Entering the Promised Land of Decentralization

A transformational progress worthy of being the next generation internet

Building a new internet (Silicon Valley, Photo: HBO)

After breaking the theoretical limit of the Weissman score, Richard Hendricks (then CEO of PiedPiper) discovered that the same technology could be used for building a new internet. One that is truly open and owned by the users. A decentralized internet. Together with his company, Richard embarked on an evangelistic journey to convince more and more adopters. To the crews’ credits, they almost succeeded if not because of a flood of rats.

That story is a snippet from Silicon Valley, a satirical comedy series by HBO about tech start-ups. Throughout the seasons, most of their premises were puns of real-world events: the rise of AI, the ICO craze, and of course, the tech leaders theatrical hearing. However, the main course, the idea of “a new decentralized internet”, was barely a thing back then. Lately, I realized, the series may have predicted the future.

What is wrong with the internet?

Not much.

Internet is one of the most significant technological breakthrough, if not the most significant, in human history. The benefits outweigh the flaws. In that sense, the next generation should be less about fixing and more about stimulating. How can we extend the value of the internet? As the growth seems to slow down, a claim of a “new” internet should be a platform upon where we can spur innovation even further.

Blockchain seems to be an unconventional contender to take on that role.

I will not describe what is blockchain, since an abundance of resources is readily available at your fingertips. Those cryptic… I mean crypto terms, are not everyone’s cup of tea anyway. Rather, let’s take a glimpse of the flowery garden and see if its charm can lure you in.

Down the rabbit hole

It is impossible to begin with any innovation other than smart contracts, which are basically immutable code stored in blockchain. Sort of like a technology-backed blood pact. The beauty, however, lies within the automatic execution of the code under pre-defined conditions. We always know what will happen and what triggered the action, without any hesitation of bailing or deviating from the agreement. Essentially, trust is no longer needed.

The concept has a huge potential, but there is a major obstacle before we can fully harness smart contracts: how to verify a condition is fulfilled if it is an event outside the blockchain? This challenge is known as the oracle problem. Subsequently, solving this problem means we can exploit the vast amount of data available on the internet as inputs to smart contracts. One sector that has seen tremendous benefits from oracles is financing.

Learning about decentralized finance (DeFi) was the a-ha moment for me. It shows how much untapped potential a decentralized network has by comparing it to an actual type of entity.

What entity? Financial institutions.

Suddenly, we can trade without any middlemen through decentralized exchanges. And, of course, you can trade not only the actual assets but also the derivatives (basically “betting” wrapped on a fancy name). We can also lend our assets and earn interest through P2P lending platform. Everything happens exactly how the smart contracts adjudicate, all accessible by anyone to audit. Free of debt collectors.

One argument against DeFi is the volatility in the market. How secure is it to lend or borrow assets that may swing 20% of its value in both directions every day? That is a valid argument until you learn about stablecoins. Blockchain makes it possible to digitize our precious money and transact with the “tokens” through the decentralized network. Every coin is a representation of actual money as we know it.

The scale of all those innovations is limitless, happening beyond borders, and without any distinction of our race, religion, or any personal background. Sounds familiar? Well, that is the dream that the internet was supposed to achieve. Decentralization makes it possible. Blockchain makes decentralization possible.

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The curse of a symbol

Okay, let’s address the elephant in the room.

There is no way I can get away with writing a post about blockchain without mentioning two terms: crypto-currency and bitcoin. Indeed, I have been deliberately avoiding them due to the over glorification they possess.

Bitcoin is the digital gold. Owning bitcoin is a hedge against the authority’s freedom to print money. Bitcoin is a statement against the institutions. Everything will be sucked into bitcoin and cryptocurrencies.

Crypto is going to conquer the world.

It may. Or it may not. Bitcoin has taken too much attention as a store of value and speculative asset. Worse, it has become a symbol of revolution: you are either a zealot supporter or an evil opposition. This kind of narrative hinders people from even thinking of learning about bitcoin and cryptocurrency. It works against the cause.

At present, bitcoin’s proponents are euphoric within an echo chamber, isolating themselves within a cult. In contrast, the value of decentralization grows on the number of participants. We need to make bitcoin, cryptocurrency, and blockchain simpler to understand and easier to adopt, rather than widening the gap. Bitcoin does not need a marketing campaign. Like the internet, the technology is sufficient.

Final Remarks

During my last university time, I used to joke with my colleagues about how many blockchain guest lectures we would get. It seemed every guest lecture was about blockchain. I grew tired of learning what is a ledger and how mining works. It felt like observing the same wall, over and over again. Only recently I realized how unfortunate that those guest lecturers did not introduce me to the garden behind the wall. I would have paid more attention.

We do not need to be a rebel and go all-in against the establishment. Do yourself a favor, ignore all the fuss. Just follow the development, check out the latest innovation, and be open to new ideas. You may learn a thing or two about how the world currently works and what blockchain is offering. That is good enough.

I cannot care less if you own bitcoin or not, and whether you are a bull or a bear. I have just a simple message: learn what’s happening beyond bitcoin, then judge the potential by yourself.

Find me in your nearest Ramen stall.

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