Centralization vs. Decentralization in a Nutshell
Unbeknownst to me as a young Occupier in 2011, a different economic revolution had already been growing legs. Years later when I would finally hear about Bitcoin and Ethereum, I was like, “Oh cool, money without the government? They suck, count me in!”. So, I threw a few hundred bucks at it and within months it nearly doubled, almost making me a thousandaire. But as quickly as my fortune came, it vanished, and I thought, “I can’t pay my rent with this shit!” I couldn’t see the revolution. Years later when I saw the same decentralization being applied to corporations that Bitcoin applied to money, I had that lightbulb moment. Instead of pointing our financial incentives toward the center, decentralization points them out toward the edges and if applied properly can align corporate, governmental and monetary incentives toward us.
Half-Activist
Shortly after graduating college, I moved to Los Angeles to pursue a career in filmmaking and quickly realized how difficult it was to get by in the big city. In a market already saturated with freelance video editors, I picked up a minimum wage job at a sandwich shop to get by. When my overpriced computer stopped working, I took it to the “geniuses” that worked at the local store. They acknowledged the problem but said there was nothing they could do to fix it. So I replied, “Ok. I have a warranty, so legally you have to replace it, right?”
The employee was required to ask me to leave because I mentioned the word “legal”.
I lugged my 50 pound computer all around town to store after store after store through traffic, traffic and more traffic. Struggling as a freelance worker with a busted computer, I carried the machine back into my apartment once more and thought, “Wait, what was that Occupy thing I heard about downtown? Something about major corporations ripping people off?” I barely cared about politics, let alone protests, but I recapped the relevant data points in my head: I bought a computer from a huge corporation, I bought a warranty from said corporation, I moved thousands of miles across the country to pursue a field I went to college for but was unable to get my work done because of a corporation. Meanwhile, I was working minimum wage at another corporation that kept my hours at 36 per week or less to ensure the corporation didn’t accidentally pay out overtime. As hard as I worked at the corporation, my income was just below the line where I could survive in Los Angeles without going into debt with another corporation. So, I decided to go and protest corporations.
I mean, after all I did fit the stereotype. I had long hair, smoked weed, and listened to classic rock from the peace and love generation of protestors. Hell, I had even worked on a weed farm. I was born to stick it to the man.
Eventually, the government shut the protest down and the momentum died. As I digested the protest in the following months, I began to experience the same pessimism I had with voting in general. One more vote doesn’t make a difference and neither does one more sign at a protest. I decided the term half-activist was better for me than activist.
Broke? Learn to Code
In the years following the protest, I pivoted from working in film and broadcast to writing software for the same industry. Over the years I began to see automation looming, got into UBI, and kept overhearing about this cryptocurrency thing. The first time I invested was on the way up during the 2017-18 bull run. The market crashed massively and most people wrote it off as another fad. I bought a little bit more after the crash, and then, mostly forgot about it for a couple years until I heard that its price was rallying again.
Now that I had a few more years of software experience under my belt, I was more curious about it this time. I understood the part about not wanting the government to control my money, but I still didn’t see how this solved the trust problem. But nonetheless, it was in the news again. I thought this fad had died. Why was it back in the spotlight? I started following crypto news, blogs and podcasts. I started learning about the infrastructure being built over the previous few years. I knew that cryptocurrencies were money without centralized control, then I learned about this thing called DeFi (Decentralized Finance) that was analogous to banking and financial markets without centralized control. I also heard about DAOs (Decentralized Autonomous Organizations) which are the analogy to corporations without centralized control.
I discovered academics were spending their time writing and reviewing papers about this software-defined rejection of centralized governance. From an engineering perspective, reducing potential points of failure is always preferred. Imagine a city of ten million people powered by one power plant. If a natural disaster wiped out the plant, ten million people would lose power. A decentralized grid, one with many plants, is more resilient. Enterprises backup mission critical files in a geographically redundant manner for the same reason. The decentralized nature of the internet itself enabled it to scale rapidly because anyone could “plug in” to it without permission; however, the applications built on top of it are mostly centralized. Bitcoin changed that. A decentralized application, it has had less than 15 hours of downtime since its inception in 2009 and none in the last 8.7 years at the time of this writing. I understood the engineering angle, but what about the philosophical angle?
My lightbulb moment
It might be more accurate to say crypto, or more broadly decentralization isn’t so much occupying wall street as it is replacing wall street. And replacing the banks, and the federal reserve, and corporate middle men. These new banks share their profit with you. These new financial instruments are transparent and enable anyone to grow wealth. It’s building new scalable organizations that give governance and ownership to their workers and even customers.
I was pessimistic about voting because no one I voted for ever did anything and I was pessimistic about protesting because nobody listened. Then I found my tribe, people who were doing something other than holding a sign. People who were voting, but not for the lesser of two evils, voting for how their banking system or currency will evolve. I found people building structures that organize labor and give them voting rights. Structures that even give consumers voting rights. People who were building solutions to societal and structural problems.
Did you know that your bank makes 15% per year by reinvesting the meager savings you hold with them? If there’s no centralized authority to take all of that money, where do you think it goes? The city of Miami has already earned $7 million from MiamiCoin, a coin built in the Bitcoin ecosystem. Mayor Francis Suarez, “estimates the effort could generate as much as $60 million for Miami over the next year and ultimately ‘revolutionize’ how the city funds programs that address poverty and other societal issues.”
As I mentioned at the beginning, decentralization takes all of the economic incentives and points them out toward the edges (where you are). Decentralization is at the very beginning stages, like the early internet, when very few people understood the technology and saw the long term vision. This essay is part one of a multi part series and is only written to set the stage. The next parts will discuss actual projects to show you the future that is already being built, we’ll explore what it looks like for gig economy workers, social media, streaming media, streaming money, loans and credit, how you pay your rent and more.
Decentralization has technology and education barriers to climb before reaching mainstream adoption. Before getting to those problems I want to show you how removing middlemen can improve your personal financial situation. I want you to look at the world the way I look at the world. Anywhere I see a middleman, I see a group of people who can be removed from power and a pile of money that can be distributed to the workers and customers of that organization — from banks to big tech.
Click here to read part two of How Crypto Occupies Wall Street.