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Is decentralization the future?

Startup business planning

Decentralization delegate decision-making, it's democratic, encourage participation, diversification and is flexible to adaptation. Centralization is based on hierarchy decision-making, central control, authoritarian approach, decisive, coordinated and enable fast execution. Both of these structures have advantages and disadvantages. Each can be used to achieve a specific objective or goal depending on the business strategy. The blog will focus on the market or industry decentralization approach. The diagram below depicts the characteristics of both structures.

Figure 1 Decentralization vs. Centralization approach

Characteristics of Centralized vs. Decentralized Structures

A decentralized market enables sellers and buyers to connect directly to each other using online platform, like Bitcoin. Bitcoin is a secure digital currency that uses blockchain technology to send and receive bitcoins (money) directly from person to person over the internet, quicker and at low fees. This avoids the middleman, for example financial institution and intermediary. Decentralized markets and technologies are still in its infancy and will mature over time. Advancements come with open innovation. The challenge though is the governance of these new platforms. The whole world of blockchain and digital currencies is seen as the Wild West.

One decentralization approach is indeed blockchain technology. Another example is BitTorrent, a network of nodes that all talk to each other directly eliminating the need for a central server. The decentralization market does not rely on any company’s central servers, instead it operates by using its user’s computers as the underlying infrastructure. A good example is Bitcoin mining. Bitcoin operate as peer to peer network. Miners use special software to solve maths problems and are issued a certain number of bitcoins in exchange. This creates an incentive for more people to mine. It ensures fairness while keeping the bitcoin network secure and stable.

What is blockchain?

Blockchain is an open source distributed database or ledger technology that underlies crypto currencies like Bitcoin and provides a way to record and transfer data that is transparent, safe, auditable and resistant to outages. Blockchain technology has the ability to make businesses that use it transparent, democratic, decentralized, efficient and secure. It facilitates collaboration and tracking of transaction and interactions. The underlying themes for using blockchain technology are trust, transparency, democratic and security.

Blockchain is a persistent, distributed, tamper resistant, cryptographically secure database. Once something enters the blockchain, it’s there forever. It’s a perfect place to store property rights, credentials, identities and agreements, for example land title registrations. The advantage is that no one can censor the data in the blockchain database. The smart contract can be used to facilitate all transactions between the seller and the buyer. Smart contract is a computer protocol that facilitates, verifies; or enforces the negotiation or performance of a contract; or that obviate the need for a contractual clause. An example of a distributed platform is BitPesa in Kenya. It is a digital foreign exchange platform that offers business a fast, easy and low-cost way to make payments to, from and within frontier markets.

How is blockchain disrupting the world economy?

According to Future Thinkers (2017) these are some of the industries that blockchain is already disrupting:

Supply chain

With blockchain technology, transactions can be documented in a permanent decentralized record, and monitored securely and transparently. This can greatly reduce time delays and human mistakes. It can also be used to monitor cost, time, labour, wastage and emissions at every point in the supply chain management. The blockchain can also be used to verify the authenticity of fair trade status of products by tracking them from their origin. Some blockchain startups working in this sector are skuchain and Fluent.


Blockchain technology can be used for voter registration, verification, and vote counting to ensure no votes are changed or moved. Creating an immutable, publicly-viewable ledgers of recorded votes would make elections more fair and democratic. Democracy earth and follow my vote are two startups aiming to disrupt democracy itself, creating blockchain online voting systems for governments.

Banking and payments

Some people are saying blockchain will do to banking what the internet did to media. The blockchain banks the unbanked. Technologies like Bitcoin allows anyone to send money across borders almost instantly and with very little fees. Abra is a startup that is working on Bitcoin-based remittance services. Many banks like Barclays are also working on adapting blockchain technology to make their business operations faster, more efficient and secure.


Forecasting is set to change the entire approach to how we do research, consulting, analysis and forecasting. Online platforms like Augur are looking to create global decentralized prediction markets.

Networking and IOT

Samsung and IBM are using blockchain technology for a new concept called Adept which will create a decentralize network of IOT devices. Operating like a public ledger for devices it will eliminate the need for central location to handle communications for IOT devices. The devices could communicate directly, update software, manage bugs, and monitor energy usage.

Private transport and ride sharing

Blockchain can be used to create decentralized peer-to-peer ride sharing apps. Allowing both car owners and users to arrange terms and conditions in a secure way without third party providers. Startups working in this area include Arcade city and La'zooz. The use of built in e-wallet can allow for car owners to automatically pay for parking, tolls and fuel. For example, blockchain could enable customers and taxi drivers to connect directly, disrupting services like Uber. Ubs, ZF and Innogy are some of the startups developing blockchain based e-wallet.


Government systems are often slow, opaque and prone to corruption. Implementing blockchain based systems can reduce bureaucracy and increase security, efficiency and transparency of governmental operations. Dubai for example is aiming to put all its government documents on the blockchain by 2020.


Another industry that relies on so many legacy systems and ripe for disruption is healthcare. One of the challenges that hospitals face is the lack of a secure platform to store and share sensitive data. They are also victims of hacking because of outdated infrastructure. Blockchain technology can allow hospitals to safely store medical records and share them with authorized doctors or patients. This will improve data security and even help improve accuracy and speed of diagnosis. Gem and Tierion are two startups that are working on disrupting the current healthcare data space.

Energy management

Energy management has been a highly centralized industry for a long time. Energy producers and users cannot buy directly from each other and must go through the public grids or trusted private intermediary. Transactive grid is a startup that uses ethereum blockchain and allows customers to buy and sell energy from each other in a decentralized or peer to peer way.

Online music

Blockchain startups are coming up with ways for musicians to get paid directly from their fans without giving out large percentage of sales to platform or record companies. Smart contracts can be used to automatically solve licensing issues and catalog songs with their respective creators. Mycelia and Ujo music are two startups creating blockchain solutions in the music industry.


When you shop you trust the retail system of the store or market place. Decentralized blockchain retail utilities work differently. They connect buyers and sellers without a middleman and associated fees. Trust comes from smart contract systems and built in reputation management system. Two startups disrupting the retail space are Open Bazaar and OB1.

Real estate

Some of the issues in buying and selling real estate are bureaucracy, lack of transparency, fraud, and mistakes in public records. Using blockchain technology can speed up transactions by reducing the need for paper-based record keeping. It can also help with tracking, verifying ownership, ensuring accuracy of documents, and transferring property deeds. Ubiquity is a blockchain platform for real estate record-keeping that is an alternative for legacy paper based systems (Future Thinkers, 2017).

What does this mean for the future?

It is certainly impossible to predict the future. However, what is evident is that blockchain technology innovation is giving people (banked or unbanked) the voice, power and shifting the paradigm. The decentralized business models will certainly change the way the wealth is distributed and perhaps ultimately solve the inequality issues. As this leads to new forms of value creation and exchange without the middleman, this could disrupt centralized services, existing markets and ecosystems. Blockchain technology and decentralized business models offer great potential for humanity.

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#Blockchain #Smartcontract #Startups #ewallet #Decentralization #Centralization #Decentralizedmarkets #Bitcoin #BitPesa #Blockchainstartups #Decentralizedbusinessmodels

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