to get grocery. We go to a store or two to get what we need. The source of the food are decentralized, but the platform for selling products are centralized.

>Not convinced that centralization is due to the economics of running a computer on a network. It's also a due to reputation and trust.

Yes I agree and I've written previously that non-physical costs such as "trust/reputation/skills" have to also be included:

https://news.ycombinator.com/item?id=14125730

https://news.ycombinator.com/item?id=10405945

SMTP, Git, and Bitcoin are really and truly decentralized in their actual implementations, even as economies of scale favor a concentration of service providers.

"Because Git the technical protocol is not a bank fund that gives every programmer a free $10 VPS account to host their own git repo."

No, but the protocol does ensure that every individual clone of a repository is a full mirror, and that everyone can work offline and synchronize via USB drives if they should need to.

I'm not sure that the kind of decentralization you're talking about is possible or even desirable.

>No, but the protocol does ensure that every individual clone of a repository is a full mirror, and that everyone can work offline and synchronize via USB drives if they should need to.

Correct, but what I was addressing was the recurring sarcasm of "why did we settle for a centralized service like Github when Git itself is decentralized?" ... everytime Github has an outage.

Some people truly don't connect the dots as to why source code repo centralization exists despite the fact that Git is decentralized. To them, Github centralization seems like a weird irrational phenomenon. No, it's actually a quite natural and expected phenomenon!

Yeah. I think part of the problem is that centralized vs decentralized becomes a dualism and people get fixated with an ideal of pure decentralization.

In my view, decentralization is about building resilient systems where it's not a big problem if everyone uses the same provider, or the same three providers, because the content is de facto independent from the operators.

But it's also true that decentralized systems are under constant threat of recentralization because lock-in benefits monopolists...

The bitcoin example is an especially clear one. You could generalise that even more, and say that the reason why companies exist is because you can make more money by working together with other people than to try to do everything yourself. In other words, the fact that a company is more than the sum of its parts is why this kind of centralisation happens.

My prediction would be that we would see this centralisation overturned at the same point that companies disband as people realise they can do just as well, self-employed. (Which is happening a little bit, actually.)

That's what I'm talking about (in rather indirect language - this is just a quick rant) - the incentive structure drives even decentralized systems (like the web as a whole) to centralization.

And yes, mainly it has to do with the problem that tech people aiming for decentralization are yet to accept that this isn't a tech problem, but economic/incentive problem.

Agreed. I'd even go a level up and simply say that centralized systems generally allow the service to have more control over user behavior. This allows them to monetize user behavior. This profit potential allows them to raise capital. The capital allows them to do all kinds of things that a nonmonetized platform can't, like hire 30000 employees, buy the competition, and engage in big marketing campaigns.

Ultimately though, it's a local optimum. Facebook acts in its own interest, not in the interests of users. The things that Facebook does to maximize its revenue cause great harm to its users. I'm not sure what's going to break the logjam, but something will.

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