If Bitcoin (BTC) was born in response to the systemic failures of the global financial crisis, the subsequent rise of various decentralized networks could be seen as a disagreement over the best way forward. Everyone agrees that the current financial system is broken, but they disagree slightly on how to fix it. In a sense, each of these networks represents a new, albeit partial, vision of what could lead to a better system.

For example, we’ve seen Celo use crypto tools and cell phones to put financial instruments in the hands of the unbanked world. We have seen that this compound reduces friction in financial markets and replaces it with speed, efficiency and openness. And we saw that MakerDAO was able to maintain a stable bond through incentives rather than financial support. In a way, each new venture represents a new and different view of what the financial system could be – or even what it should be.

Despite their differences, many of these networks share the spirit of decentralization as a fundamental principle. According to the theses effectively put forth by these networks, financing should not be mediated by an oligopoly on well-rooted interests and goalkeepers in the industry. Instead, the better system allows for wide participation and brings the ideals of open source and decentralization into a new, fairer and more equitable market structure.

As builders and participants of this new system, we have a real opportunity to create something better than before. However, as money and influence continues to flow into digital assets, the challenge is to avoid the centralization trends that have characterized traditional finance from its inception.

How do we avoid just recreating a new copy of the same old system? The answer is to partially learn from the past, join and support the projects and teams that truly shape today’s financial future.

Learn from the past to build the future
In traditional banking, centralization is the rule that allows old actors to exert an extraordinary influence. To correct this, decentralized networks have developed myriad models of community governance. Instead of allowing dozens of people in a conference room to determine the fate of a symbol, these networks put the fate of their icons in the hands of widespread user participation.

In theory, community governance involves aligning incentives towards creating, storing and transferring value now and in the future. In theory, it is directly democratic, as the voting share is often distributed proportionally to its share. In practice, however, it can be a bit more complicated.

Even in an intentionally decentralized network, the impact can still be focused on a few big players, whether they are investors or service providers.

Emerging icon projects often have particular interest in this trend towards centralization. You might be genuinely concerned that they will face the problem of building a decentralized network and governance structure only to be overly influenced by a few large owners. This problem is compounded when service providers come into the picture, especially one where customers can only choose one option – often together under one roof.

The truth is, we all have a role to play in aligning networks with their ethos. As a service and infrastructure provider, the liability is particularly high. In order to participate responsibly and avoid the trend towards centralization, we need to support decentralized networks as decentralized networks.

In line with the soul and the ecosystem
Neither the users nor the token projects want the networks to be decentralized, but de facto centralized. And honestly, as builders of a truly better and more prosperous financial future for everyone, we shouldn’t, either.

Infrastructure providers must ensure a large number of participatory measures in order to ensure decentralization. For large service providers, this means introducing a wide range of participation mechanisms for owners. This means that users can enable or even simplify sharing as they see fit, either through native sharing services, third-party share services, or on their own.

Source: CoinTelegraph

LEAVE A REPLY