Centralization is a power relation

A thread on r/ethereum has lead me to once again realize the disconnect between my perception of the Ethereum community and its reality. The first time this happened for me was in the wake of the “The DAO” debacle. I was unperturbed by the hack, having expected exactly that sort of thing to happen with regularity, and yet others seemed surprised and distressed. This was not a inevitability they were prepared for, it seemed.

“But the code had been audited! It had been open source for months!” Well, yeah. Talk to OpenSSL about that sort of assumption. “But there were people whose faces I recognize and trust somehow tangentially involved!” That doesn’t mean anything. You’re operating under the wrong paradigm if you think that matters one jot. “Social proof” is no proof, especially not of security or even fitness to purpose.

Again, I’d assumed all of this going into Ethereum. I expected the ecosystem that emerged to be forged and tempered in the blood and tears of investors who’d lost their wealth to bad decisions and imperfect software. I assumed this was obvious enough that everyone else coming in would see it the same way. Apparently not, as even the Ethereum Foundation is pushing for a hard fork to undo the poor decisions of many naive investors, coy though they may be trying to play. My perception had deviated from reality. Being who I am, rather than simply correct my perception and move on with my life, I’m writing this post in an attempt to correct this deviation via an exchange of ideas, starting with this ones in this blog post. One of us is bound to yield, of course, but I’m not throwing in the towel without even so much as a whimper.

There’s been some fast-and-loose wordplay which has led some people to conflate decentralization with democracy. Let me be clear: decentralization is not democracy. Democracy is merely centralization tempered by at least pretending to care about what the governed want. Once the governing apparatus makes its choice, it’s enforced on all subjects whether or not they wish it. Decentralization and centralization relate to the distribution of power held.

Repeated: centralization and decentralization of power is only meaningful when applied to real, actual power. Not imagined power. Not “power to the people,” “let’s take a vote on it and hope the powerful respect our wishes” faux power. Power held by oneself as a simple, mechanical fact. Ethereum does allow for democratic governance mechanisms, of course, and I won’t fault someone for thinking these are decentralized: after all, the governing apparatus is ostensibly controlled by the rules of the network rather than a group of humans, and that tends to be somewhat easier for crypto nerds like myself to stomach. But inasmuch as the decisions made by the group are enforced on the members, the power of the democratic smart contract is just as centralized as its meatspace counterpart.

Repeating that again: the degree to which a system may be considered centralized or decentralized is determined by the degree to which your personally held power remains within your control. “Power” is an abstract concept, so let’s make it concrete: when you, as a miner, choose to mine with a mining pool, you are investing your power into a center which someone else controls. The mining pool itself is a centralizing force. Your relationship with the pool is centralized for as long as you opt to keep your rig pointed at the pool. You have lent your power as a miner to that pool.

If the mining pool decides to do something with your power that you don’t agree with, you can get angry. You can complain. You can take your hash power elsewhere. But you can’t claim that the mining pool taking action without consulting you was centralizing. Their action was a symptom of the relationship you willfully entered into, and your decision to enter into it was what created a centralized power relation.

An aside: decentralization is great, but sometimes centralization does make sense. It tends to be tons more efficient than decentralization for decentralization’s sake. Sometimes it’s the right decision. The trick is in figuring out when it is and when it isn’t. Having a reputation system, perhaps like the Web of Trust, maybe even the Bitcoin OTC Web of Trust until such time as we Ethereans can get such a system of our own together, helps a bit with making decisions with regards to who to trust about what. Combining such a system with cryptographically signed statements and depending on those instead of rumor and implicit, perhaps-imagined social signals would help as well.

If you’re going to be in the crypto space, you’d best begin with developing a keen sense for power relations and a mind for choosing yours wisely. Otherwise the blood and tears this ecosystem gets tempered with may be your own.