Centralization vs. Decentralization

Posted byNeil ThanedarPosted inEssays

“There are only two ways I know of to make money: bundling and unbundling.” – Jim Barksdale

There are only two ways to solve the World’s Biggest Problems: Centralization and Decentralization

Centralization vs Decentralization

Bitcoin decentralizes control but consolidates wealth.

  • If cryptocurrencies become just another way for rich people to hoard money and evade taxes, then it won’t really change the world.

Cryptocountries are the future of the Decentralized Left.

  • These nations will offer sovereignty for communities, not just individuals.

For all the hype about decentralization, the truth about crypto today is most major platforms are very centralized:

  • Ethereum = Centralized
    • I love ETH, but my bet here is highly dependent on founder Vitalik Buterin‘s continued leadership of both the community and protocol development.
      • Apple stock dropped 3% the day Steve Jobs announced his resignation.
      • ETH’s price would easily fall 30%+ if Vitalik left the project.
  • Coinbase = Centralized
    • As Fred Ehrsam, co-founder of Coinbase, said in an interview when he left the company in 2017: “The end point seems pretty clear: Coinbase as a responsible regulated institution in the United States will fall under the same, or a similar, tax reporting regime as the major banks and brokerage houses.”
  • Robinhood = Centralized
    • Robinhood can and will halt trading when it’s in their interests.
      • This also means that centralized authorities like FINRA can force Robinhood to pay fines and damages.
  • Binance = Centralized
  • Crypto.com = Centralized

The ideal future of web3 is distributed:

  • Centralized → Decentralized → Distributed

This idea is a work-in-progress. If you’d like to riff on it, hit me up @neilthanedar on Twitter.

Published by Neil Thanedar

Neil Thanedar is an entrepreneur, investor, scientist, altruist, and author. He is the founder & GP of Utopic, a pre-seed biotech VC fund investing in the future of science. He is also the founder & chairman of Air to All, a 501(c)3 nonprofit medical device startup, and Labdoor, a consumer watchdog with $7M+ in funding and 20M+ users. He previously co-founded Avomeen Analytical Services, a product development and testing lab acquired for $30M+ in 2016. He has also served as Executive Director of The Detroit Partnership and Senior Advisor to his father Shri Thanedar in his campaigns for Governor, State Representative, and US Congress in Michigan.