The lack of trust required or the “trustlessness” of the blockchain is a common way to tell the story of Bitcoins architecture. People hear that there is “no trust required in Bitcoin” or that the “blockchain is redefining trust” and they freak out. And reasonably so, because trust is the basis of every business relationship. Trust itself is the currency of business. The concept of trust in this context is seriously misunderstood.
Decentralization is the property that allows you to use Bitcoin without having to trust a third party like banks or payment processors.
Removing the requirement of trust in favor of decentralization is the most dangerous feature of Bitcoin.
Heard this way, decentralization is “anti-social, stupid and immoral,” as Charlie Munger has said of Bitcoin.
Decentralized in a computer science term, meaning that the system can operate with the information from different points. Instead of framing the discussion in terms of trust, another way to frame decentralization is from the perspective of reliance or power.
Framed this way, decentralization is the removal of a central power. It’s the shift from relying on those in power to relying entirely on yourself. Centralization comes with censorship-risk, seize-ability, freeze-ability. These are all versions of a similar thing, the power to get in between you and your funds.
- A decentralized currency is protected against inflation and seize-ability.
- A decentralized payment platform is protected against censorship and payment freezes.
The value of Bitcoin is not in the decentralization itself, but in the emergent properties of decentralization.
- In Bitcoin, the property of unseizeability is enforced with direct ownership of your private key.
- The property of censorship-resistance is enforced with a decentralized distribution of hash power.
In modern democratic governments the people these properties protects might be whistleblowers or foreign dissidents. In more totalitarian governments the users it protects might be sex workers, porn stars, or average citizens.
Historically, governments, corporations, or other large, faceless organizations have used their power to get in between users and access to their funds. The ability for third parties to seize assets guarantees that it will occur. Bitcoin is a tool for circumventing moralizing centralized powers, protecting individual privacy, and resisting censorship at large.
Bitcoin’s decentralization removes centralized power structures, by shifting the associated responsibilities on to the individual. Part of that responsibility are localized costs. Mining burns resources, running a full node costs money, and key management can be the users biggest burden. Decentralization makes people self-reliant, not anti-social.