Why Decentralization Matters Now More Than Ever

This article was first published on @iotex - Medium

Our world looks much different than it did a year ago. The shocks of 2020 are still fresh in our minds, but remembering our world as it was a decade ago in 2010 is truly night and day. Uber was still in R&D mode, DoorDash was not even a company, and voice assistants like Alexa were still a futuristic concept. Centralized corporations fueled this decade of disruption through a vicious cycle of consumer naïveté and corporate greed— but times have changed, and decentralization matters now more than ever.

A decade of disruption followed by a decade of decentralization. — Balaji Srinivasan

The seeds of the “Centralization Problem” began to bloom with the Google IPO (2005), which coincided with the hatching of Facebook and Amazon Web Services (AWS). Today, Google owns 90% of search and roughly the same proportion of buy and sell-side ad-tech. Facebook controls 60% of social media and AWS hosts 40% of the Internet. The moment FAANG started cordoning off the internet for our ease and entertainment, commentators started to point out that these kumbaya network effects would turn on us.

In Chris Dixon’s from 2018 blog post — Why Decentralization Matters — he shows an S-curve that models the extraction relationship between tech platforms and users (the farther to the right, the more platforms extract from users) was flattening; in other words, more and more value was being stripped from users over time. But it’s not just users. Platforms are n-sided marketplaces so the same goes for all businesses, developers, and creators that rely on centralized platforms.

This is problematic for an ever-growing number of reasons. Many companies have gone out of business overnight after losing access to Facebook, Twitter or LinkedIn’s API. Sudden co-opting of data by Big Tech showed us that oligarchs can “flip-the-switch” on sweeping network-wide policies ...

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