Vitalik Buterin - The Advantages of Decentralization

Vitalik Buterin - The Advantages of Decentralization - EventHorizon 2017

So what is decentralization, anyway? (6:08)

• Architectural decentralization - is it one physical system or many physical systems?
• Political decentralization - is it controlled by one person or entity or many?
• Logical decentralization - is the interface or data structure a singleton, or an amorphous swarm?

Why decentralize? (11:07)

• Fault tolerance - use redundancy to reduce risk of a system failing accidentally
• Attack resistance - cost of attack sublinear, so splitting a system into components makes attacks more costly
• Collusion resistance - making it more difficult for a sub-group of community to act in its own benefit at everyone else's expense
• Efficiency (sometimes) - decentralization may be more efficient due to diseconomies of scale or spare capacity considerations

What might we decentralize? (25:05)

• Production of energy
• Distribution (ie. making and maintaining ires)
• Source authentication (eg. is the power green? Is it financing any nasty dictators?)
• Market mechanisms (ie. allocation and incentivization)

Blockchains seem most well-suited for markets, though we can also think about source authentication.

How can decentralization help? (27:10)

• Fainess
  - Proving a market/auction algorithm is fair: 60 years of game theory
  - Proving that the fair algorithm was the one that was actually executed: what a blockchain can do
• Privacy preservation
  - No central point of data collection
  - Reduced incentive to create a point of data collection
  - Blockchians transparent by default but privacy can be added via crypto, eg. ZKPs
• Privacy isn't just about big brother paranoia, it's a critical requirement for fame-theoretic incentive compatibility of many classes of mechanisms!