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Decentralization: Key to Bitcoin’s Success

Decentralization: Key to Bitcoin’s Success

Bitcoin is now becoming a household name as, once again, the price of each coin is nearing 200 USD and more companies are selecting to accept payment in this convenient, yet new payment option. With the recent closure of Silk Road and the US government’s temporary shutdown, Bitcoin has proven to be a force to be reckoned with.

What makes Bitcoin unique? It is a digital, decentralized, cryptocurrency and a gateway to send money anywhere around the world with just the click of a mouse or the scan of a QR code to anyone with internet access. Proponents of Bitcoin pride themselves in supporting the lead cryptocurrency, which is based on peer to peer transactions. Yet, one must never take the decentralized nature of Bitcoin for granted.

Unfortunately, any system can trend back towards centralization if not carefully monitored and safeguarded. As humans, we can, unfortunately, move towards centralized structures for an, often times, false sense of “security” and “certainty.” Centralization tends to create more problems than naught when the power to make decisions falls into the hands of a select few. History provides evidence of the tremendous failure of central planning with the collapse of the Soviet Union, massive starvation and lack of development in North Korea, and right now a bloated US Government with a growing bureaucracy with an accompanied skyrocketing debt. On a US-centric note, how can a Washington bureaucrat really know and meet the needs of a school teacher in California or a farmer in Iowa? In the end of the day, each individual knows what is best for his/her needs and with systems and societies based on greater individual responsibility, in turn systems will be stronger and more diverse and meet more needs than blanket solutions and inefficient “one-size fits all” policies. So, while there is comfort in having to be responsible for less in the short-run, there are too many unintended long term consequences.

Bitcoin is not just a currency, but a movement towards decentralization in society, government, financial systems, and thought. Bitcoin has served as a catalyst to provide power to individuals seeking to separate themselves from constricting governing bodies and failing central banks. To date, Bitcoin has been characterized as an open source project prompting discussion of the role of money in society, the danger of current banking structures, and the creative decentralized solutions to centralized problems in society today.

A model of organized decentralization is key to the success of Bitcoin around the world.  Decentralization does not equate to chaos, but many individuals at work to promote a project with the common goal of strengthening a project and not placing trust in one entity. The best example of organized decentralization would be grass roots activism and organization within the Bitcoin community instead of central actors making all major decisions and protocol adjustments.  Each member of the Bitcoin community serves a unique role and has a distinct voice and part to play in keeping the Bitcoin currency on a pathway to success, growth in value and utility, and a global reach. Most members of the Bitcoin community already recognize that the larger the user base, the less volatile the currency, and the greater legitimacy lent to the currency.

Open source software is also vital to the preservation and strengthening of Bitcoin. With decentralization in the development community, there is greater room and leverage for an increased number of individuals to enter the community and contribute. The question, then, may arise as to how the Bitcoin Qt client can remain decentralized. An option which has prompted growth in Bitcoin development is when businesses have given back to the Bitcoin community through hiring individuals to solely work on the Qt client. There is value in the marketplace of ideas as trial and error and diversity of thought inspires the development of the strongest wallets, payment processors, and software. There is too much risk in entrusting all development and protocol to a few. The Bitcoin community must continue its commitment to the open-source ideals that make Bitcoin the resilient system it is today.

As Bitcoin continues to increase in value and central banks continue to disappoint, it is clear that decentralization leads to healthier societies and global financial success.  What will become of Bitcoin? To date, Bitcoin is the most successful cryptocurrency and is still in earlier stages of development.  What we do know: a model of organized decentralization is vital to the success of the Bitcoin currency and movement.

 

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