Decentralization finally coming?

Decentralized systems are great. These things provide power for the general public. Every single person becomes capable to do things without extra permission from authorities.

First step: the internet

The internet is the first decentralized tech people noticed around. The Internet is not managed by any single authority. No company, no country, no person. The Internet is a connection between machines and you can join this global network.

No one can really control the internet, some tried but people found workarounds because ultimately it’s a decentralized system.

Now you could say “but countries like Russia or China are blocking all kinds of services, so it’s an authority in that region and is managing the internet”.

Well, yes, for now. And yet people are massively using VPN services to bypass all those blocks. There are many guides on how to do that and it is easy to use, cost nothing or couple bucks a month.

With cloud computing services as AWS, so many companies are using those that last time when Russia blocked some access to AWS many popular sites in Russia broke, so they had to release this block. Point is that too many parts of the internet are cross-connected, in many cases, you can’t really pinpoint what to block anymore without breaking things.

What’s wrong with the internet? Why someone can still block it?

Even most of us use wifi or mobile connection, the signal to/from the country is coming via cables and wifi or mobile connection is just a local spot.

Cables map

SpaceX with Starlink project is in great progress to launch a network of satellites to cover all globe with an affordable and quick internet connection.

China or other countries can try to block signals over the wires coming to the country and crossing the border, but you just can’t block signals coming from space. You can block the signal coming through the wire because you can cut the wire, connect it to a special device, modify/filter/block signal and send it modified to the end-user.

There will be some special device which you put on top of your building or car or generally anywhere where you have a clear view of the sky and that’s it. You are connected.

Facebook is trying to do similar things too with Internet.org just sometimes it seems like they do that in a weird way so people in some areas think that Facebook is the internet, which is obviously not true. They provide “free basics” which first of all are Facebook’s services. Other companies can join the program too but it will take time for 3rd parties to do that.

Also, keep in mind that at the moment, only half of the people are online. Currently, only 57% of the global population has internet — access to knowledge and easy communication.

People are blocking something somewhere or people just don’t have wires anywhere close. These issues will be resolved during the coming decade.

I think global space-based internet will do the trick and the internet will become finally decentralized for real.

Blockchain & crypto

So now we have single decentralized technology and it already does a huge influence on all sectors. Economics, politics and life quality in general.

While the internet gave voice and knowledge, blockchain tech is aiming to provide more decentralized things. Two main topics are shipping goods and making money transactions.

What is blockchain?

Ultimately blockchain is a chain of blocks (what a coincidence in the name). If you take one block out of it, you can not use the rest of it. You must have all the blocks to add a new one or read them. There is no way to modify the block which was already added or chain will break.

In other words, you have a full vision of how actions happened. What happened after what and no ways to modify history. You can not give some bribe and change things as needed for your secret personal needs. The chain will be broken and it will simply won’t work or if you add your action to the chain, it’s there and can not be ever removed.

Trust

The Internet gave the ability to communicate with trust. You send a message to a person with your device and you trust the system, that message will be sent to that person. No matter where the destination is. You have no clue that when you send a message, it is delivered by literally millions of computers working together. You just trust the global system of the internet and that’s it.

When you want to send the physical item you need to have service you can trust too. If you have ever sent anything between countries or tried to pay for services or just transferred money to another part of the world, you may notice that it’s risky. To buy locally is less risky because you have trust in authorities, 3rd parties (Visa, MasterCard, your local bank). They manage the risk for you and you pay them for the service every time you use their service.

To send the physical goods is risky too because it involves 3rd parties. To transfer the item there will be many companies included (may not be the case with DHL, UPS, FedEx but that’s why they cost a lot more) and when many companies are included, some may lose track of your item, forget something or just make a mistake. It’s somewhere in transition, maybe stolen and person intentionally “forgot” to put it to the next truck.

Same with money. If you want to transfer money from one location to another you need 3rd parties. Banks or some other service providers. Both sides need to agree to trust this 3rd party and pay a fee for their service. Everyone knows about services Visa and Mastercard (by the way, they do not issue cards, these are tech companies) but even those are not the only service you use, but you also use banks to use the card. Each time we pay with those cards bank gets % and underlying Visa, Mastercard or some other service will get it’s %. So eventually we always pay extra to have the ability to make the payment.

This dependency on 3rd parties limits people. You can not sell something for a really small amount. That’s why you can not pay with card in some shops, or you may find shops that limit, e.g. you can pay by card if total is more than some amount. It’s so, because they must share their profit with banks and MasterCard/Visa etc.

This dependency on 3rd parties limits people in Europe or N. America a bit but many parts of S. America, Asia and Africa are losing a lot.

World without cards

Just imagine you don’t have a card that supports Mastercard or Visa. You could buy only locally from your shop. You can not shop online.

But if the shop doesn’t have a card too, they can buy only locally or in cash. What if your currency is euros and you want to buy from China and your parcel will need to travel through 10 countries and all use different currencies? If a transaction needs to happen by cash, there will be a lot of currency changes, that will cost extra, it will be super hard to track where the money is and the refunds would be extremely hard. So eventually, you can’t buy anything “not local”. That’s an issue in many areas of Africa. People do not have tools to trade. Many people do not have payment cards or bank accounts or any financial service anywhere close.

Blockchain can resolve this issue because it’s cheap to build and it’s more secure. You eliminate the need for 3rd party services. You just need a device that can connect to the internet and trustworthy internet.

The “issue” is that this all thing is a decentralized system. You send money directly to another person. Everyone who is connected to blockchain knows the fact that money moved but the part of who moved money to who is unknown. Just like you don’t have to identify yourself to use the internet.

Same with physical goods. Everyone can connect to the chain and see where the parcel is. Each carrier needs to add a block of information about the parcel to move it to the next location. Each action is in the chain. If you need to take a box out of the ship and put it into the truck you need to have all previous blocks. If that is not there, you see exactly where the parcel was lost and who is responsible for that. Tracking is super efficient and always works.

If it’s so good, what’s the issue?

These things are powerful but now everyone is paying 3rd parties. How banks and all payment services would survive if you can pay directly? For every transaction, you make in a physical store with your card, MasterCard, Visa and on top of that some banking services providers will get some profit. How much money post services would lose for not billing extra for tracking? As a political system, if you can’t track who got the money for what, how can you manage taxes? Money laundry?

This tech could have a huge impact, just like the internet, to basically all areas of life. It will raise a lot of hard questions and things will need to be changed. Many people who have control now, will lose that control and they will try their best to not lose it. That will be intense times but the final output of all this should be a more open world with more options for all.

The modern world tried and failed, why Africa could succeed?

People tried to introduce cryptocurrency in the EU/N. America and it kind of failed. Facebook is trying to push new currency Libra forward and there is a lot of friction.

Meanwhile, Africa has a unique environment and different issues from the EU/N. America. The issue there is that they don’t have a strong economy and strong systems that manage money transactions, they need to create one. 3rd party local authorities are often not trustworthy.

To handle these issues, they will build something for sure, the question is what they gonna build. And while they see how people in the “modern” world are paying extra fees for whatever they do, I think it could happen that they will go a different route.

It could be that Africa will be the first place in the world where crypto would be used at the national level and cross-countries. Which leads to many many things. Unseen political systems, ways to manage transactions. It all leads to unseen possibilities. Akon is building a city in Senegal on ±810 hectare land that’s powered by Akoin cryptocurrency.

To use crypto, people will need some kind of device, probably phones, so they will need to get connected to the internet. Phones can be very cheap nowadays. For example Nokia 215 for ±30 EUR in Europe after all European taxes, I bet they could make that device way cheaper in Africa. On a single battery charge, it can last for 29 days (1200 EUR iPhone? 1 day 😅) and has the ability to connect to the internet. With a connection to the internet, all the possibilities of the internet will come as a nice side effect.

It will enable all blockchain things to happen too. Thing is that for regions that do not have electricity you can find ways to generate that minimum needed amount. Local people just don’t know-how. With the internet, they will find out and electricity will be there. Together with phones and the internet.

They will need decentralized internet to make it all happen and global satellite-based internet is coming and no one will stop that.

We could finally see new ways to run countries while these decentralized systems will decentralize money flow, which leads to decentralized power and seems like the time when we will actually see the true power of the decentralized systems is coming.

Add that will output something never seen before

It could be that the biggest benefit of poor regions in Africa is the fact that they don’t have much to lose. If you would like to dismiss such things as systems how transactions work in a modern country, would often mean war and no one wants that, so progress is super slow and maybe it will lead to better decisions eventually, but it will be slow.

The modern part of the world will need to find peaceful ways to make updates to those fundamental systems of society. Meanwhile, in many regions of Africa, war is already happening. People don’t have much so don’t have much to lose and may decide to try out something you can’t use anywhere else.

People from countries around the worst areas definitely know about militant groups. Also all stories about how China is building a lot of infrastructure for Africa and gets access to their natural resources. Often seems like this happens because local authorities are corrupted. People will get online, will talk and rise.

Can’t wait to see what will happen when people will get the internet, will be able to organize actions and will notice that they are losing so much because they don’t have financial services and when they will notice that parts of the world which do have such services are paying a fortune for those and then someone like Akon comes into picture with a full city based on cryptocurrency.

This could also be the conditions for the next huge market bubbles like it was with tulips, dotcom, bitcoin. With communication tools like the internet, it’s easier than ever to create powerful FOMO on a massive scale and that’s the main attribute of all bubbles so I bet they will happen and probably more often than ever before.

In any case, this should be a huge thing. With many good and bad parts.

I wonder how this all will play out.

CTO at LittleSaas.com, has master's degree in Physics. Built startups with ex-Googlers. Was world’s top 3% developer at Toptal & Upwork