Disclosure: I own some Ether (ETH), the cryptocurrency for the Ethereum blockchain. It’s a disclaimer cliché but the purpose of this newsletter is purely educational. My goal is to be a trusted resource to help you better understand blockchain and cryptocurrencies. Owning ETH and writing this newsletter are related only insofar as they both reflect my honest views.
Often when you're talking about blockchain, people throw around the word 'decentralization'.
Decentralization is a very nebulous term and while it's important, it's not always clear why.
Part of why it's confusing is when applied to blockchains, it means a few different things.
Digital signatures, the topic of my last post, is one example of decentralization.
The ability to send money from account to account doesn't lie within a single authority, but rather each individual account holds the secret password to spend that money. So instead of having all the money live in a single vault, if there are millions of accounts, there are millions of vaults spread around the world.
This is one aspect of decentralization.
Another is that there are thousands of copies of the Ethereum blockchain running across the world.
Part of what makes blockchain unique is that anyone can run their own copy. A copy run by JP Morgan is the same as the copy I run at home. That's part of what makes it so cool, it's accessible to almost anyone.
Having thousands of copies is great for a few reasons.
Part of the reason 'nobody controls the system' is the inability for thousands of diffuse participants across the world to coordinate against you.
It's also beneficial from an infrastructure point of view. If there are thousands of copies running across the world, that is a lot of redundancy in case some of them are taken offline.
As a result, AWS has had 448 minutes of downtime in a 2-year period while Ethereum has had no downtime over its 5-year existence.
When an enterprise is relying on their data being available, blockchains can beat even their most well-resourced competitors.