You can apply Game Theory to the miners’ and developers’ incentives to maintain this illusion, if that’s your thing, but the second everyone is under pressure, the mask will come off, and you’ll be staring centralization directly in the face.

At best, cryptocurrency provides the illusion of decentralization. 😭

From the United States, we’re often taught the widely-debunked “Trickle Down” theory of economics. Instead of a fluid under the effect of gravity, it’s better to model wealth as the gravity itself: The more you have, the easier it becomes to pull more towards you.

If you take a somewhat egalitarian (from an optimist’s perspective anyway) approach to decentralization, and map it over everyone’s pre-existing economic conditions, you’re going to end up applying the identity function to the pre-existing system.

That is to say: Centralization in, decentralization out.

Wealthy people can afford more computer hardware than you can, and they can hire people to handle the hard technical problems they don’t understand.

You and I do not have this capital, and are therefore at a disadvantage.

Centralization is an inevitable result of capitalism, or any system that builds atop capitalism. Whether you love or hate capitalism, this is a systemic inevitability.

How to Decentralize?

To embrace decentralization is to dispense of Network Effects. Decentralization is to embrace anonymity and the freedom of information. The hacker ethos. The cypherpunk’s manifesto. Decentralization means the rejection of rulers–whether political or financial.

True decentralization requires adhering to the principles of cryptoanarchists, which requires an anarchist digital currency; not an anarchocapitalist one.

Capitalism creates a hierarchy, which creates rulers, which is incompatible with anarchy.

Without the gravitational effects of capital driving income- and wealth-inequality, we could design a cryptocurrency that is actually decentralized, even when the world is largely governed by capitalist economic systems.

Towards A Decentralized Digital Currency Without Capitalism

What would a decentralized digital currency without capitalism look like? It’s difficult to say, because as far as I’ve been able to research, no such designs have ever been proposed.

In the absence of capitalism, we’ll need an alternative economic system to based a design atop, and whose principles we’ll need to incorporate.

As a non-expert, the only alternate economic systems I’m aware of are socialism, communism, and egalitarianism.

For the purposes of this thought experiment, you can treat any ruler{less}economic system as interchangeable–although the details will certainly matter for any real implementation.

Important: I’m not interested in discussing the politics of economic systems. This is an informal brain exercise to model what a decentralized digital currency would look like if you removed capitalism from its core. The removal of capitalism would help prevent the long-term centralization of a digital currency, so I think it’s a topic worth exploring, even if you dislike non-capitalist economies. I’m not here to judge, so let’s chill out and use our imagination a bit.

Requirements of a Non-Capitalist Digital Currency

For starters, it would necessarily be distributed and sharded, to faciliate decentralized trade between independent communes (which will have a many-to-many relationship with humans).

Additionally, each commune would define its own local currency independently of the global state of the network. Exchange would be facilitated between communes, not individuals. However, within a community, they would be able to define their own rules for individuals to participate in inter-community trade. This would likely be enforced through a sort of smart contract.

Within a commune, all tokens would have an expiration (e.g. block height) from the moment they are mined. Upon expiration, the tokens would be recycled by evenly burning their values across the commune. This would create an inevitable tax on wealth that the rich wouldn’t be able to evade, without requiring the price inflation mechanism used in fiat currencies today.

Private transactions, such as implemented in ZCash–would be enabled by default. This is necessary to preserve individual privacy. Only interchanges between communes would be sent in the clear by default.

The global state between communes would need to have its integrity maintained through a non-wasteful consensus algorithm; such as Proof-of-Stake.

To this end, communes will be able to stake some of their collective assets (rewarded and optionally traded between communes that participate in mining) to authorize transactions and resolve contestations.

Non-staked global tokens expire just like communal tokens, but staking prolongs the lifetime of the staked token.

Each commune will be able to define their own consensus protocol used internally, but wasteful ones (i.e. Proof of Work) are strongly discouraged. If Proof-of-Stake is used, communes can decide if their communal currency is prolonged for staked tokens. A commune-specific percentage (which MUST BE at least 50%, up to 100%) of all incoming assets expire and burned immediately, ensuring that the community always benefits from trade, and a wealthy nobility class doesn’t emerge via tax-evasion.

There are possible many more considerations I hadn’t yet delved into.

I am not an economist; merely a anarchy and cryptography hobbyist balkaniqqa.

Consider this a rough simulation until someone smarter has a chance to review it.

In short, if you want real decentralization, you cannot get to there from here with any capitalism-based cryptocurrency (which, unfortunately for CT trenches, describes all existing cryptocurrencies). However, with a few specific design choices, you can build a cryptocurrency that models a non-capitalist economic system.

Trenches may just be the next iteration in an infinite series of dumb buzzwords used by cryptocurrency peddlers, but the notion it describes does encapsulate some ideas that may be valuable.

However, these ideas do not work well with existing cryptocurrency designs, and often do not even require an actual currency at all to be successful.

acción, protec, attac!