Fallacy of Decentralisation

So I have been walking for decentralization for ages now, and I hope everybody here likes the idea of decentralization, don't you? Is there anybody who doesn't like the idea of decentralization? Could you raise your hand, Neil? Zero. Which is good, but what we define how we define decentralization, and are we really getting there? That's a very good question about it. That's why I put fallacy of decentralization.

You probably have had of the world follow CEO of composition, everybody walking to save money and you know, in composition, it's going to get to the, I mean, local maximum leads to the global minimum. And we may as well be doing that. And where do we find the solutions? So that's what I'm going to talk about.

Now, the common web, three narratives goes web one was decentralized, web two is centralized and dominated by Garam or big text. And web three will be decentralized again, Is that real? We need to do a fact check and demystify what they actually mean.

Yes, web one. What, what was web one? It was about publishing webpages we built, I, you know, I used to build the ware, you know, compile them and put it on my own machine. Connected with one 20 K Kilobits, right? Kilowatts line. And you know, at that time, you know, getting IP address was easy. So I was getting the block of 16 IP address or something like that and publishing the content.

So it's the read it's primary from the point of view of the internet users read only web, it's a publishing platform, and the web servers were there and then the, the reading devices like browsers on pc, we didn't have smartphone then was connected like this. It resembles web, right? That's why Web one.

Now, what was Web 2.0? The Tom Web 2.0 was coined by Tim Morale back in 2004. It was about the read right web, the, or in another world, it's API economy. Each functionalities that the servers ex was export were exporting, exposing was, you know, decomposed into the, in independent functions and were given the rest APIs and people were able to compose them together to create new services like that. And just like, you know, putting Legos together. And it was a permissionless innovation possible and permissionless creation of, you know, remix of those APIs.

And they resembled, as you can see, web, spider web, that's its Web 2.0. And if you see it, you can see that the, the idea of Web 2.0 was actually decentralization to its extreme.

It's, it was decomposings, you know, monolithic functionality is to the functions and they were completely distributed over the network. So it couldn't have more decentralized than that. And at the time, GFA or GFA was not dominating. Just to pick a point, you know, Facebook was just founded on 2004. It was just a small company. YouTube wasn't there yet.

It, it was on 2005. Amazon websites came around in 2006. So Amazon was, at the time was just an internet merchant instead of what we know of right now. And of course there was no smartphones. Apple launched iPhone in 2007. Apple at the time was iPod and I, you know, Mac company and it can be seen from the annual revenue of those companies.

So, okay, I don't have the the pointer, but the Google, Google was only 3000, 3.2 billion company from the point of revenue. Amazon 6.2, Facebook, that's 0.38, $2 million, tiny. It's like nothing. That's my own company. Probably bigger than that, right?

So, and so it, it wasn't that like GFA was, you know, dominating the world at the time. It was instead IBM and Microsoft, as you can see on the, the, on your right, the B was far, far, far bigger than somebody like Google at the time.

So in, in the sense Gaffa was carrying the liberation torch against Kingdom of ibm, Microsoft or Empire, so to speak. And Web 2.0 was supposed to be the liberation tool. Now with that, did we achieve decentralization? Suddenly not. We are now in the gar farm dominated world, Looking At the current figure, the revenue looks like that. I mean IBM has a little bit decreased, but not that much. But you see Google, Amazon, Facebook, apple, Microsoft, Affam has grown so much. Why it's grown.

You know, this is partly because of the, what is called increasing return on the free market competition. The, in the information technology exhibits something called decreasing cost because the initial investment tend to be large and once it's in place, the incremental generation cost or production cost is very low, close to zero. And because of that it abts decreasing cost and increasing return. And we know from the game theory and economic theory that if it abts increasing return, we are going to get to Monopoly or at least oligopoly. So the result was inevitable.

The those people who started to run fast and was able to invest fast was growing and dominating the world. Now enter the time of web three. Are we going to achieve decentralization with web three? It still is information technology and therefore it exhibits increasing return. How can we expect that we achieve the decentralization that we want? And when we talk about decentralization, we probably need to talk about what we are decentralizing. And also there, you know, what is meant by centralization?

So in the context of decentralized identity, you know, often open ID connected is cited as centralized technology. But you know, when you really think about it, it's not really clear what you mean by centralized, right?

One, when you say centralized and decentralized, it's actually going to be the graduation of decentralization. So I have brought one example in the case of Ledger, right? Ledger can be most is going to be most decentralized if each entity has Ledger is maintaining its own ledger, right? So if the number of entity was in, if it's just down there on new far right, then it's completely distributed ledger situation. And that's actually what a traditional ledger is in each company is maintaining its own ledger, right?

Well, in the case of something like Bitcoin, it's saying distributed ledger, but there's exactly one ledger. That's what you call centralization, right?

So the, the one of the innovation of decentralized ledger is to, you know, put the label decentralized to the, what is the definition of centralization, which is kind of interesting and I should probably land more from their marketing skills. You, but yeah, that, that, so we always have to think about what they re what it really means by the words. And the same actually applies to privacy.

And as a, you know, editor of the ISO 29 100 privacy framework, I have got a lot to say about the rampant of the world privacy, but I'm going to save it for another day. Okay? So now some data points, 0.34% of our address on 82.28% of Bitcoin is a decentralization from the point of view of the distribution of the wealth, it's probably not Lido. Dao dis distributed autonomous organization has gene ENT of 0.93. And as Gene Cove efficient goes higher, it's going be more in equal. And 0.93 is extremely high in that.

And in the South Africa has the highest g coefficient in the world from in terms of countries. And that's only 0.3, 0.63. So that's centralization actually. And then centralization of Polygon, it's a eight key multi signature to the code base. And there are co there are four co-founders and it takes all the co-founders plus one to drain everything. Isn't that centralization In web two? And coming back to the, the identity thing in web two world, there are hundreds of thousands of IDPs. What's going to happen with web three with wallets? I'm feeling that it's going to be just two of them.

Isn't that centralization? Well, you can say that now there's a market competition. You can always create independent wallet.

Yes, sure. And all wallets are equal, right? But some are more equal than others. It's from animal farm, oh, Georgia Wall and more. There's more into that. How can you believe the core that runs on your farm four is actually doing what you really wanted to, wanted it to do? There is no transparency on that.

Yes, you can do the, the apple might be doing the color review, but it's not reviewing the binary. And if the compilers were instructing something, you will never know that. And that's if the provider of wallet is been wallet. So last year in November at i a w we, you know, a bunch of us were gathering to create a devil's dictionary on decentralization and things like that. And we came up with a definition of decentralization as this, it's we are now called on your machine at your own risk. A repeat decentralized means we run our code on your machine to your own risk.

So we never know what's going to happen, but by the way, my slides were actually create, most of my slides were created by ai. So sometimes, you know, these are just being beautiful and not really meaningful.

But yeah, that's another aspect of the world that we are living now. So fallacy of decentralization, We may be, you know, with goodness of our heart trying to get to the decentralized world with wallets and decentralized identity and verifiable credential and everything. But if we look at them closely, we might be going to a hyperized world and we have to be really careful about it. And unless we start to, you know, thwart that now we will be in a very bad place.

The problem is that for, for something like pollution, I know how to, you know, do the policy intervention and for the classic form of monopolization, we know how to cope with it. In this case we don't. And that's a big problem. Coming back to web three, can it be a solution or can it provide a part of a solution then certainly not between A and Z. Do you guys understand this one?

The, like two years ago, one and a half years ago, Elon Musk asked on the Twitter saying, is there a web three? I don't find them. And then Jack Dorsey, the, the, the founder of Twitter replied, it's between A and Z A 16 Z s, right?

So, so the, the venture backed capitalism thing, and it was pointed out most world three is down there, but suddenly the, when we are talking about decentralization, the solution won't be there. Maybe just maybe we can find in, you know, cipher punks in, in idealistic dream, like, you know, crypto accommodation, cryptography and innovation and permissionless innovation, things like that.

I would in financial cryptography, you know, related event in Crok last week, financial cryptography is the, the conference which was found bys, punks, and was taught, you know, it was the conference which is really instrumental in pushing the secure encryptions and algorithms to the world. When there was export restriction on the cryptography, you know, I was also dealing with cryptography at the time, but then I, you know, I, and my company was probably categorized as a weapons dealer at the time, but yeah, that's, but they are really thinking seriously about this.

And in one of the sessions I had there in the beginning in blockchain governance and shared network, the consensus was that we are getting to the centralization and we need to do something about it. So blockchain and web three, what kind of innovation did it bring?

The, the, the signed block of ledger definitely isn't that thing is called signature. And that was found by a Japanese color back in 1999. So it was a known concept by them.

The, the one of the biggest innovation as I see in the blockchain world is then the trust in the running code. The smart complex are committed to the blockchain and you can, everybody can see it. And if something was modified or the environment which was, which it was running was modified, it still is going to be kicked off because of the consensus of the algorithms. So we have transparency and we have some assurance onto what is being executed or the, the result of the execution.

So I'm not suggesting that we are committing the data into the blockchain, but just as the assurance mechanism on the, the running cord, maybe just, maybe we could look and do it, but I don't have good solution. So if you, if you guys have come up with some good idea to stop this trend of centralization, please come to me. Let's think together. And that's it from me.

Great, thank you very much. It's always very enlightening to, to have na at e I c and I've followed you over the years. It's always a, a great education. Unfortunately the questions seem to close earlier cause we are running a bit behind time, but we just have one question.

It says, what should we call VC or D or d i d solutions if not decentralized. Okay, VT is just a, the, the kind of certificate, right? Yeah. Verifiable credential.

Yeah, verifiable credential kind is kind of okay. Although I don't like the word credential too much, but yeah, it's, it's just fine. And the other thing was d i d or, yeah, Yeah. So I think it's, it is talk about, you know, decentralized identities. Decentralized identities. If we're not gonna call them decentralized, what are we gonna call them? I know I'm not very good at the marketing, but you know, What would be a more accurate term though, in your experience?

You know, how should we talk about this new way of, of, of doing identity? Just, well, the, just try avoid the, the, you know, marketing kind of term and just talk about the substance, right? And you know, you could just call it decentralized, right? But it's just a name and token. You always have to be conscious that where you are going to, right? I'll just call it identifier. So there you have it. Stick to the substance, sweep away the marketing. And if you've got any other questions for, for Nat Saur, just grab him over lunch or coffee. Once again, a round of applause for.