At the TechCrunch: Sessions Blockchain 2018 hosted in Zug, Switzerland, Ethereum Creator Vitalik Buterin explained the decentralized nature of the Ethereum blockchain and the merit of eliminating single points of failure.
Decentralization in Ethereum
Unlike Bitcoin, the creators of Ethereum are outspoken, accessible and well known to the cryptocurrency and finance community; figures like Vitalik Buterin, Joseph Lubin, and Charles Hoskinson have become influential developers and entrepreneurs in the blockchain industry.
A common misconception about Ethereum is that the public disclosure of the identities of the creators of the blockchain network opens the Ethereum network vulnerable to single points of failure, and if these individuals are forced with violence to write code and alter the blockchain, the Ethereum network could fall in danger.
In short, this theory is simply nonsensical and illogical. As former Goldman Sachs CEO Lloyd Blankfein said, major digital assets such as bitcoin and ether, the native cryptocurrency of Ethereum, are consensus currencies. They are operated without the presence of central parties and sustained without the involvement of intermediaries, through a decentralized network of developers and users that have the ability to reach consensus with a variety of methods.
Currently, Ethereum is a proof-of-work (PoW) network, meaning that miners and nodes have the power to adopt or reject the code of the developers in the Ethereum ecosystem.
If Vitalik Buterin and his team of developers create a hard fork to alter or improve an element of the Ethereum blockchain network, the entire community of miners, users, and node operators will have to be on board, and if consensus is not reached, the software upgrade is rejected and the hard fork either is dismissed or could lead to two chains, as seen in the case of Ethereum and Ethereum Classic.
“The thing with developers is that we are fairly fungible people. One developer goes down and someone else can keep on developing. If someone puts a gun to my head and tells me to write a hard fork patch, I’ll definitely write the hard fork patch. I’ll write the GitHub issue, I’ll write up the code, I’ll publish it, and I’ll do everything they say. If I do this and publish a hard fork patch to delete a bunch of accounts, how many people will be willing to download the update, install it and switch to that update? This is called decentralization.”
Cost of Decentralization
The striking merit of decentralization is the non-existence of central authorities and the inability of a centralized group of people to manipulate a network or a protocol. But, decentralization is expensive and inefficient, and in most cases, using a public blockchain to process information in a peer-to-peer manner is highly unproductive.
But, in some cases, the expensive cost of running a decentralized network to process information can be justified in areas like payments, insurance, real estate, transfer of assets, and trading.
Ether, for instance, is a consensus currency based on the Ethereum network that is immutable, transparent, and open-source. If Ether had been placed on a centralized database, its value as a consensus currency would vanish.
As Buterin emphasized, it is important for individuals, businesses, and developers to be aware of the inefficient nature of blockchain technology as a data processing network, and focus on deploying decentralized applications that really require decentralization to perform optimally.
To watch the full fireside chat with Vitalik Buterin, watch the video below:
Cover Photo by Fabrice Villard on Unsplash