One of the selling points of cryptocurrency is “decentralization”. This is, the idea that cryptocurrencies and public blockchains do not need a central authority to work, authenticate and record transactions. In theory, this feature makes them “censorship-resistant” (An attacker cannot implement measures to block/limit its use) and makes it difficult for an attacker to take over a blockchain and forge transactions.
In practice, this is not that simple. Several layers make for a fully decentralized system:
Network Infrastructure
Consensus Algorithms
Control of Virtual Assets
Interactions with Real-World Economies
Narrator: “In this episode, we will focus on Network Infrastructure”
In many countries, Internet access is so prevalent and readily available that many people forget that the infrastructure to make it work is very centralized. For any country (or state) small Internet Service Providers (ISPs) connect you to the Internet through big ISPs that are connected to the Internet Backbone. The Internet backbone is this worldwide fiber-optic cable network that connects every regional network and collectively we call this network of networks The Internet. In any given place is hard to find more than ten big ISPs providing backbone Internet to any region. Depending on the region all of these ISPs are under heavy telecom regulations and some of them (Required by the government where they operate) implement all kinds of measures to limit, monitor, or trace the data that flows within their networks.
Is a common misconception to think of the Internet as a Mesh or a highly interconnected network when is structured more like a “star” where end subscribers connect to the backbone through their ISPs. This is the natural evolution of a network like this as is the most cost-effective way to provide Internet access that scales to millions of users worldwide. Who controls the hubs/nodes, can (and often will) control the traffic.
Cryptocurrency and public blockchain proponents omit in their sales pitch that the most decentralized application is just decentralized at the logical level. Data, protocols, and applications must travel through a network of highly centralized ISPs that must comply with local regulations and/or can block/limit the use of final user applications.
This is the point where the Crypto-bro raises his hand and yells “But there are VPN services, and TOR-like protocols, and ways to hide your traffic! You are lier!! You don’t want people to experience freeeedom!!!”. Yes, but this adds an additional complexity layer or costs for end the user, and technologies like Deep Packet Inspection can map the type of traffic flowing in the network even if they are not able to access the actual contents. This is particularly important in countries where the use of VPNs or means to hide your traffic is punished by law. Yeah, the government probably wouldn't see your Bitcoin transaction but you probably end up in jail for unauthorized use of VPNs.
This also imposes a fundamental problem with the use of cryptocurrencies and blockchain in disaster or conflict-prone areas where Internet access is limited, unavailable, or might cause their users to become targets as Musk realized with his idea of deploying Starlink in Ukraine.
Even if technologies like Starlink are deployed to provide worldwide Internet access in the most remote places it will mean just one company will have a monopoly over the connections or, in other words: More centralization of the network infrastructure! (This without taking into consideration that Starlink needs base-stations deployed near their clients interacting with the local ISPs so they can deliver their promised Internet speeds )
Cryptocurrency proponents often try to hide, mix or change the distinctions between the logical and physical topology of the underlying Internet access and their applications because achieving true decentralization requires a decentralized network too. But that is just impossible by the way that the Internet works today and probably that’s not going to change in the future.
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Mario, me interesan mucho estos artículos y tu punto de vista. Te envié DM por twitter.
Saludos y gracias,
Leopoldo