alt text

Decentralization is the restructuring or reorganization of authority so that there is a system of co-responsibility (instead of a central point of responsibility or authority). In practical terms, decentralization boils down to sharing control of a process you care about. Decentralization can be very very powerful and even a little bit can go a long way.

Before talking about decentralization in blockchain terms, let’s consider an everyday non-technical example (a fender bender) to explore the influence of sharing control with others in a process, to illustrate one benefit of decentralization.

The Car Accident

In a fender bender scenario, the process “we care about” is the assignment of an appropriate amount of responsibility to the parties involved, such that each person’s Insurance pays a fair amount of the total repair costs and that the insurance rates of each individual are adjusted accordingly.

The basic scenario: two cars are involved in a crash on a remote country road. One of the drivers swerved to avoid a dog that ran into the street and the other driver, who was texting and driving, didn’t react quickly enough. In this scenario, there are only two parties responsible for reporting information that will be used to assign responsibility. The outcome of this process—assigning responsibility—would be massively improved by sharing the responsibility of assigning responsibility to more parties: that is, decentralizing the process. The nature and outcome of this type of event is dramatically influenced by both the number and types of parties involved as well as the degree to which the info they have to offer is captured for consideration. Let’s explore.

Imagine that the Car Accident scenario played out on a rural road with only the 2 parties present. This situation illustrates that in a direct relationship between 2 parties who have different or misaligned agendas, conflict and wrongdoing can easily manifest. The nature and ultimate outcome of the interaction will be driven by the person with the most power and by the information that is captured/made available to relevant 3rd parties. We can imagine that the information about the one driver being on the phone would likely be suppressed/hidden, the importance of the dog may also be lost or minimized, and the anger of one or both parties may derail the process of info sharing entirely - i.e. one party could flee.

Now, let’s consider the same scenario, but this time with one pedestrian witness. The inclusion of just one additional party changes the nature and outcome of the events dramatically. The witness can confirm the dog, confirm the driver was on his/her phone and provide each of parties with a perspective they individually lack. Imagine the power and influence of the witness, if they happened to be filming the dog (who ran into the road). In this scenario, the witness (particularly if they were filming) is empowered to play a significant role.

Let’s consider the same scenario again but this time, there are many witnesses and included among them is a police officer. Once again, the nature and outcome changes dramatically. What’s interesting to note in this case, is that as the number of witnesses grows and the more “qualified” they are (police), the better the outcome. Not to mention the reduction in conflict and time to resolution.

Finally, let’s consider how many witnesses and what types of witnesses are IDEAL for this scenario. Having 25 police officers on site wouldn’t be 25x’s better. It might actually hurt the situation because it would take longer to come to a resolution (but having more than 1 might mitigate any police misconduct). Having 1000’s of witnesses to the event, when a few witness accounts of the same event align, also doesn’t provide provide much additional value. After a certain point, the extra participants simply create more work, and begin to slow the whole process down.

The takeaway from the exploration above is that there is incredible power and value in decentralization (the inclusion of additional parties who can contribute to a process and outcome) of the execution of processes we care about. Additionally, there is an optimal degree of decentralization for different scenarios.

How do car accidents relate to blockchain?
Blockchains are distributed networks. They can include many participants. With many participants, we can decentralize power among them and give each participant an opportunity to witness the others AND/OR contribute something to the execution of a defined process. For example, the BitCoin blockchain works because it decentralized the authority to approve transactions between strangers across 1000’s of participating computers (called nodes), some of whom (the miners) witness, compare and verify each transfer of value.

Blockchains are an effective way to decentralize power/authority and create systems of co-responsibility that improve the outcomes of processes we care about.

Today, blockchain technology is being applied to all kinds of processes in all kinds of scenarios. And as we have explored,not every scenario requires massive decentralization. In fact, over-decentralization can lead to a huge waste of resources (electricity) with limited benefit. We should strive to align the degree of decentralization with the severity of the potential wrongdoing in the processes we care about.

The available public blockchains are huge, distributed, massively decentralized networks. They were designed from the beginning to provide maximum decentralization and as they have grown, they have slowed (analogous to our 25+ police and 1000’s of witnesses example above). Private blockchains allow us to create blockchains that are ideally distributed and appropriately decentralized for the processes we care about, including both the number and kinds of additional parties we need to build new more efficient and more trustable digital environments where we can connect to do business or socialize.

BTL and
Interbit is a private blockchain technology platform that takes the concept of creating fit-for-purpose blockchains to a new level. Interbit has a unique (patent-pending) capability to join blockchains together. This unique ability unlocks the opportunity to create blockchain-based applications where specific parts of the application run on their own, optimized blockchains. This is a new way to think about and apply blockchain technology. When developers are empowered to design many-chain architectures they begin to see how privacy can be achieved by separating chains, how scale can be achieved by running many chains in parallel and how to create chains that are appropriately distributed and decentralized. It is our hope that, developers around the world will use Interbit to build fit-for-purpose blockchains to solve the smallest of problems and join them together in a myriad of ways to create global ecosystems that solve the largest of problems.

Stay Tuned for a follow-up article on how Interbit allows for variable decentralization of parts of an application.

alt text

Author: Jay Milroy, Head of Product Management (and hackathon judge!), BTL Group @jaymilroy

Jay lives in Vancouver with his family. When not working on Interbit, Jay spends his time playing hockey, traveling, and skiing in Whistler.