Demystifying decentralized blockchain

Featured article by Zurab Ashvil, Founder and CEO, L3COS

Even now, after a decade of analysis, debate and innovation in blockchain, there is still a lot of misunderstanding about what decentralized blockchain actually is.

Many people still confuse the various characteristics of blockchain technology and come up with definitions for decentralized blockchain that are either misjudged or down right wrong. Is a decentralized blockchain the same as a distributed ledger? Can a permissioned blockchain be decentralized or is it only public blockchain that can claim this status?

The fact that these questions still abound is one reason why you find yourself breathing a sigh of relief when you come across good explanations of decentralized blockchain, like this one from L3COS. This newly launched system describes itself in the following way:

“The L3COS blockchain is decentralized in the architectural sense. In other words, L3COS is an operating system that runs on a distributed blockchain. Logically, it is also centralized or partially centralized.”

First of all, it’s worth noting that this sounds like a very interesting innovation because, as it goes onto say:

“What makes the L3COS blockchain different from other blockchains is that it is centralized in the political sense. It is designed for governments to regulate it, and enable the power of the technology for businesses and every individual.”

The reason this is noteworthy is because, for all the interest in blockchain there has been so far, the regulation of the technology by governments around the world has been vastly different and, one might even say, haphazard. If L3COS could enable government regulation of blockchain, this would be a major development.

Putting this argument to one side though, let’s refer back to the initial statement about “decentralization in an architectural sense” and dig into it a little further. This phrase is important because it relates to a definition of decentralization that was suggested by Vitalik Buterin, the founder of Ethereum. He said that decentralization has three dimensions, which are political decentralization, architectural decentralization and logical centralization.

Political decentralization relates to control by a central authority. An example would be Pound Sterling (GBP), which is regulated by the Bank of England. Bitcoin on the other hand has no centralized political control.

Architectural decentralization refers to the underlying blockchain infrastructure, namely a distributed network of computers, that ensures the system can keep running even if one of these computers is shut down. Bitcoin, Ethereum and other blockchains are all architecturally decentralized.

The final dimension of decentralization, which is logical centralization, relates to the fact that all computers in the network are bound together by a commonly agreed state of data. As a result, the computers in the network actually end up working as one common database or record of transactions.

Therefore, when we talk about decentralization, we need to be clear about exactly what we are talking about. After all, a politically decentralized blockchain will have very different outcomes to a politically centralized one. However, both could – and more than likely will – be architecturally decentralized, because this is really the only sensible structure for a blockchain. Furthermore, it is worth noting that it is this architecture that brings the stability, attack resistance and collusion resistance to a blockchain.

Finally, it’s worth looking briefly at the concept of permissioned blockchain in relation to decentralization. As L3COS states, permissioned blockchain can be architecturally decentralized, so it’s not right to think of these descriptions as being mutually exclusive. It’s more worthwhile to compare permissioned and permissionless (or public) blockchains in this way.

Which approach is the best is a debate that has gone on for many years and will no doubt continue long into the future. Of course, this debate can only really be settled if you caveat it by asking ‘best for who’? In the case of L3COS, the who is governments, so they can regulate blockchain and enable the technology’s use by businesses and individuals. And you can certainly see why this system would appeal to them.

About the Author

Zurab Ashvil is a serial tech entrepreneur who spent more than a decade at Softbank between 1995 and 2006, where he won awards from Microsoft, Dell and EMC. As early as 1998 he was advising on Distributed File Systems design for Windows 2000: the basis of the Cloud.”