Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
If you cast your mind back to the early days of the Internet, many of the services were built on open protocols owned by the Internet community. Big platforms like Yahoo, Google and Amazon started during this era, and it meant that centralised platforms, like AOL, gradually lost their influence.
During the Internetâs second growth phase, which largely started in the mid-2000s, the big tech companies like Google, Apple, Facebook and Amazon built software and services that left open protocols trailing behind. The skyrocketing adoption of smartphones helped propel this as mobile apps started to dominate the way we used the Internet. And, even when people did access the open protocol that is the worldwide web, they usually did it through the medium of Google and Facebook etc.
On the one hand, people worldwide benefited from free access to cutting edge technology, but on the downside, startups couldnât grow their Internet presence without worrying that one of the centralised platforms, like Google, would simply change the game plan and take away any chance of growing an audience and making a profit. This has stifled innovation and in many ways made the Internet less interesting. And, there is a global political aspect to the dominance of centralisation, which we have seen most clearly in the emergence of âfake newsâ that has turned some social hubs into battlegrounds.
The third age of the Internet
And so we arrive at the third age of the Internet. And as Chris Dixon says in his incisive article on Medium, crypto-economic networks, which in turn owe their existence to the networks developed by Bitcoin and Ethereum, will enable its further evolution. Dixon says: âCryptonetworks combine the best features of the first two Internet eras: community-governed, decentralized networks with capabilities that will eventually exceed those of the most advanced centralized services.â
The case for decentralisation
First letâs look at the problem with centralised platforms. They have a predictable modus operandi, such as a big drive to recruit users, adding third-party developers and media organisations, and as they grow, so does their power over users. Dixon quite rightly says that when they hit the top of the S curve, âtheir relationships with network participants change from positive-sum to zero-sum.â And for the third-party platforms, the game has changed from cooperation to competition. So, all the entrepreneurs n the third-party community start to shun the centralised platform.
Now enter the decentralised cryptonetworks. Dixon defines them as: ânetworks built on top of the internet that 1) use consensus mechanisms such as blockchains to maintain and update state, 2) use cryptocurrencies (coins/tokens) to incentivize consensus participants (miners/validators) and other network participants.â
Cryptonetworks are also able to maintain a level of neutrality that the centralised platforms canât offer, and donât want to either. Plus participants and users are given a voice through the community governance of these decentralised networks. This is available, âboth âon chainâ (via the protocol) and âoff chainâ (via the social structures around the protocol). Participants can exit either by leaving the network and selling their coins, or in the extreme case by forking the protocol.â
To sum it up: cryptonetworks align network participants to work together toward a common goalâââthe growth of the network and the appreciation of the token. Thatâs why they just canât keep Bitcoin and Ethereum down, no matter how much they try, because there is a community that believes in it.
The importance of decentralization was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.