Decentralization is a concept that has been around for a long time. It can be applied to nations, technology, power, and more. Switzerland is a great example of a nation that in many ways operates in a decentralized manner. It consists of 26 cantons, each with its own government, parliament and courts. This and other benefits – such as direct democracy – came with a great political struggle that included revolution, long riots and a civil war – not from their culture or tradition as many may think.
This has allowed the regions to decide what is best for their people, as well as keep their traditions and even languages intact. Such languages include German, French, Italian and Rumantsch, preserved by both the locals and all regional TV, news and media prints. This approach is more respectful towards communities and is also empowering in that it accepts people as they are, rather than forcing them to change or enact passed-on traditions based on political or colonial powers. One could look at this as a more natural way of approaching governance.
We can see the benefits of this political model when compared to a traditional centralized model as each individual entity is empowered rather than centrally governed. Moving forward, how does this apply to blockchain applications and what are the benefits?
Bitcoin and other cryptocurrencies have made it possible for people to break away from centralized entities which lack transparency and can be manipulated, such as central banks. Most countries in the world have a central bank, meaning that all national money is issued and controlled by those banks, taking control out of the individual’s hands. In contrast, one can use a decentralized cryptocurrency such as bitcoin, or issue their own coins or tokens, not unlike company shares. Similar to Switzerland, such an approach would mean that the people issuing the token can embed their own ideologies, economic rules and systems of governance rather than follow the regional or national currency framework – such as the Euro or USD.
Decentralization of Energy
Electricity and power consumption is yet another great example of what decentralization has made possible in combination with better storage options – such as Tesla batteries – and renewable energy supplies – such as solar panels. As mentioned by the European Commission:
Distributed generation technologies, combined with local storage, can also have much higher efficiencies than large centralized facilities and also have greatly reduced, even negligible transmission infrastructure costs. Indeed, in the future, with a high proportion of small-scale renewable energy sources connected to local storage, most of the grid could consist of local, low voltage lines, with high voltage transmission lines only used to link large wind farms, solar arrays and conventional power stations with urban areas.
The central model widely used around the world requires power plants to burn coal, build dams or use solar and wind turbines. All of these methods require significant infrastructure and the power itself has to be carried over long distances to reach people – resulting in a loss of efficiency. This is something that has made distributed production and storage a winner on all levels when compared to centralized models. As mentioned by Imtech UK:
The UK’s centralized model of production and transmission wastes an astonishing two-thirds of primary energy inputs, requiring us to burn far more fuel and emit far more carbon dioxide than necessary. But there is an alternative where electricity is generated close to or at the point of use avoiding the losses in transport and driving efficiency by utilizing the heat generated in the process through technologies such as combined heat and power (CHP) systems. In a decentralized energy system, buildings, instead of being passive consumers of energy, become power stations, constituent parts of local community energy networks.
Once again, we can see the benefit of decentralization as it allows people to look after themselves and their communities on a local level while empowering the individual to be part of the solution. Individuals can generate electricity through unused space available on their roofs – by installing solar panels – and store it or sell it back to other people as is being done by a Dutch company named Vandebron.
Storj is a great blockchain example when compared to the distributed energy model mentioned above. Centralized data centers require huge infrastructure and are greatly expensive. They are also inefficient due to having to transmit data across large distances and waste a lot power through the cooling required for the servers as well as the electricity used. Blockchain has made software such as the one developed by Storj possible – which allows individuals to become micro data-centers while being rewarded in the form of STORJ. The STORJ token can be used to rent space on the network, or converted to other forms of cryptocurrencies such as Bitcoin or Ethereum.
So now data can be served directly from person to person rather than having to go from a data-center to individuals. This is a mode that centralized data centers simply can not compete with.
This comparison is parallel to distributed energy, as individuals can purchase extra hard drives – similar to storage batteries and solar panels – to earn a passive income. You can also use the network for object storage while keeping your data encrypted, which is not the case with existing service providers. All of this comes at a greatly cheaper price than those of traditional object storage companies such as Amazon S3. The price – similar to that of distributed energy – is adjusted for not having to pay for the infrastructure, staff and other costly overheads. The entire process once again empowers the individual while strengthening the network.
The Future of Distribution
While Storj is one of the many available platforms – such as SiaCoin, Decent and FileCoin to name a few – it is the first to pursue this goal since 2014 and has done amazingly well in the process. The platform offers a friendly interface designed to be used by anyone, not just the tech savvy. In June, Storj successfully raised $30 million during their crowdfund. This also saw the project shift from their original Counterparty blockchain to that of Ethereum.
I’ll be following up with the founders and conduct an interview to go deeper into the platform and learn more about how the crowdfund has influenced their progress moving forward. I also hope to see more decentralized applications in pursuit of making centralization obsolete while reducing costs, increasing privacy, and empowering the individual.