January 4, 2018
At a time when disbelief in decentralized systems may end up being an offense in Silicon Valley and beyond, I’d like to give a benefit of a doubt to the concept and modern embodiments of centralized systems, and argue that centralization is not an inherently inefficient and a flawed model. In fact, centralization is a natural response of any industry to increasing complexity and globalization, and a natural push towards efficiency. To make a case for centralization, I’d like to go over three points:
Centralized systems are not inherently flawed. Comparing safe havens of private decentralized networks to modern embodiments of centralized systems is not a comparison of equals.
The history of institutional banking is the history of consolidation and centralization of resources in the name of efficiency and benefit to the end-user.
Intentionally or unintentionally, FinTech is repeating every step of the history of institutional banking.
It is at least unfair to compare centralized systems that have existed for centuries to a theoretical concept of a decentralized system, and even to POCs. The world is yet to see an international, or even national, organization fully running its data and operations on a much-hyped decentralized ledger technology; an organization serving the needs of the whole population of one country and thousands of businesses, and able to serve those needs abroad with the same success as domestically. The Federal Reserve System, the Financial Action Taskforce on Money Laundering, the ...