Now that we’ve finished talking about all the meaningful properties of decentralized solutions, it wouldn’t be complete if we didn’t go over the caveats.
What are the costs of these properties of decentralization? What do we achieve better with centralized solutions? The overarching theme of centralized solutions is the benefit of independence.
There’s no need for consensus when a single party has the power to make decisions.
Because of this, we get the following benefits: First and foremost we have deep integration.
A central solution has full control over everything under its umbrella.
Apple is well known for taking advantage of this to control the user experience.
When a blockchain attempts to upgrade its protocol, all users have to voluntarily upgrade or get left behind.
With a central solution, however, it’s much easier to change individual components or entire architectures of projects.
Because of this, it’s much easier for a central systems to patch up bugs, such as security issues, than decentralized systems.
A central solution does what it needs to do, unrestricted, but a decentralized system needs to come to consensus with thousands of different actors to change anything at the protocol level.
Another huge advantage for central solutions is efficiency.
With centralized solutions, the cost of executing a program is about a million times less work than decentralized solutions.
This is easy to see, as only one party is doing work, and it doesn’t need to confirm the result of its work with anyone else.
In addition, only one store of data is required.
The data doesn’t be replicated across thousands of nodes .
In addition, access control is much more simple in a central solution, where it’s much easier to restrict read and write permissions.
In a decentralized solution with censorship-resistance, we give up that control.
Building off that, central solutions handle complexity well.
Imagine replicating Airbnb using smart contracts.
If a landlord finds their house destroyed, a blockchain can’t handle that scenario.
How can an oracle accurately report whether a tenant damaged household possessions? Who would report that information? It’s much easier to trust a single person to report on the state of the house than to implement a complex and likely unreliable oracle system.
Finally, central solutions are adaptive.
When an Uber driver is having trouble with their passenger, or the other way around, who do they call for customer support on a blockchain solution? How do they get this issue resolved? Centralized solutions have the advantage of handling messy situations with grace, since you don’t need every single entity to agree on every single outcome.
If you do integrate centralization with a blockchain solution, you lose out on most of the benefits of decentralization.