Centralization can be well defined by the control and power that has always been in the hands  of the big banks. After the crash of 2008, attempts were made to clip  their wings but things just stayed the same. In a zero interest rate  environment, large public companies borrowed cheaply from the bond  market. Smaller businesses found it a lot more difficult to access funds  and this stifled their growth potential.

But now,  decentralization is coming to the forefront. Advances in technology  allow companies to move away from a centralized environment to benefit  greatly from being independent. Metaphorically, one could compare a  decentralized organisation to a starfish. If you cut off its leg, it  grows a new one, and the partial piece of leg can grow into a new  starfish. There is no head or brain to consider.

When we look at  an organisation which is decentralized, there is no weak point which can  be focused on to bring it down. Some examples would be accommodation,  driver-owned taxi services, e-marketplaces, Wikipedia and Craigslist.  Outside of the internet there is, for example, Alcoholics Anonymous and  the Mafia.

Let's compare Napstar and BitTorrent. The former had an  easily identifiable server and could be shut down whilst the latter is  decentralized and has no particular "place of business". That is why it  is still around today.

Moving people, power and functions away  from a central authority is a trend we see continuing. It is evident  that the problems caused by centralization often result in  decentralization taking place. In business it leads to management by  results and for government programs, increases in efficiency and  effectiveness can be achieved.

Share this post