Cryptocurrency users bought into a world based on a single original concept: a peer-to-peer (P2P) electronic cash system. The key selling point of the technology is its ability to enable P2P transactions, where I can send a transaction directly to you without having to go through a service first, or ask permission. Somewhere along the way, however, an idea became popularized that a P2P system should run on a P2P infrastructure, namely that every user should be able to run their own full node and verify their own transactions. While this idea draws on the humble beginnings in the early days of Bitcoin when the wallet was a full node and a miner, it oddly enough became popularized after this three-in-one setup was long gone as the standard. Now many of Bitcoin’s current community support this idea, while other coins such as Dash go for a robust, professionalized, and decentralized infrastructure that differs by not requiring users to actually run the network themselves. Is there really a benefit in a P2P infrastructure?
Casual crypto users are already far past the P2P infrastructure stage
Before we have a discussion on whether or not it’s good to move away from the “user-runs-all” model, let’s acknowledge that we’ve already done that. Of the possibly millions of cryptocurrency users around the world, a tiny fraction of them are involved with mining or running nodes. The vast majority of wallets used connect to nodes that the users are not required to run themselves, and most mining is grouped into large mining pools and major commercial operations. For any top cryptocurrency right now we’re well past the hobbyist stage, and attempting to put the genie back in the bottle just isn’t going to work.
The larger the scale, the harder to run infrastructure on your mom’s laptop
Right now, a node for a cryptocurrency processing a few thousand transactions a day can probably be run on any regular personal computer. At a level of several million per day, that will change. Naturally, all kinds of optimizations will no doubt be developed that will ease the burden of a single transaction, however this probably will not be enough to outpace the demands of vigorous use. At some point, having everyone participate in running the network is going to require everyone to upgrade their hardware and bandwidth for that specific purpose.
Requiring users to run infrastructure excludes most of the world
Speaking of that equipment update, it’s going to amplify the effect that requiring users to participate in running the network already has: user exclusion. Of all those interested in using cryptocurrency, very few have any interest in mining or running a node. The reasons can range from lack of funds for hardware to lack of technical knowledge to a simple lack of time and attention span. The result, however, is the same, which is fewer people using the network. I believe in using cryptocurrency to help as many people as possible, and believe that the more people use it, the more useful it becomes. For those who believe as I do, attempting to force users to run infrastructure has effects that are antithetical to the whole point of cryptocurrency.
At mass scale, infrastructure becomes ubiquitous and invisible
At a certain point, all this discussion becomes less relevant. As the global infrastructure supporting cryptocurrencies grows and becomes more robust, the perceived benefits of a completely P2P infrastructure run by every user diminish.
The confusing of the terms and concepts “P2P” and “decentralized” comes from their similar end goal: censorship resistance. Both seek to protect the network from being compromised by a central point of failure. The difference between the two is that one seeks for all members to run the network itself rather than simply use it, while the other allows for a pure user role. Compare it to coffee. Very generally speaking for the sake of simplicity, in a P2P model everyone wishing to have coffee grows some beans in their backyard, roasts them, grinds them, and makes their coffee. In a decentralized system, anyone is able to grow their own coffee start to finish, but some growers choose to produce extra to sell to shops, which buy beans from any number of growers and make coffee to sell to the average user, who need not participate in the production of coffee at all, only its consumption. Similar to the P2P model, any role is in theory open to participation from anyone, though in practice the minority specializes in running the system while the majority serves as simple users.
The worry by skeptics of a merely decentralized infrastructure is that an underdeveloped ecosystem will result in centralization, or in the coffee example a single or small handful of coffee growers or sellers. The concern is not in the model itself, but that the few independent businesses will be bought out or shut down by a larger actor, then no more coffee for everyone. Of course, enough market demand will encourage increased supply, and I would argue that, with demand low enough that only a few businesses are participating in the coffee trade, almost no one will be growing and making their own, either. In terms of raw numbers of people with access to the good/service/network, having every user run the system probably doesn’t really help much.
At a higher scale, however, the limitations in resistance to censorship of a decentralized structure fade away. When there’s a coffee shop on every corner, most of them independently run, all with access to scores of different growers around the world, you stop seeing the infrastructure behind the business as it’s truly everywhere. You stop seeing the feasibility of censoring the average person’s access to a cup of coffee. Apply that to a decentralized cryptocurrency and I think you’ll see how it can do just fine.