How to decentralize
Arvind Narayanan and others have proposed a framework in their book, Bitcoin and Cryptocurrency Technologies, Princeton University Press, that can be used to evaluate the decentralization requirements of a variety of issues in the context of blockchain technology. The framework raises four questions whose answers provide a clear understanding as to how a system can be decentralized:
- What is being decentralized?
- What level of decentralization is required?
- What blockchain is used?
- What security mechanism is used?
The first question simply asks you to identify what system is being decentralized. This can be any system, such as an identity system or a trading system.
The second question asks you to specify the level of decentralization required by examining the scale of decentralization as discussed earlier. It can be full disintermediation or partial disintermediation.
The third question asks developers to determine which blockchain is suitable for a particular application. It can be Bitcoin blockchain, Ethereum blockchain, or any other blockchain that is deemed fit for the specific application.
Finally, a fundamental question that needs to be addressed is how the security of a decentralized system will be guaranteed. For example, the security mechanism can be atomicity-based, where either the transaction executes in full or does not execute at all. This deterministic approach ensures the integrity of the system. Other mechanisms may include one based on reputation, which allows for varying degrees of trust in a system.