Centralization vs. Decentralization

“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, author, and political advisor. He is currently the founder & chairman of Labdoor (YC W15), the independent worldwide alternative to the FDA, and Air to All, a 501(c)3 nonprofit medical device startup. He previously co-founded Avomeen, a product development and testing lab acquired for $30M+ in 2016. Neil 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.