In the digital currency industry, the term ‘decentralization‘ has taken on almost religious overtones. Its fiercest adherents are dead-set on limiting Bitcoin’s potential and capabilities so as not to give a single inch of ground to the dreaded ‘centralization,’ and no project in the space can survive or thrive without giving decentralization at least a mention.
Yet, a recent story from DLNews and an announcement by Google Cloud about its partnership with ‘Lightning as a Service’ firm Voltage lay bare the lies at the heart of the decentralization myth.
How Ethereum and Lightning rely on AWS and big cloud companies
When it comes to Ethereum, a staggering 2,439 of Ethereum’s 6,810 nodes are hosted on AWS, with 1,395 of them in a single data center in Virginia. While the overall number of Ethereum nodes hosted on cloud computers has decreased by 10% since 2020, consolidating the remaining ones into a single provider—AWS—is concerning. Large Ethereum infrastructure companies like Consensys also continue to rely heavily on Amazon Web Services (NASDAQ: AMZN).
In such a situation, an outage or refusal of service could have catastrophic consequences for the Ethereum blockchain and staked ETH, yet, most Ethereum enthusiasts are oblivious to these risks. What could cause a firm like AWS or other cloud computing firms to refuse service to Ethereum nodes or applications? Something like a legal order from the U.S. government would probably do it. Those who dismiss such possibilities should ask Kim Dotcom of Mega Upload how Uncle Sam can take down a global network of criminal activity if he puts his mind to it.
As for the Lightning Network, which is often touted as BTC’s scaling solution, it’s not much better. Recently, Voltage, a Lightning as a Service (LaaS) company, announced it was partnering with Google Cloud (NASDAQ: GOOGL) to expand its hosting capabilities and attempt to scale to enterprise levels. This partnership will allow customers to spin up Lightning and BTC nodes globally but will further make a mockery of BTC ‘nodes’ and the network’s quest to become truly outside the control of authorities like governments and their legal systems.
Opinion: Let’s stop worshiping the false idol of decentralization
The misunderstanding of what decentralization means is one of the most pervasive and harmful blockchain myths. Nothing has held the industry back more than attempting to solve the false trilemma, making networks scale while keeping them in line with some ‘crypto anarchist’ cyberpunk notion of what decentralization means.
The original Bitcoin, as Satoshi Nakamoto designed it, could scale unboundedly, and he said in his very first public post it was “completely decentralized” the way he released it. That’s only possible if Satoshi meant something completely different by decentralization than is commonly understood today, something like being able to send micropayments (electronic cash) to anyone purely peer to peer, anywhere in the world instantly, without ever going through a trusted (central) third party just like physical in person cash transactions.
It is a cruel irony that Ethereum, BTC, and other blockchains had come to rely on AWS and other large cloud computing firms when the original Bitcoin was designed to challenge them, creating a truly distributed, robust network that could send payments and host/serve data, preventing the sort of outages and takedowns that Ethereum, BTC, and others must now live in fear of because of their reliance on these centralized services.
As for the notion of decentralization in the way BTC and Ethereum maximalists use it, what is the point if, to scale and make the blockchains work, you are ultimately reliant on large corporations subject to the very laws you seek to avoid by creating such a network?
The fact that such a large number of Ethereum nodes, and now the Lightning Network itself, are dependent on the services of publicly traded corporations, which are subject to the laws of governments in the jurisdictions they operate in, should cause thinkers to pause and realize that decentralization has become little more than a hypnotic mantra, an unattainable end in itself, and one that will never deliver on the promises its loudest proponents claim for it because it can’t.
Of course, Satoshi Nakamoto told us all of these years ago, and he has explained in detail how Bitcoin can act as a global distributed network to provide an alternative to these large cloud computing companies and why the law is ultimately unavoidable.
Let’s put the false notion of decentralization to bed, embrace the BSV blockchain, and work on giving Google Cloud, AWS, and other data monopolies a real challenge!
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