Decentralization is the "moat" of blockchain

In the previous article, I mentioned at the end a recent conversation that Vitalik had with the Chinese community published by Block Rhythm. Today, I would like to share some of Vitalik's views on decentralization from that conversation.

• "If you need to distinguish which blockchains are 'truly decentralized', you can use a relatively simple test: if its foundation disappears, can the chain survive? I feel that only Bitcoin and Ethereum can clearly answer: of course, they can. Most of Ethereum's development is outside the foundation, the client teams have independent business models, and many researchers are no longer within the foundation; almost all activities, except for Devcon, are independent. Reaching this stage is difficult; five years ago, Ethereum was not like this."

I greatly appreciate Vitalik's response to this statement.

He explained the role of the Ethereum Foundation quite clearly, which is that Ethereum can still operate independently even if it leaves the foundation. Such a blockchain is a system that can operate independently of interference from a specific institution.

As far as I know, many blockchains are even sponsored by foundations in terms of node operations. Without the financial support of the foundation, those chains would struggle to maintain operations. Some chains have nodes that are completely controlled by the foundation.

For such blockchains, controlling the foundation essentially means controlling the entire chain.

This so-called "blockchain" can play a certain role in a specific niche, but it certainly cannot support grand commercial scenarios and the broadest human collaboration, which means it cannot achieve the longest-term price increase and the greatest value.

• "Giving up these advantages in pursuit of TPS is a big mistake because there will always be new chains that come out with suddenly higher TPS than yours. But decentralization and resilience are valuable, and very few blockchains have them."

The point Vitalik mentioned is aimed at Layer 1 (L1) blockchains, not at Layer 2 or even lower-level blockchain expansions.

In fact, this point has long been a focal point of debate within this ecosystem and has reached a certain consensus quite early on.

Unfortunately, no one has mentioned this point for a long time, especially in this cycle. I believe the fundamental reason is that short-term interests have blinded many people's eyes, causing them to forget long-term benefits and the fundamentals.

In fact, the topic was first raised in relation to Bitcoin.

At that time, many people believed that Bitcoin's TPS was too low, so a series of altcoins with much higher TPS were developed.

But in my view, while a low TPS is certainly not an advantage of Bitcoin, it is not a fatal flaw either; rather, it is a compromise on efficiency that had to be made to achieve decentralization.

In fact, when Vitalik proposed developing Ethereum, the main issue he targeted was not Bitcoin's low TPS, but its inability to support Turing-complete operations.

Vitalik's point that there will always be new chains that achieve higher TPS than existing blockchains is a good one. This is also an inevitable result of technological progress.

In fact, without technological progress, even with current technology, blockchains will never surpass centralized systems in terms of TPS.

I have always believed that if Alibaba or Tencent were willing to publicly create a high TPS chain, they could definitely surpass all current blockchain teams; it's just that for various reasons, they haven't done so. However, they will never be able to create something like Bitcoin or Ethereum; even if they technically achieve it, it won't operate effectively.

The primary characteristic of a Layer 1 blockchain is decentralization, and to achieve decentralization, certain sacrifices in efficiency/TPS must be made.

Therefore, when I see a new public chain (L1) that promotes TPS as its core selling point, I always wonder: how can such a "chain" still attract investment?

If the investors behind these chains are retail investors, it doesn't matter, but if they are some so-called capital, I will greatly discount my view of such capital, as there is actually quite a bit of this kind of capital within this ecosystem.