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The natural flow from centralisation to decentralisation

Anytime I talk to people about work, one of the first questions that pop up is “Where is your company based?”. Explaining the choice of decentralising and designing a fully remote company is usually met with two reactions: curiosity around how does it actually work, and confusion related to how can an entire organisation function without one or more central hubs.

This conversation is usually followed by an explanation of how our systems and processes have been designed to support a remote team and leadership. And if the other person has some extra time, I try to highlight the key behaviours that people need to change in order to succeed at running a fully remote team.

These conversations always make me think about the natural flow from centralisation to decentralisation that seems to occur across multiple areas in both natural and social sciences. But more specifically, how centralisation to decentralisation play a huge role in how our societies are structured.

Almost 30 years ago, the world was a super centralised place where brick and mortar corporations ruled the world from their tall office buildings, and markets were bound by geography, currency, talent etc.

The invention and rise of the world wide web opened the doors of the world to individuals across the planet, decentralising markets to a degree never seen before. The creation of online marketplaces was a revolution for both vendors and consumers. Instant access to a high volume of consumers and products and services revolutionised the way in which we do business. This incredible level of reach enabled individuals to catapult businesses to unprecedented heights.

The decentralisation didn’t last long. Ten years later, many ‘.com’ monopolies were established, centralising markets once again. However, in a different way this time. Firms like Google and Amazon became gateways to the online world. In an average day, more than 60% of all Web-enabled devices exchange traffic with Google’s technology services. It means that around 25% of all US internet traffic is managed by Google alone.

This central position gives Google, Amazon and other tech giants access to millions of users’ personal information. And ultimately, the ability to harness the power of data and turn it into a weapon of persuasion. So, the same internet that enabled a new wave of global interactions became a surveillance engine for corporations

In 2007, the emergence of smartphones and mobile applications created another revolution. One that altered forever the way people interact with technology and consume, shaking again the centralised status-quo established in the ‘.com’ era.

Mobile app platforms gave developers (and many non-developers) worldwide the tools to develop and market applications that can reach millions of people on their personal smartphones. It created a new economy and gave birth to a whole new breed of startup companies. However, the app economy is supported by key distribution networks that are owned and governed by large corporates.

Platforms have different levels of regulations and controls in place, some of them are less regulated, like GooglePlay, and others are highly controlled such as the AppleStore. Although the power of production has been further decentralised, the control is still very much at the hands of companies such as Google and Apple.

One of the most revolutionary ways in which the app economy has affected the centralisation to decentralisation flow was the acceleration of the ‘sharing economy’.

Marketplaces like Uber, Airbnb facilitate peer-to-peer interactions by acting as intermediaries between providers and consumers who don’t yet know each other. Overall, those marketplaces dress up their corporate practices in a peer-to-peer gown, while regulating and controlling the platform to their advantage. Uber, for example, doesn’t necessarily charge you/pays the driver according to the route; its algorithms are smart and can figure out what you are willing to pay and charge you accordingly, paying a much smaller amount to the driver.

Although, in history, the middlemen have always met a fatal destiny, as markets tend to gravitate towards efficiency and vertical integration. The middlemen always get replaced with more efficient alternatives.

In the example of Uber and Airbnb, we also saw the retaliation of governments when it comes to enabling a real peer-to-peer economy. Both companies were brought to court, banned or heavily regulated all around the world.

In 2008, while everyone was busy figuring out the app-economy, the blockchain was invented. A technology that I believe has the potential to truly liberate our society from the shackles of previously centralized systems for three main reasons:

  • As the blockchain is truly decentralised. It is not owned or controlled by any central entity, therefore it has no single point of failure or control. It gives us security and censorship resistance
  • Decentralised marketplaces use token economics to incentivising users, creating a “better than free” business model and designing a distribution framework that rewards those who contribute the most value in the network
  • Blockchain Marketplaces are truly global and are not bound by any specific local laws and banking regulations, creating a major competitive advantage over centralised marketplaces.

Looking at the last 30 years alone, we saw the structures flowing from centralisation, to internet-powered decentralisation, and then data-driven accelerated centralisation. At this stage, I believe we are on the cusp of experiencing major blockchain-enabled decentralisation. This phase has the power to be equally as transformative as the internet itself.

Deep down, I believe that this will be a change in the distribution of power and responsibility throughout the entire chain. Arriving at a place where organisations and governments are more transparent, while users enjoy the freedom to choose how they lead their personal lives.

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