The Swamp Critters Vs. Decentralization

--We begin today’s episode with a scene from the latest season of HBO’s hit show Silicon Valley.    

If you haven’t seen it, Richard Hendricks, the protagonist, develops a revolutionary compression algorithm which becomes all the rage in Silicon Valley. (Compression, in simplest terms, allows for more information to be transmitted using less power. For example, a great compression app could allow for flawless video chat streaming on a poor connection.)

The scene:

“Let’s do an exercise,” Russ Hanneman, a crass venture capitalist says after Richard (unsuccessfully) pitches Russ on an advanced video chat app.

“You’ve got unlimited time and resources,” Russ says, “you can build anything you want with your compression algorithm… anything at all. What’s it going to be? 3, 2, 1, go!”

“Anything… uhhh?” Richard asks.

“Go!” Hanneman demands.

“OK… A… a… a new internet,” Richard says.

“What?” Hanneman says. “Why?”

“OK… I haven’t really thought this through… but… I own a telescope.”

“Of course you do.”

“And I brought it out one night to look at the full moon.”

“Of course you did.”

“And… I got to thinking, wow, we put a man on the moon using the computing power of a handheld calculator. And then I thought, OK, there’s literally millions of times of computing power in my phone and that’s just sitting in my pocket doing nothing. And then I thought, there’s what, billions of phones all around the world with the same computing power just sitting in people’s pockets? So then I thought what if we used all those phones to build a massive network?

“And here’s the kicker. We use my compression algorithm to make everything small and efficient to move things around. And if we could do it, we could build a completely decentralized version of our current Internet. With no firewalls. No tolls. No government regulation. No spying. Information would be totally free in every sense of the word.”

“You want to build a new Internet?”

“Yeah.”

Decentralization is mainstreaming…

The entire new season of Silicon Valley is gearing up, it seems, to focus entirely on decentralized networks. It’s just the latest and greatest sign decentralization is slipping into the mainstream. It’s becoming cool, hip, trendy… cute. And it just makes sense.

Let’s end the fruitless debates.

Why not create a network for and by the people? Why not just end the debates on Net Neutrality, censorship and spying in one fell swoop?

Why not, indeed.

The swamp needs centralization

Centralized control has led to massive pockets of stagnation, which has, of course, created the swamp. Swamp critters can only rise to power within centralized command-and-control hierarchies. Without this architecture in place, such arbitrary attempts at power is absorbed by the crowd.

Despite this stagnation, though, innovation continues on, plowing through artificial barriers.

In an age of astounding complexity, decentralization on a massive scale is becoming the only logical outcome. Absent some remarkable rise in AI tech to bring forth the Zeitgeist utopic resource-based economy (not holding my breath) in the next decade, centralized systems — systems with only a few attack vectors — will prove too vulnerable.

Decentralization will and must eat them alive. When something no longer works, the cost of maintaining it outstrips the output.

India’s a good example…

Let’s take, for example, India’s centralized national ID scheme, called Aadhaar. Introduced in 2009, India was just hit with some unsurprising news about their new ID system. India officials recently discovered a leak of fraud-friendly personal information of 130 million people.

No small deal.

Moreover, India’s demonetization scheme is giving mainstream pundits an unmistakable lesson in the failures of centralized currency. In hindsight, it proved a.) just how unprepared certain developing countries are for the cashless centralized-currency utopia and b.) alternatives out of fiat, whatever they may be, are not just a “good idea” — but necessary for the unwashed masses to protect themselves.

Fiat currencies, controlled by sadistic and/or hopelessly out-of-touch politicians, are ticking time-bombs. And both the smart and the small money are catching onto the ruse.

The rise and rise of the cryptocurrency…

Another sign of the times: In the past, there’s been a psychological barrier batting down bitcoin. The digital coin would hit an all-time high near gold, stop, then crash.

Upon writing, though, bitcoin has blasted through that mental barrier, sitting at a hefty $1567 — leaving gold, at $1256, in the dust. (Whether it will maintain this dominance remains to be seen. But a big deal nonetheless.)

And it should be no surprise to anyone why.

If you have any doubts, I’ll leave you with a good example why bitcoin’s rise in popularity continues on, posted by a friend on social media.

We are currently in the process of moving some millions of dollars across the world, using the banking system. It is a week-long process, involving:

– Three different law-firms in 3 different jurisdictions

– 2 Swiss government institutions

– 3 banks

– One foreign embassy

– One foreign government institution.

…not to add, a huge amount of hours of work and document exchange, and the incredible high costs we’ll have to pay. Probably $50,000 before we are done, our own work not included.

It is becoming virtually impossible to move funds through the banking system, and particularly in USD.

If we have moved same amount of millions in value, using for example Bitcoin, it would have taken 2 minutes of work, 30 minutes before finalized — and incurred fees of around a dollar.

If you wonder why crypto-currencies and assets are setting one all-time high after the other, this is one of the reasons.

The swampiest of the swamp creatures — those central bank wizards at the Federal Reserve — are most threatened most by the rise of decentralized networks.

As Charles Hugh Smith puts it on his blog OfTwoMinds:

“The Federal Reserve is the ultimate centralized horse-manure-collection industry. Like the Catholic Church trying to control Gutenberg’s printing press, the Fed is terrified of transparency, liberty, competition and the technological forces of networked decentralization.

“Though those in power cannot dare contemplate it, their highly centralized institution and the chokehold of its authority are already doomed.”

Indeed.

Until tomorrow,

Chris Campbell
Managing editor, Laissez Faire Today

P.S. Have something to say? Say it! Chris@lfb.org.

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