July 4, 2022

Bittorrent Lessons for the Crypto Industry: Goals, Complexity and the Management Paradox - Part 3

Continuing the theme of previous materials on the importance of Bittorrent and destination decentralization - it makes sense to discuss three things related to decentralized ecosystems that are equally relevant as Bittorrent, as well as to other crypto projects.

In the previous material, where they signedthe benefits of decentralization, it was argued that the main justification for decentralized architecture is its resistance to various forms of censorship or, in other words, the ability to break the rules when no one is able to stop you. Yes, there may be useful projects that have nothing to do with breaking the rules, but if true gold in this gold rush really has to break the rules, then it doesn’t really matter which picks and shovels you are trying to sell.

And, although it’s tempting to focus onactual violation of the rules, do not forget that when the person or company violates the rules - this leads to an acute problem associated with the initial goals of the project or, in other words, the “problem of intentions”.

The Problem of Intent

The inconvenient thing here is that, inin the end, the legal system shows little leniency to accused people who intend to break laws. By and large, if any system allows for massive violation of laws and is built on technology that is clearly intended to violate these laws, then at some point law enforcement agencies will look for authors to bring them to justice.

But, Bittorrent Inc and the inventor of Bittorrent -Bram Cohen was able to get around this problem, as Bram never intended to create a system that intentionally violates the rules. In fact, the popularity of Bittorrent was completely random.

At the same time, Satoshi’s Whitepaper Bitcoin is clearlyoutlined intentions to violate the rules, but the anonymity of its author did not allow to bring a specific person or organization to liability for violation of any rules.

Ethereum's approach seems to be more likeBittorrent's approach is to do nothing to try to adapt it to violate a specific set of rules and encourage legitimate options for its use as publicly as possible.

An example is a public startup,who clearly plans to break the rules after its launch. Let's say this is a well-funded project that is about to violate the strict copyright rules for music created by a gifted DJ, and which is prohibitively expensive to post online. But, if they really will be engaged in this task, it is difficult to imagine that law enforcement agencies will calmly look at them or their investors if the startup is successful.

Difficulty problem

The second important issue with decentralized systems is a general lack of understanding of how complex these systems are and how well they must be balanced in order to work properly.

The author originally joined BittorrentInc in 2007, to work on a decentralized CDN (content delivery network), the purpose of which was to connect all the unused space and bandwidth on clients' computers into a single network to distribute content with zero operating costs from the company itself.

Over time, it became clear that this was an overly ambitious goal - a difficult path to this clearly proved the complexity of the task.

Yes, it was technically possible to put togethersome kind of CDN from computers that do not use their resources at full capacity, but it was incorrect to consider this an absolutely free resource that is easy to combine and sell. Consumers had a clear understanding that the bandwidth belonged to them, and not to the company that decided to resell it, so the attempt to do this caused a negative reaction among users.

An additional disastrous aspect wasthe need for continuous integration of CDN with a rapidly growing and evolving technology stack for managing and delivering multimedia. The advantages, in the form of lower bit delivery costs, were significantly overshadowed by the need for concessions from potential customers in terms of reorganizing their content management systems.

Option - “a little cheaper, but much more complicated andmuch less flexible, ”in the end, was not very attractive. Yes, it could be assumed that this is certainly a cheaper solution, but in the end, it turned out to be completely wrong. This option was suitable for a “decentralized system”, which, in fact, was monitored and controlled absolutely centrally.

Additionally, for a system that mustto support independent developers writing software running on the same protocol, the complexity only increased. The truth is that even large-scale decentralized systems, even if only one developer works on them, are damn complex, and all this, ultimately, increases their cost.

In general, it is not surprising that the timing of implementationprojects are delayed, because engineers face a number of problems that cannot be solved, no matter how much money is spent on them. On the one hand, you need to immediately adapt to a changing future, and on the other hand, focus on the prevailing paradigm in the world of Internet technologies, which requires providing MVP (minimally viable prototype) and launching a project as quickly as possible. And all this must be done absolutely right from the very beginning.

The paradox of management: each new solution is more complicated than the previous

Management in this case means abilitymake decisions quickly and efficiently, and also implement them effectively. But, making decisions in a decentralized system that violates the rules is very difficult.

In fact, worse - decentralizedmanagement may border on a paradox. Indeed, in a decentralized system, which is impossible to manage, it is really quite difficult to make a mistake, but it is almost impossible to control it. That's just the point - here you cannot get only advantages.

Yes, you can build and run a system such asBittorrent, and if someone comes up and demands to stop doing something that annoys him, then you can answer him - "I'm sorry, but this is impossible." At the same time, you can’t just make changes and updates to such a system. The coordination costs are high, and the deadlines are extremely long. At least this is the experience of BitTorrent Inc and the Bittorrent ecosystem as a whole.

It is difficult to succeed in a decentralized system that violates the rules for three main reasons:

  1. For members of the status quo (preservation of the old order) is a safe place - there are manystakeholders with often conflicting interests, and the fact that a steady balance between such groups was quickly found is perhaps quite unusual and rare. In general, all groups will cling to the previous model of interaction.
  2. Coordination here is a difficult and costly task,especially considering the presence of many paranoid people whose interests are not necessarily obvious to you. For Bittorrent, this meant that positive changes in various parts of its protocol — whether optimizing or enhancing security — took many months and sometimes was completely delayed.
  3. Major players are at risk - even if youIf you want to do something that, in your opinion, you can do, and that will be popular with all interested parties, it is necessary to take into account the interests of the main executor of the violation of the rules, i.e. yours. The fact of breaking the rules always has a frightening effect on all parties involved. Over the years, BitTorrent Inc constantly analyzed its actions, trying to predict how various law enforcement agencies would react to them. While the BitTorrent ecosystem was decentralized and extremely difficult to censor, BitTorrent Inc itself was one of the few participants with real potential influence, and, for this reason, was very visible and felt subject to legal consequences from any of its actions. Therefore, often did not want to take an active leadership role.

The same problems are relevant in the world.cryptocurrencies. Before launching, blockchain projects are completely centralized, so they are blissfully immune to such problems and are able to progress rapidly. But, after the launch, when the projects become truly decentralized, although it is obvious that some are only pretending to be such, in any case, it becomes incredibly difficult to manage. The difficulty of deciding what should happen next leads to a slowdown in progress, as well as to disputes and confrontations between the parties.

There are a number of crypto projects that are tryingsolve the management problem with the help of various approaches to ensuring decision-making, which, in their opinion, are “fair” and “effective”. But, in practice, the only way to make any large-scale governance viable is to decentralize power in the form of a narrow circle of decision makers. It is also necessary to define rules that determine who can become and remain decisive. At the same time, the more successfully the ecosystem breaks the rules, the role of the “decisive” becomes more and more problematic, and the less willing to decide they want to bear personal responsibility.

Decentralized management even in suchOrganizations like ICANN, IETF, and W3C have long been slow, conflicting, and prone to over-influence by key players. Therefore, it is expected that the management of decentralized systems that clearly violate the rules will become even more difficult as a result of the assumed responsibility even for participation and, of course, for leadership.

In general, it’s interesting to see how all these newcrypto projects are going to solve the problem of stated goals (whether they will talk about the rules they are trying to break), how well they understand the cost of complexity that their plans entail, and how they will solve the management paradox when each solution will be more complicated than the previous one.

The last material in this series will be dedicated to the one who wins the battle for decentralization.