There have been plenty of complaints in recent months about the degree of centralization or decentralization in our networks. There are a number of principles and facts governing the degree of decentralization in our network. It might be helpful to review some of them.
First of all, a share price rally is a decentralizing event. A bear market is a centralizing event. As the NuShare price, for instance, goes up, early large shareholders are likely to sell a portion of their holdings to people new to our network. If our network succeeds, that is where we are going. More and more decentralization. However, in the case of a severe bear market like we have seen recently in NuShares, we saw most shareholders jump ship. Most sold their NuShares. But who bought them? In the vast majority of cases, I honestly don’t know (Poloniex does), but we have good reason to believe they were bought by a relatively small group of people who could distance themselves from the negative herd mentality enough to see the tremendous potential that remains in our networks.
What this means is that those who wish to have a radically decentralized network need to first ensure a series of bull markets. It seems like in many cases those who are strongly insisting that the network needs to be decentralized are the very people doing the most to centralize it by inducing a powerful bear market. It is behavior that is poorly aligned these peoples’ stated goals.
Two weeks ago, the NuShare market cap was $400,000. Quite frankly, it is foolish to expect robust decentralization at that size. It would be very difficult to achieve, but even if were, it would probably destroy the network by throwing it into complete chaos. Someone had suggested we find a way to limit share ownership to 2% of all outstanding shares. While it has been noted doing so is not possible with our architecture, my point is that it would certainly be undesirable. Imagine 1000 shareholders with an average investment of $400 and a maximum investment of $8000. This is a very small stake. It doesn’t motivate action. Such small shareholders will be, in the vast majority of cases, quite ignorant about how the network operates. We don’t want too many of our shares being held by ignorant and apathetic people. Can you think of any business worth $400,000 that could be successfully run by 1000 small shareholders? The notion is just a bit ridiculous, it seems.
All these decentralized networks start out completely centralized and must grow into decentralization. Bitcoin started with Satoshi Nakamoto in firm and complete control of it. Only growth could change that. Our situation is similar, although our architecture will accommodate genuine decentralization, whereas Bitcoin mining architecture has proven to favor centralization.
What is important is that the system is open and people are free to accumulate shares. Many people on the forum, who probably don’t have very many shares, seem to be suggesting that one or two or three people have an iron grip on the network and won’t let anyone else participate. This is manifestly false. Huge, controlling quantities of NuShares are available to anyone with relatively modest investment. I think there are between 400 and 450 million NuShares minting and voting right now. Anyone with a pulse and enough BTC can go to Poloniex right now and in a single second, purchase 326 million NuShares. A week later, they can produce 40% support for any motion or custodial grant they wish. If someone bought 326 million NuShares all at once like that, we can be certain more than 100 million additional NuShares would show up on the exchange very quickly. The truth is, anyone with enough funds can gain complete control of the Nu network in a single day. The price of NuShares tells us no one is interested in doing this. So the problem is not that one or two or three people have an iron grip on the network and won’t let go. The problem is that very few people want NuShares. Why would the community choose to hate those who have enough enthusiasm for the network to purchase a substantial amount of NuShares? There is a good answer for that, and it is simply jealousy. People who don’t have shares for whatever reason (lack of funds or lack of interest) want to have control and say so. But that isn’t our model. Our model has always been 1 share, 1 vote. Some people seem to want it to be 1 person, 1 vote. This is understandable given that in political democracies the notion of 1 person, 1 vote is held sacred. But we are not a political entity or a government over people. Ours is an economic model. The political model of 1 person, 1 vote would be impossible to implement and quite undesirable for the purpose of creating a stable currency. We aren’t doing that and have never pretended to.
To sum up, our network is so small that expecting it to be robustly decentralized is unrealistic and unhealthy. The only way for it to get there is a series of bull markets. Those who want decentralization should help the network grow. Defaming it and abandoning it are producing a result opposite of what you say you want. Even if the network is not robustly decentralized today, it is radically open to anyone who wants to purchase NuShares. It is so open that anyone willing commit enough BTC to the cause can gain a controlling stake in a single day. No one is holding Nu hostage. I would guess that a controlling voting stake in the Nu network could have been had over the last couple of months for $100,000. If you didn’t buy that controlling stake or an otherwise large stake, stop complaining. Everyone has equal opportunity to do so.
