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What are the tangible benefits of decentralisation?

This question was posed to me by my parents. Under that this question might incur a lot of wrath from this community.

When my parents lose their ATM cards, they can go to the bank to queue up to get their ATM card if they provide their identification card.

Unlike the above scenario, when one loses his/her private key, one loses access all his BTC.

Hence this question -- Other than removing intermediaries, what are the tangible/immediate benefits of decentralisation? Frictionless commerce, etc.

Nathan Aw

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Some of the tangible benefits of decentralization, blockchain technology and triple-ledger accounting include:

  • Higher trust between parties, with a lower need to trust other parties due to transparency and immediate reconciliation of transactions when a blockchain/triple ledger accounting system is used.
  • Resiliency, Robustness: by eliminating single points of failure (a single company, a single database, set of computers/network), the network itself can be much more resilient and able to deploy resources most efficiently/effectively.
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I'm argentinian and in 2001, banks converted all USD money in the argentinian accounts to argentinian pesos. A lot of people lost money, because the peso plummeted in value after that. With a central authority things like this can happen at any time.

Descentralization is good because you remove a central authority that can modify the economic policy in an arbitrary way, it can seize or reduce your funds for arbitrary reasons, etc.

If Bitcoin had a centralized authority that would mean the policies that were set in the beginning (e.g. the quantity of coins that will be created, the fact that is a deflationary currency) could change. The fact that Bitcoin is descentralized means that the policies can't change, actually if they change it would not be Bitcoin anymore, it would be a new currency.

So from the beginning you know the "rules" in Bitcoin and you know they are not going to change because an arbitrary authority decided to change it. You are protected against arbitrary change in economic policies.

Also, being descentralized, you can do whathever with your money and hipotetically nobody can take it from you. A central authority could take your funds because arbitrary reasons (e.g. a new tax, etc.).

Also, being descentralized means it's really hard for a government to "shut down" Bitcoin.

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I think that we take advantage of the situations that we are in.

There are some countries that will not greatly benefit from decentralisation because we trust our government. This is not the case in most circumstances, in lesser developing countries the government cannot be trusted and because of the power that we have given them, they can at any moment create money out of nowhere, take money from you and a plethora of other things.

The question for me, boils down to "who governs the government?" when we have a centralised structure, we normally need people in place to watch them. For example, there are people in charge to watch the bank and make sure that the banks don't run off with your money. In my opinion, I think the banking crisis showed that they were not doing a good job. Even if we did not have the banking crisis, who is governing those that are watching the bank? Who governs them then? There comes a point where they can't be governed. This is where we as human beings start to take advantage of the situation. This is why we need decentralisation. Who governs in decentralisation? From what I have seen, the majority, the way it should be.

TLDR: It is hard to think of the reasons, we need decentralisation until your government starts spying on you and taking your money/property because they can. It is a great benefit for those in developing countries, and by us using these technologies, we are steering the ship towards the global decentralisation.

  • Thanks! Is trust the only reason for decentralisation? – Nathan Aw Mar 23 '18 at 1:24
  • @NathanAw The umbrella reason, why you would want decentralisation is that, you do not want a central authority. Trust is one reason why you would not want a central authority, I do not want to be hasty and say it is the only reason. – Kyle Graham Mar 23 '18 at 1:59

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