>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.
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.