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Discussions about decentralization should start by defining the term decentralization in the specific context of the discussion, otherwise nobody knows what the

by lottin 5y ago

Discussions about decentralization should start by defining the term decentralization in the specific context of the discussion, otherwise nobody knows what they're talking about. For example, nobody in the economics profession would refer to the financial system as being 'centralised'. It is not. There's no central planner. Financial institutions are autonomous and make their own decisions with regards to what products to sell, and how to make them. If you want to argue that it's centralised, you will have to be much more specific. And the same applies to everything else, from the internet, money, software or whatever.

bitxbitxbitcoin 5y ago
Good point. Control of the inflation rate (total money supply) in fiat currency is centralized.
- deleted 5y ago
  [deleted]
- pessimizer 5y ago
  Isn't the same thing true for bitcoin? As far as I know, it was set with the first implementation, and can only be changed when a majority of miners agree to change it.
  - bitxbitxbitcoin 5y ago
    Valid point. It's much more complicated but suffice to say it can be changed by a majority of full node operators, of which miners are only a subset. The meta checks and balances preventing such an occurrence have been proven for Bitcoin. We haven't seen miners succeed in reversing the halvenings, for instance.
3np 5y ago
Thank you. It really grinds my gears when people/projects/companies make strong claims about “decentralization” without even specifying what they’re talking about. Many times it becomes nonsensical.
pphysch 5y ago
> For example, nobody in the economics profession would refer to the financial system as being 'centralised'. It is not. There's no central planner. There is and it is called the Board of Governors of the Federal Reserve System. By setting the EFF rate (or QE policy if EFFR ~= 0%) of the global reserve currency, they control many facets of the financial system and broader economy. It's not very fine grained control ("bake X loaves of bread"), but it is centralized control and planning.
Kranar 5y ago
The economy as a whole isn't centralized but the commercial banking system is centralized by each nation's respective "central bank" [1]. It would be kind of awkward to claim that economists are unaware that a central bank isn't a form of centralization, specifically of a nation's monetary system. That said, most people can pick up the meaning of centralization based on the context without every discussion having to spend a paragraph defining it. A discussion about a centralized Internet isn't too hard to understand, nor are discussions about finance, media, markets, governments, etc etc... The idea that people can't figure out what decentralization means in the context of a discussion about the Internet or finance unless someone spells it out in precise detail is kind of obtuse. [1] https://en.wikipedia.org/wiki/Central_bank https://en.wikipedia.org/wiki/Central_bank
- lottin 5y ago
  Economists are fully aware of central banks and the role they play in the monetary and the financial system. Still they won't use the term 'centralised' because it doesn't describe the current system well. In fact, it does a terrible job of describing it. For example, consider the fact that 90-95% of the currency in circulation is not issued by the central bank, but created by commercial banks via fractional reserve banking.
  - Kranar 5y ago
    Then it's not clear in what way you expect economists to hypothetically use that term, even in principle. Your argument becomes unfalsifiable. If using the term central to describe the "central bank" isn't a prime instance of economists using the term centralized, then it's not clear that anything could ever possibly satisfy your standard. I could go on to show you how "centralized finance" returns over half a million scholarly publications on Google Scholar, many of which predate Bitcoin, to discuss centralized payment systems, centralized monetary systems, centralized exchanges, centralization of finance in China but as I said before, this is such an obtuse discussion at this point it's not clear that anything I ever produce could ever change your mind. It's not like "centralized psychology" returns half a million results, or "centralized math" returns half a million results (centralized math mostly refers to centralization in the education system)... but "centralized finance" does. All I can say then is that empirically, if I talk about a centralized Internet (700,000 results), people are able to understand what it means... if I talk about a centralized monetary system or centralized banking system, people understand that too. These all appear to be commonly discussed and researched topics that people are aware of. Someone might need a precise definition of "centralized psychology" or "centralized chemistry" since those topics do not seem to produce much of any academic research, but centralized finance appears to be well understood. If you don't believe it, you can see for yourself by doing a search and going over the abstract of several academic papers that use the term without having to spend paragraphs precisely defining it.
vishnugupta 5y ago
> There's no central planner There may not be one central planner but there are definitely power centers that exert far more influence than rest of the participants combined. There’s fed which walks a tight rope of managing inflation while keeping low unemployment rate. And then there’s federal government, by far the biggest spender in the market. You also have Fannie Mae etc selling mortgages which is huuuge.
dvlsadvoxate6 5y ago

by lottin 5y ago

bitxbitxbitcoin 5y ago

Good point. Control of the inflation rate (total money supply) in fiat currency is centralized.

deleted 5y ago
[deleted]
pessimizer 5y ago
Isn't the same thing true for bitcoin? As far as I know, it was set with the first implementation, and can only be changed when a majority of miners agree to change it.
- bitxbitxbitcoin 5y ago
  Valid point. It's much more complicated but suffice to say it can be changed by a majority of full node operators, of which miners are only a subset. The meta checks and balances preventing such an occurrence have been proven for Bitcoin. We haven't seen miners succeed in reversing the halvenings, for instance.

3np 5y ago

Thank you. It really grinds my gears when people/projects/companies make strong claims about “decentralization” without even specifying what they’re talking about. Many times it becomes nonsensical.

pphysch 5y ago

> For example, nobody in the economics profession would refer to the financial system as being 'centralised'. It is not. There's no central planner. There is and it is called the Board of Governors of the Federal Reserve System. By setting the EFF rate (or QE policy if EFFR ~= 0%) of the global reserve currency, they control many facets of the financial system and broader economy. It's not very fine grained control ("bake X loaves of bread"), but it is centralized control and planning.

Kranar 5y ago

The economy as a whole isn't centralized but the commercial banking system is centralized by each nation's respective "central bank" [1]. It would be kind of awkward to claim that economists are unaware that a central bank isn't a form of centralization, specifically of a nation's monetary system. That said, most people can pick up the meaning of centralization based on the context without every discussion having to spend a paragraph defining it. A discussion about a centralized Internet isn't too hard to understand, nor are discussions about finance, media, markets, governments, etc etc... The idea that people can't figure out what decentralization means in the context of a discussion about the Internet or finance unless someone spells it out in precise detail is kind of obtuse. [1] https://en.wikipedia.org/wiki/Central_bank https://en.wikipedia.org/wiki/Central_bank

lottin 5y ago
Economists are fully aware of central banks and the role they play in the monetary and the financial system. Still they won't use the term 'centralised' because it doesn't describe the current system well. In fact, it does a terrible job of describing it. For example, consider the fact that 90-95% of the currency in circulation is not issued by the central bank, but created by commercial banks via fractional reserve banking.
- Kranar 5y ago
  Then it's not clear in what way you expect economists to hypothetically use that term, even in principle. Your argument becomes unfalsifiable. If using the term central to describe the "central bank" isn't a prime instance of economists using the term centralized, then it's not clear that anything could ever possibly satisfy your standard. I could go on to show you how "centralized finance" returns over half a million scholarly publications on Google Scholar, many of which predate Bitcoin, to discuss centralized payment systems, centralized monetary systems, centralized exchanges, centralization of finance in China but as I said before, this is such an obtuse discussion at this point it's not clear that anything I ever produce could ever change your mind. It's not like "centralized psychology" returns half a million results, or "centralized math" returns half a million results (centralized math mostly refers to centralization in the education system)... but "centralized finance" does. All I can say then is that empirically, if I talk about a centralized Internet (700,000 results), people are able to understand what it means... if I talk about a centralized monetary system or centralized banking system, people understand that too. These all appear to be commonly discussed and researched topics that people are aware of. Someone might need a precise definition of "centralized psychology" or "centralized chemistry" since those topics do not seem to produce much of any academic research, but centralized finance appears to be well understood. If you don't believe it, you can see for yourself by doing a search and going over the abstract of several academic papers that use the term without having to spend paragraphs precisely defining it.

vishnugupta 5y ago

> There's no central planner There may not be one central planner but there are definitely power centers that exert far more influence than rest of the participants combined. There’s fed which walks a tight rope of managing inflation while keeping low unemployment rate. And then there’s federal government, by far the biggest spender in the market. You also have Fannie Mae etc selling mortgages which is huuuge.

dvlsadvoxate6 5y ago