Crypto and the Conservation of Centralization

You can't decentralize the web. At best, you can kill old winners and pick new ones. Here's how. Originally published in November 2021 here. Subscribe to Dror's newsletter on DrorPoleg.com.  The web is broken. A handful of companies dominates it: Google (and Baidu) tracks all our queries, Facebook (and Tencent) monitors our social interactions, Twitter (and Weibo) decides what we're allowed to share, Amazon (and Alibaba) dominates retail, etc. Above these corporate giants, governments from Beijing to D.C. encroach on the free flow of information in the name of "social harmony" or "public health." Crypto and blockchain-based applications aim to steer the web toward its original vision: an open network, based on public-domain protocols, controlled by no one. It promises to enable "decentralized" alternatives to the tech and government giants we all know and love. This effort can be divided into two main fronts: Decentralized Utility and Decentralized Ownership. Decentralized Utility aims to provide online services without relying on a centralized system. For example, instead of storing your files on server farms owned by Amazon (AWS) or Microsoft (Azure), you can store them on Arweave, Storj, Filecoin. The latter will keep your files encrypted on a network of computers governed by a protocol that cannot be stopped or altered by any individual entity. Decentralized Ownership aims to share the ownership and governance of digital platforms with their users and stakeholders. Mirror, for example, enables writers to publish their content online, monetize it, as well as own a piece of the publishing platform itself and vote on how it is operated. Helium and Livepeer operate networks of wireless hotspots and video streaming infrastructure. These networks are maintained and secured by users who own specific tokens that compensate them for their services and enable them to participate in governance. These crypto projects are still small and experimental. They point towards an alternative way of building, maintaining, and marketing the type of services that giant, centralized corporations currently provide. But decentralizing one class of internet companies does not guarantee that a new class of centralized giants will not emerge in their stead. In fact, decentralizing power from one pair of hands is almost guaranteed to concentrate that power in another pair of hands. A powerful theory and the history of the internet itself explain why. Let's start with the theory.