Cryptocurrencies proved us that finance can be democratic. They are a trend now but many people are not aware what blockchain can do except financial operations. And it can do a lot more. In the decentralized world no human being is able to censor the information the way they do it in the centralized media space where big bosses can determine what is the freedom of speech and what is not.
Vitalik Buterin, the founder of Ethereum (ETH) blockchain, became the first who explained it to the audience. His initial idea was to improve the system of Bitcoin payments but soon he understood that blockchain allows actually any type of transaction, and this can give so many new opportunities to people.
A new smart technology is based on the execution of smart contracts. These contracts are written in code inside the blockchain. They are created to execute automatically in conditions that fit into the certain parameters verified by the network. If you think about it outside the technology, you will see that many of our daily interactions are based on the similar principle of contract, therefore, such systems can be applied in various situations.
The simplest example is purchase and sale. But this system can work with more difficult processes like identification or institutional and even legal decision-making. All these processes can be automatized, and they will become more effective this way. In addition, we won't need any bureaucracy or middlemen to make them happen.
It's important that smart contracts unlike the transactions we are used to don't require trust and reliability of the executives who, unfortunately, don't always do their job seamlessly. Here mathematical calculations run everything, and since the network verifies the transaction, it goes through and can't be reversed.
Chris Dixon, a crypto expert, says that centralized systems usually follow an S-curve. In the beginning of their lifespan thay do all they can to involve more users and make their services valuable. They use the help of partners, developers and media sources to achieve their goals. Their influence over the users and partners grow over time and they start making it all about their interests. After achieving the peak of their growth, such systems can continue growing only by extracting as much data as possible from their users and cannibalizing the services that used to complement them. Dixon refers to mostly technical companies but doesn't it happen like this in many other fields? Centralization concentrates the power in the hands of the minority, and their own interests start prevailing over the interests of their users. It leads to lack of the transparency in services and rent seeking behaviour. In addition, centralization creates the risk of mistakes that can make the entire system collapse.
As an example, we can recollect the global crisis of 2008 when the problems of the banking system resulted in the recession of the entire world's economy. The storm of the U.S. Capitol and the aligned actions of the social media influencers against Donald Trump show that mistakes and the influence of unpredictable events are common both on the political and social arena.
Failures aren't necessarily the results of someone's intentional evil plans. People do make mistakes due to the cognitive biases, poor competency, corruption and many other reasons.A better future with blockchain Buterin divides decentralization into 3 classes:
Architectural (the amount of physical elements making one entity);
Political (the amount of individuals and organizations controlling the system);
Logical (is it only an interface with data structures or something more complicated).
The most important option provided by blockchain is the deconstruction of political and architectural centralization. This will give power to the end-users and will create a better governance mechanism.
Decentralized systems exclude the element of trust and state control in situations where they are not necessary. It will open new opportunities for the people who were left behind the traditional financial system due to the autocratic barriers created by it. And also it will help create more efficient versions of the centralized organizations the likes of Twitter. They will be protected from the intentional narrative extortions that are used for certain people's profits. They use social media technologies to push their own interests.
Of course, blockchain isn't a magic wand that will turn our society into a paradise. But it can reduce the number of middle parties and improve p2p communication, and it will lead to a better alignment of their goals and interests.