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Legitimacy and Decentralized Systems; Technometria - Issue #6
Why are some decentralized systems accepted and widely used while others wither? What is the basis for a “hard fork”? It all comes down to legitimacy.
Legitimacy and Decentralized Systems
As an undergraduate engineering major, I recall being surprised by the so-called three body problem. In Newtonian mechanics, there are nice closed-form solutions to problems involving the motion of two interacting bodies, given their initial position and velocity. This isn’t true of systems with three or more points. How can adding just one more point to the system make it unsolvable?
N-body systems are chaotic for most initial conditions and their solution involves numerical methods–simulation–rather than nice, undergraduate-level math. In other words, it’s messy. Humans like simple solutions.
Like the n-body problem, decentralized systems are chaotic and messy. Humans aren’t good at reasoning about emergent behavior from the coordinated, yet autonomous, behavior of interacting agents. We build bureaucracies and enact laws to try to make chaotic systems legible. The internet was our first, large-scale technical system where decentralization and governance clashed. I remember people in the 90’s asking “Who’s in charge of the internet?”
In The Most Important Scarce Resource is Legitimacy (see link below), Vitalik Buterin, the creator of Ethereum, discusses why legitimacy is crucial for the success of any decentralized endeavor. He says:
[T]he Bitcoin and Ethereum ecosystems are capable of summoning up billions of dollars of capital, but have strange and hard-to-understand restrictions on where that capital can go.
These “strange and hard to understand restrictions” are rooted in legitimacy. Decentralized systems must considered legitimate in order to thrive. That legitimacy is tied to how well the systems and people enabling them, like programmers and miners, are seen to be following “the rules” both written and unwritten. Legitimacy isn’t a technical issue, but a social one.
Wikipedia defines legitimacy as
the right and acceptance of an authority, usually a governing law or a regime.
While this is most often applied to governments, I think we can rightly pose legitimacy questions for technical systems, especially those that have large impacts on people and society.
With respect to legitimacy, Philip Bobbit says:
The defining characteristic … of a constitutional order is its basis for legitimacy. The constitutional order of the industrial nation state, within which we currently live, promised: give us power and we will improve the material well-being of the nation.
In other words, legitimacy comes from the constitutional order: the structure of the governance and its explicit and implicit promises. People grant legitimacy to constitutional orders that meet their expectations by surrendering part of their sovereignty to them.
Talking about “legitimacy” and “constitutional orders” for decentralized systems like Bitcoin, Ethereum, or your favorite NFT might feel strange, but I believe these are critical tools for understanding why some thrive and others wither.
Major General Andrew Jackson and his Soldiers claim a victory in the Battle of New Orleans during the War of 1812.
In Bobbitt’s theory of constitutional orders, transitions from one constitutional order to a new one always requires war. While people seeking legitimacy for one decentralized system or another might not use tanks or missiles, a hard fork (as Vitalik describes happened when the Steem community moved to Hive, leaving it’s founder behind) is essentially just that–a war fought to cause the transition from one constitutional order to another because of a question of legitimacy.
So when you see someone talking about a decentralized system starting sentences with phrases like “Somebody should…” or “Why do we let them…” or “Who’s in charge of…”, beware. Unlike most of the easy to understand systems we’re familiar with, decentralized systems are heterarchical, not hierarchical. That means that the means of their control is political, not authoritarian. These systems are not allowed to exist. They simply are by virtue of their legitimacy in the eyes of people who use and support them.
This doesn’t mean decentralized systems are unassailable, but changing them is slower and less sure than most people would like. When you “know” the right way to do something, you want a boss who can dictate the change. Changing decentralized systems is a political process, and sometimes requires war. As Clausewitz said “War is the continuation of politics by other means.”
There are no closed-form solutions to the n-body problem that decentralized systems represent. They are messy and chaotic. I’m not sure people will ever get more comfortable with decentralization or understand it well enough to reason about it carefully. But one thing is for sure: decentralized systems don’t care. They simply are.
The Bitcoin and Ethereum blockchain ecosystems both spend far more on network security - the goal of proof of work mining - than they do on everything else combined. The Bitcoin blockchain has paid an average of about $38 million per day in block rewards to miners since the start of the year, plus about $5m/day in transaction fees. The Ethereum blockchain comes in second, at $19.5m/day in block rewards plus $18m/day in tx fees. Meanwhile, the Ethereum Foundation’s annual budget, paying for research, protocol development, grants and all sorts of other expenses, is a mere $30 million per year. Non-EF-sourced funding exists too, but it is at most only a few times larger. Bitcoin ecosystem expenditures on R&D are likely even lower. Bitcoin ecosystem R&D is largely funded by companies (with $250m total raised so far according to this page), and this report suggests about 57 employees; assuming fairly high salaries and many paid developers not being counted, that works out to about $20m per year.
The architecture of an identity system has a profound impact on the nature of the relationships it supports. This post categorizes the high-level architecture of identity systems, discusses the properties of each category to understand architectural influences, and explores what their respective architectures mean to their legitimacy as a basis for online life.
This post examines the claims to legitimacy that social login and algorithmic identity systems each make.
Using both Renaissance examples and cases drawn from our current era, Bobbitt situates Machiavelli’s work as a turning point in our understanding of the relation between war and law as these create and maintain the State.
Feeding the Fire
Reading about this study on Alzheimer’s at BYU reminded me of a book I read recently called The Vital Question. I was simply blown away by the amount of energy our cells need and the fantastic lengths cells go to feed themselves. The story of energy is much a part of the origins of life as DNA and equally fascinating.
The researchers found widespread glucose metabolism impairment in those nervous system support cells of the brains of former Alzheimer’s Disease patients, but limited ketolytic metabolism impairment. The finding is significant because the brain is like a hybrid engine, with the ability to get its fuel from glucose or ketones, but in the Alzheimer’s brains studied, there appears to be a fundamental genetic deficit in the brain’s ability to use glucose.
To explain the mystery of how life evolved on Earth, Nick Lane explores the deep link between energy and genes.
That’s all for this week. Thanks for reading.
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By Phil Windley
I build things; I write code; I void warranties
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