You’re Not Decentralized: The 4 levels of true decentralization
You might not be as decentralized as you think
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One of the key design elements of designing a blockchain product is decentralization. There are several key components. I’ll cover them here with my notes so far on them. Note: these are very complex matters. Each of the items below has a bunch of work to be done.
Prefect decentralization
As I started thinking about decentralization I came to the unfortunate conclusion that (like many things with blockchain) it’s more complicated than it looks at first glance. Designing blockchain companies artfully combine economics, ecosystem design, and technology. This is especially hard because few people have deep tech, business, economic, and innovation backgrounds to put all the puzzle pieces together.
The pieces are: technical, governance, business, and state. I’ll cover my notes on each below.
Level 1: Technical decentralization
The first decentralization is technical. This is the one that comes up the most. Technical decentralization can come in several forms. One could simply be that there are several nodes that can do work. Also, there may be nodes that fully replicate each other’s data (P2P). The point is that there is not a single point of technical duplication, or at least the capability to keep the core system running without relying on a single source of truth. I would simply say that for technical decentralization the minimum definition of decentralization would be that both data storage and data processing (work) are not all on the same server. There are levels of technical decentralization where we can discuss how many nodes are there, are they duplicated, how many can do similar work, and how many are there. I won’t cover all my thoughts on this here. But, I’ll say that this is the most discussed is a foundation of blockchain technology and why it’s so interesting to entrepreneurs.
Let’s all this “Level 1” Decentralization. It’s the minimum we need to start with.
