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Decentralization

Sep 7, 2021

bitcoin

59

image Just because you're in tech, doesn't mean you automatically understand it

Every once in a while I came across this kind of confused comments/tweets like this, a comment that directly/indirectly challenged Bitcoin's decentralization, but it rather came from having a very little understanding of what decentralization is in Bitcoin.

But really, usually I don't bother with this kind of thing, but lately it becomes an itch that I could no longer hold. It's a call to write about it.

Here's the main thing you need to understand. Bitcoin is money, and decentralization in Bitcoin relates to how it govern every aspects of its role as monetary system. How it enforce rules within the network, how it validates transaction, among others, is the true part of Bitcoin's decentralization. It's all of the opposites of your government's regulated money where they're the one who create, change, controls and enforce the rules. The example tweet above is the same as saying Bitcoin is not decentralized because bitcoin.org website is hosted on [ put whatever the name of hosting provider here ], which is centralized business/entity.

The image on the tweet above is a diagram of Chivo, an official Bitcoin wallet of El Salvador, the first country to fully legalized Bitcoin as money. The wallet is definitely end-user's touch point. In the case of El Salvador, it need centralized entity to host it. Otherwise how does end user interact with it? Of course the ideal situation will be every single person run their own Bitcoin full node on their computer, which I hope they do later in the future, but right now it need centralized hosting to cater the mass. And rest assure it does not affected Bitcoin's decentralization, which is how Bitcoin govern its monetary system. In other words, if AWS decide to block the system, Bitcoin will not be affected. How about the people, suddenly their wallet stop working? Just use another wallet!

Note that I'm not really aware how Chivo wallet works, as meant of how its government enforce the usage if it. Whether the El Salvador government make it required for its people to exclusively use it or not. If that the case, then shame on them. That's not really in the spirit of Bitcoin. But if it's only for the distribution of $30 that the El Salvador's government promised to its people, and then after that it's up to the people whether they want to continue using it or not, that's the good way.

While we're talking on the wallet, let's make sure that when we says "Bitcoin Wallet", put aside our definition of physical wallet where we literally put money in it. It is not. Bitcoin wallet have no Bitcoin in it. It's just end user's touch point to interact with Bitcoin network (where your Bitcoin you own literally written there on Bitcoin blockchain).

I will not explain every single details about decentralization here. As a matter of the fact I'm too still learning about it. But even so, my understanding so far about Bitcoin decentralization is enough to tell that kind of commentary like the tweet above, is wrong. I'll take another example of the very same tech that I believe could explains decentralization in Bitcoin, way more easily: Torrent.

The main server of The Pirate Bay has been long gone, but its new mirrors appear every single day. Some of its proxy/mirror websites hosted on various centralized hosting providers. It easily taken down, but it doesn't matter because the actual file itself it's not there, it's in every computer in the world that joins torrent network. The website is merely a catalog of what is available in the torrent network.

The website is end user's touch point, it doesn't matter whether it hosted in centralized hosting provider or not. It doesn't affect how Torrent works. If one mirror website down, we simply switch to other available website. If all the websites down, we simple create our own if we want to. This is the true beauty of decentralization, and it's also the reason why people says it impossible to taken down. Just like Bitcoin.

I have to add one more thing here: The ups and downs of Bitcoin price IS NEVER relates to its decentralization.

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