Slashdot Mirror
The Promise of Blockchain Is a World Without Middlemen (hbr.org)
dryriver writes: The Harvard Business Review has an interesting article about how Blockchain technology may bring down the cost of business transactions and enable new ways of doing things: "Consider the problem that small manufacturers have dealing with giants like Wal-Mart. To keep transaction costs and the costs of carrying each product line down, large companies generally only buy from companies that can service a substantial percentage of their customers. But if the cost of carrying a new product was tiny, a much larger number of small manufacturers might be included in the value network. Amazon carries this approach a long way, with enormous numbers of small vendors selling through the same platform, but the idea carried to its limit is eBay and Craigslist, which bring business right down to the individual level. While it's hard to imagine a Wal-Mart with the diversity of products offered by Amazon or even eBay, that is the kind of future we are moving into." "Decentralization" is the idea that a database works like a network "that's shared with everybody in the world, where anyone and anything can connect to it," writes Vinay Gupta for Harvard Business Review. "Decentralization offers the promise of nearly friction-free cooperation between members of complex networks that can add value to each other by enabling collaboration without central authorities and middle men." The proposition ultimately makes things "more efficient in unexpected ways." For example, "a 1% transaction fee may not seem like much, but down a 15-step supply chain, it adds up. [...] The decentralization that blockchain provides would change that, which could have huge possible impacts for economies in the developing world," writes Gupta.
"Decentralization" is the idea that a database works like a network "that's shared with everybody in the world, where anyone and anything can connect to it," writes Vinay Gupta for Harvard Business Review. "Decentralization offers the promise of nearly friction-free cooperation between members of complex networks that can add value to each other by enabling collaboration without central authorities and middle men."
And this wonderful decentralization, where anyone and anything can connect to "the database," is why Bitcoin transactions take hours to confirm, the network is only capable of supporting a handful of transactions per second, etc. Don't even get me started on the laughs involved if "everybody in the world, anyone and anything" is keeping local copies of "the database," or enough of it to verify transactional integrity to a level necessary for shit like inventory management at Wal-Mart scale.
Let's look at the numerous examples of decentralized systems that are already out there, like git, BitTorrent, and even Bitcoin.
What do we notice about them? Despite all of the hype about how decentralization is important, a large degree of centralization ends up happening again just to make those systems practical. With git it's GitHub. With BitTorrent it's the major tracker sites. With Bitcoin it's the major exchanges.
Of course, doing this ends up eliminating the benefits of decentralization. Like when GitHub goes down, and now all of these git users are shit out of luck (they'll always point out they could push to or pull from each others repos, yet this is a real pain in the ass in practice and they never actually do it). Or like when a tracker is taken offline and finding content to download becomes difficult. Or like when a Bitcoin exchange gets hacked and all of the bitcoins get stolen.
Anyone who isn't trapped in an ivory tower can see that decentralization is a fantasy at best. In the real world, decentralized systems end up centralizing again in order to become useful.
Weren't they good once?
Confucius say, "Find worm in apple - bad. Find half a worm - worse."