This session will delve into the crucial role of decentralized protocols in creating a more equitable and secure digital future by exploring their potential to empower individuals, foster innovation, and promote decentralized control.
I gave a talk last week about the progressive erosion of decentralization. In that talk, I provided three defenses against erosion
One of those defenses was “lava moat”. If a lapse in decentralization causes you to be incinerated, the community tends to remain decentralized
My favorite example of this is BitTorrent. Over the years, BitTorrent has been able to remain decentralized because any centralized competitor has died in a barrage of murderous lawsuits. For example Popcorn Time.
Crypto today has no such lava moat. A cryptocurrency that is centralized can often downplay its centralization to its users and then outgrow the decentralized competition because decentralization is hard and is fundamentally a disadvantage.
Hostility from US banking regulators may be one of our lava moat moments. Crypto doesn’t need traditional banking. We can use collateralized stablecoins and payment channel networks to solve enough problems to remain a vibrant industry.
The UX for both sucks, because they aren’t competitive when centralized alternatives are an option. But if the alternatives get stuck down by regulators, there will be enough user demand to build a real competitive ecosystem with enough money that innovation occurs naturally.
I won’t say that this is good for crypto. But I do think there’s a platinum lining, and that we really don’t need banks anymore if they decide we aren’t allowed to exist.
Original Post: https://twitter.com/DavidVorick/status/1636356262186164225
Transcript
Music] thank you [Music] foreign [Music] it’s great to be here today so I know the the title of my talk was uh why decentralization is important but as I got to oh hello did I started too fast I think we just maybe I just I was thinking maybe I’ll just let you go go live um it’s great to have you David um yeah we’re we’re trying to stay on
01:05
time I know we’re a few minutes late so I don’t want to take too much time but I really appreciate you coming and sharing I know it’s a little bit late for you in in Europe so uh um I really appreciate all your work you do in in the decentralized web and I follow your Twitter your tweets and I think a lot of people here should too so um but I yeah I think I’ll let you just get get started David I want to hear it awesome yeah it’s great to be here yep and um like I mentioned the uh the my talk is is titled why
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decentralization is important but as I started writing it I fell into this um almost like realization that that decentralization has been I feel like on on the decline um so I feel like peak decentralization in terms of like total mass happened somewhere between 2016 and 2017 um and then as the blockchain ecosystem started evolving the number of people focused on you know purely decentralized protocols like Bitcoin and handshake just started going down and a lot of the new attention coming in was focused on uh
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other other features and and decentralization got de-prioritized um and so I I decided that I wanted to focus my talk more around that Decline and try and reason through what what caused the decline and how we can jump back into it and and what’s uh you know what what sort of strategies are eroding on us and what sort of strategies can be used to build back stronger um so just to kind of prove out my point I don’t know if um how many people here were around in 2015 using Bitcoin but a key use case for Bitcoin it used to be very like powerful
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and motivating was remittances and so a lot of people would earn money in the United States and then send it back home overseas and when you compared the utility of Bitcoin versus standard rails like Western Union uh Bitcoin was cheaper it was easier it was faster you were subject to less scrutiny so Bitcoin was like really solving key problem for the remittances space and today Bitcoins actually no longer really used for immenses and similarly you also used to be able to use Bitcoin to buy things online and that’s
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something that that has similarly kind of fallen off bitcoin’s really just good for buying and holding um and you get you get some stuff here and there lightning is kind of getting off the ground you have Bitcoin ordinals but relative to 2016 I think we have moved backwards um and when when we dissect why I think that a big part of the problem comes down to uh a pattern that Microsoft pioneered it also happens on accident so it doesn’t have to be intentional but Microsoft was very intentional with a pattern that
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they called Embrace extend extinguish and it’s a strategy um I think you know pioneered by Microsoft most famously used by Google to take over Android where you take this like open decentralized you know not necessarily even decentralized just open source and free community you embrace the community and openness you extend it you offer a bunch of new features and then over time these features become more and more proprietary and you find ways to make the community dependent on those features and then over time you you make the
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community unable to survive without the proprietary features and now now you’ve captured this once open and you know growing community and you’ve pulled it you know entirely Under the Umbrella of Google um and so in the case of Android this was like super explicit um Google bought an open source operating system they made a much better developer kit but the new developer kit was proprietary developers started building apps on the proprietary extensions and then Google you know started inserting surveillance but the
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Android phone over time as Google became you know more and more predatory the open source version of Android became less and less useful because fewer apps ran on it it ran on fewer phones right as phones came out with new hardware there was no drivers because Google had kind of dried up the open source ecosystem oftentimes by just hiring all the bright developers um and and so Google was able to completely take over Android and now we we have Android today which should for all intents and purposes be considered a
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you know highly privacy invading closed Source operating system um and we see similar patterns in Bitcoin and in decentralization but unlike with the Google case like I think Google with Android was like very intentionally maliciously executing A playbook and in the case of uh blockchains The Playbook was not there’s not some evil mastermind uh re-centralizing the ecosystem it’s it’s just that uh and I’ll use name base as an example you have this software that’s like 50 good um and I hope no one takes offense from
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me calling you know both Bitcoin and handshake alike 50 good they’re like fun to use but it’s also not the most convenient thing to run a full node and be fully decentralized and when you get a platform like name base coming along they solve a lot of ux issues they turn it from 50 good to say 80 percent good but they introduce a little bit of centralization you get this relaxing of uh both Community expectations right you get this cognitive dissonance in the community where name base comes in they’re really good thing it makes it a
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lot easier it’s bringing a lot of new people into the handshake community and to be fully transparent like like name base is the reason I joined I started actively using handshakes is like name base made it so easy to buy my own domain and that was really like the gateway drug the handshake for me but at the same time it like because it’s centralized you get this distance in the community the Old Guard kind of relaxes and it’s like okay the centralization is bringing a lot of good maybe it’s worth tolerating this
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centralization and then you bring in a whole bunch of new people the new people are the growth right they don’t get to experience the growth the old people experience growth of the community the new people don’t get to experience that growth because they are the growth and then and then when the next feature we go from 80 good to 90 good with more centralization being introduced um the Old Guard is maybe a little bit more nervous and intimidated and slow to accept the centralization but the new guard is like really eager for the
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growth they they haven’t seen growth yet the growth is a lot more exciting to them than it is to the Old Guard and you just fall down the slippery slope and I think we you know we saw that Bitcoin turned into ethereum ethereum had lots of centralized elements inferior was a big one and then that turned into defy D5 was even more centralized than ethereum was um especially with platforms like one inch and other liquidity routing protocols that were like fully centralized and just couldn’t couldn’t
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mechanically exist in a decentralized world and then then we moved on to nfts which are even more centralized and again at each stage it’s you’re only relaxing the plot a little bit and there’s no Mastermind here thinking you know I’m going to embrace extend extinguish blockchains it’s just blockchain’s on their own aren’t that fun to use and when you add a little bit of centralization they get more fun and you just keep progressively adding centralization and you lose um you lose the decentralized aspect so uh
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it’s it’s a tough problem and I don’t have a really good solution for it it’s one that I’ve been aware of since maybe 2015 and nervous about and I think at that point I was just optimistic that it would work itself out and we would we would figure out some way to fight it at this point I don’t think we have like an antidote or a great way to fight the Embrace extend extinguish pattern and and it’s you know less malicious variants but I can share basically three strategies that I understand create
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resilience um and so the first one and I might point to like ipv4 as an example of this is to just have an experience that works really well and is complete on its own in a decentralized form so if you know Bitcoin and handshake weren’t starting at say 50 user friendly but we’re starting at say 95 user friendly it’s a lot easier for the community to see something like name base and say this is not worth it we’re gonna you know we’re just not going to use name base another example of an app that I think has
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achieved this well enough is signal signals encrypted messaging app that is centralized but it’s very private and it’s very protective of its users and extensions to the signal protocol which compromise on the encryption standard just don’t make any sense and like things that you couldn’t do you used to not be able to do group chat you used to not be able to do group video chat they’ve made made progress on the encryption but even back when those were completely unavailable people did not migrate off of signal for the
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sake of not having group chat because signal for you know one-to-one messaging worked well enough that users didn’t care it didn’t the the trade-off of introducing centralization did not improve the user experience enough to be worth the sacrifice and that’s not a place that uh blockchain is in um there is there is no fully decentralized blockchain where the users are willing to just like outright refuse any centralized Solutions because the centralized Solutions are not convenient enough it’s it’s just too con
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centralization is too convenient at this point so yeah strategy one is to make something that’s just good enough in the first place that you don’t really you don’t feel like you need centralization to improve the experience the second sort of uh the second like pattern that’s resilient is I guess what I’m calling like a lava mode and this is where BitTorrent finds itself so BitTorrent has been a pretty long lasting protocol um it’s been quite resilient to centralization over the years um and it’s not been taken over and the
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main reason is because it it sits in this like legal Hot Zone where as soon as you step outside of pure decentralization in BitTorrent um Whatever Whatever centralization Gets introduced just like dies by a holy beam cast down by Zeus um and I think a great example of this is popcorn time so I don’t know how many people remember but back in 2014 this app became really popular called popcorn time it introduced a little bit of centralization it made the user experience like a hundred times better Popcorn Time blew up extremely fast it
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got to like you know a million users in like one month which back then was like way way harder to do than it is today it was absolute Wildfire everyone was talking about it and then they got into legal trouble and they just died in a holy fire because they had enough centralization that there was a Target that Zeus could strike and Zeus Struck it without any mercy and popcorn time died and so BitTorrent has been resilient to centralization pressure just by function of any centralization that gets introduced um just gets torn clean off pretty much
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within a month of it existing um and so that’s like another that you know that’s that’s something that you may like maybe it is better to have that sort of heat on you um blockchain doesn’t benefit from that heat right now um ethereum you know we’ve seen a little bit of this with tornado cash um there’s a lot of fear that uh staking protocols proof of stake Protocols are going to be subject to kyc um and and are going to be regulated soon but it hadn’t really happened yet and it’s certainly not this like uh you
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know sudden struck out of the sky and so uh I don’t know if we want that sort of lava moat to exist for blockchains but if it did uh I can guarantee you that more a greater percentage of the space that cares about the space would be focused on maintaining decentralization um and then the final strategy is one that Bitcoin has used I think hasn’t worked super well for Bitcoin but uh it’s worked well enough so Bitcoin today remains quite decentralized and even when the new fad kicks in like uh ordinals is a
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new Fadden Bitcoin ordinals is only taking root in the Bitcoin ecosystem because this is a truly fully decentralized protocol and a lot of the ogs don’t like it they don’t like jpegs on their blockchain but at the same time um you can’t claim that ordinals are not decentralized lots of people are running full nodes um and and like there’s you know there’s no attack surface and so it Bitcoin has managed to protect its own ecosystem uh through a strategy that I call zealotry so instead of like a lava moat
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you basically give every single you know Denizen of the Bitcoin ecosystem their own personal bucket of lava you just instruct them if you see something that’s not decentralized just like throw lava at that thing like dump your lava bucket on that centralized thing and kick it out of the ecosystem and uh this doesn’t work super well because it’s resulted in a lot of Friendly Fire a lot of Accidental Fire we even see that with ordinals a lot of a lot of Bitcoin maximalists and ogs you know tearing
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into ordinals really really disliking it even though it’s actually not a centralized element um and so the the result of Bitcoin zealotry is like a very burned and stressed out ecosystem um and you know I I think it’s been successful in ensuring that Bitcoin remains decentralized but at the same time it’s also driven away a lot of talent a lot of the big talent in Bitcoin in 2013 and 14 has like since retired under the heat um it’s just a very stressful thing to be a Bitcoin core developer and so
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they’ve either gone Anonymous or retired entirely and then perhaps even worse than driving old people away um new people just see this like you know you you come into the space as a young bright naive mind you have a bunch of good ideas that have a lot of Merit you don’t realize that these ideas are centralized Bitcoin devs just completely tear into you throw a bunch of lava on you for having centralized ideas and then you’re like well I’m gonna go hang out in ethereum where they don’t throw buckets of lava on me
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because that’s you know I just don’t like lava um and so so Bitcoin has had a really hard time bringing new talents into the space because it’s so hostile to centralized ideas and new talents is just necessarily has a lot of centralized ideas until they’ve been uh I don’t want to use the word indoctrinated but I will and until they’ve been you know brought up to to understand the principles of decentralization and what what the limitations on your ideas are supposed to be and we just Bitcoin is not able to
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get new people over that learning curve without burning them so hard that they run away um and so yeah I guess uh in in uh the spirit of the title of my talk I do want to you know briefly give an example of why decentralization is important I do think as much as it’s struggling I think it’s extremely important and um I can only give one example but one example that’s like very dear to my heart is the example of the YouTube streamer um and so you you have this like phenomenon where YouTube streamer starts
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making custom content uh could be you know about Chess or it could be parody videos or it could be you know anime reviews um and and when they do this at some point they cross over into an income level where they can pivot their entire life to be around it and whether it’s like you know five to eight k a month if you’ve been making five to eight k a month for six months in a row you might do something like leave your job uh and and put your full life into taking care of an audience that appreciates you and
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and by the time you’re that size you have you know half a million people a hundred thousand five hundred thousand people that are really excited about the content you produce and the work you make and then one day YouTube comes down with this new rule and it’s like well if our content creator has more than you know one in a thousand words are a slur or a curse word then we’re going to demonetize all their videos and suddenly this content creator you know swearing on YouTube has been Kosher for over a decade all of
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your videos have swears in it and your whole personality it like incorporates a light amount of swearing and suddenly that 8K a month you’re making is now 200 because there’s only one video left that’s monetized your fans don’t even like your new content because when you’re not swearing you feel like you can’t be yourself um and so this happened you know you lost all of your income not because your fans turned on you not because the people who appreciate you suddenly stopped appreciating your work it’s because some
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external entity unrelated to any of any of you the Creator or your audience decided yeah we just don’t swear on this platform anymore and you’ve already left your job so now you have no income no job you can’t go back to that job because you burn Bridges when you left and you’re just stuck for a bit and so and of course this this plays over across many different Industries a personal struggle of mine is credit cards I not even kidding eighty percent of the purchases I make my credit card gets declined I have five credit cards
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and it’s almost like one in three times that I go to even like McDonald’s I will have all five cards get declined and I just can’t buy food that moment um or I’ll have to have a friend or the person of line behind me by by my food it would be really great to have a protocol where when I hit the send my money to this person button the money the money goes through and the system that’s designed to protect me from fraud doesn’t end up stopping me from eating so um just to like conclude the whole talk
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uh I think that decentralization is super important I think desaturalization is struggling a lot that ours face has shrank since 2015 um and and the main cause is some variant of of extending our space with centralized things that make it better the best we can do to fix it is basically that I know I I hope that you know in the next five years someone has a better strategy you know can offer a fourth idea but the first idea is Just Launch your decentralized protocol with a really good experience in the first
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place I point to Signal as an example of this the second one is build decentralization in areas where being not decentralized is super scary and examples of this would be uh BitTorrent Silk Road and tornado cash and then the third one would be find some way to produce this religious religious sellotry that in Bitcoin proved to be very effective at achieving the goal but maybe we can iterate on what Bitcoin did and find a way to both be zealous and also not throw lava on newcomers who don’t understand our culture yet
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um and yeah I’m gonna I’m gonna go ahead and wrap up there I can uh answer any questions that have come up awesome thank you so much David yeah we have a q a section um I’m gonna just show on I saw a poll just pop up where uh let’s so this is from Fernando falchi and OG here in the community uh I don’t know if you can read it David but he’s people new to h s as h s Community lava free I I don’t know if I’m this is do you know what that is uh I’m so I’m more of an outsider than
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an Insider but from what I’ve seen I would say it’s mostly lava free on the other hand sometimes it does get into uh uh fights with say Unstoppable domains um and again you know I think I think there are merits to these fights but at the same time uh they do they do have uh Taste of lava to them um so yeah I would say hns is not lava free I don’t I don’t know if that’s necessarily a bad thing um it’s it’s just yeah it’s it’s tough it’s tough to know where to draw the line
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got it thanks dude um we can extend a few more minutes for questions um being told Johanna so you can see here that do you have some ideas or what what apps you think would be great to be built on handshake is it yeah so I think probably um General like I don’t know if this is strictly possible but it would be great to have a general naming system for wallet addresses um I would I would love to have an app where I just like open up my phone and then instead of having to paste in an address that my friend sent
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me I just I just have a name you know uh Jeff I just send coins to Jeff and Jeff Owens that h s name and it’s Global um that’s that’s probably what’s been on the top of my mind the most um thank you great I mean I think there’s some projects I mean I mean this it’s a true point I mean there are there are startups uh that’ll be sharing that will are tackling that um another question here is how can I explain to people dids from HS startup perspective Miguel do you get that yeah I feel like that’s
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not a question I’m really equipped to answer um dids are confusing even to me so I great I’ve seen suggestions already from Ricardo who will be sharing later too from Universe um okay I think we got most of the I’m gonna go jump into chat there’s a little bit of an echo now but okay we got a poll is decentralization and struggling actually David it was your tweet that inspired there’s a little Echo but I’ll keep talking there was a tweet you said where you said that you think it was Peak decentralization I
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think you said 2017 if I recall so I I kind of feel like I agree with you that’s what what inspire me also invite you also you know your leadership and your tweets and your writing is great but it’s a little bit scary I I guess to wrap it up your session you know it honestly or you said you kind of like feel like you it’s it’s trending down is isn’t that scary to you I mean aren’t we trying to get in trending up in decentralization I mean don’t you want to try to the trend and get it turned around
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I’m I’m like maybe you feel okay oh I was gonna say I definitely feel like it’s concerning um but at the same time I also feel like it’s very uh decentralization is very compelling and we get hit with if if you look for examples of why we need decentralization you find them in the news it’s like every day um and so I I do think if if decentralization continues to Trend down it will hit like a bottoming out point where people will re-realize how important it is and and it’ll rally back up
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um hopefully you know when when it turns around we have more strategies and and uh can do better on on the next iteration but I I do think that it’s you know decentralization is not going to die it’s it’s going to be important as long as the internet exists and people people will get behind it and it will have another uh Heyday Pro probably on the heels of some disaster like Google taking over all of TLS or something like that yeah another Trend I I don’t know if it’s from your writing or others but
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there’s Protocols of existing like telephone numbers um I remember reading about like ATT and the Bell System try to monopolize you know phone numbers and the the telephone system in the United States of America um and uh there was a breakup of bell systems obviously we don’t have enough time to get into that but that’s just you know I think it’s always even before the internet there was companies trying to centralize and control the system or communication or the or the platform right I mean it’s not just
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the internet I think it’s existed even before the internet and various forms yeah definitely if all else fails who have regulators and regulation um so we you know you can go to the polls and vote you can call your congressman and say Google is a bad actor and let’s let’s do something about it and you know that is a means to accomplish things um yeah awesome okay thanks Steve I know it’s also late there for you and uh I really appreciate what you do for the you know the for the internet and decentralized
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and future web I don’t know if there’s some blast words or links or things you want to share for the uh for the people here today I’m uh between projects at the moment so it’s just my Twitter handle but if you uh pay attention I am I’m working in the background on something exciting that I hope to share with the world soon awesome thank you thank you again David for for uh agreeing to come today and uh if there’s ways I or others in the community can help I think we always will them to support whatever
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you do next so thank you Heroes great to be here all right so we’re gonna move to the next session which is Colin Burke block domains and that will be in another room so it will end this room and go to that room he’s gonna talk about data a little bit more handshake focused you know David was a great kind of way to get things started about decentralization we’re going to get more into focused handshake specific content with Colin’s talk which I’m looking forward to he’s done a lot of research and data of the
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handshake ecosystem over the years so I think we’re gonna switch over now I’m still going to hang in the flow today but I think we’re gonna end this one and see you in the Next Room foreign [Music]