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Decentralization and Oceanization - A new way to understand the Bitcoin blocksize limit debate

Jan. 31, 2016, 8:06 p.m., by chris

First, lets introduce the concept of "oceanization".

This is a made up word I coined specifically for this article.

Lets assume you wanted to engage in an activity that is illegal in the United States. If you still wanted to engage in this activity, one solution is to move to another jurisdiction. What is there is no other jurisdiction that allows this activity? Another solution is to perform this activity on a boat that is located in international waters.

The act of moving an activity to international aters will hence forth be known as "Oceanization".

One example of "oceanization" in the real world are pirate radio stations. There are at least a few illegal radio stations that are broadcast from floating boats anchored in international waters.

Bitcoin's de-centralization works much like oceanization. It is illegal to operate your own currency, in the same way it is illegal to broadcast a radio station without proper permission granted to you by the government. Bitcoin gets around this by decentralizing itself. Since there is no central point to take down, a single government entity can not take down the entire bitcoin network, in the same way no government can take down a pirate radio station because they are physically located in a part of the world where no government has jurisdiction to take down.

Oceanization can take two forms: "maximum oceanization", and "minimum oceanization". Pirate radio stations are engaging in "minimum ceanization". These floating radio stations are usually located in the boundaries, just outside the line between international waters and government controlled waters. The stay near the boundary for two reasons: 1. The closer they are to the shore, the easier it is to broadcast their signal to listeners on land. 2. The only need to simply be located in international waters to evade the authorities, being further out in the middle of the ocean will make them harder to find, which makes them more secure from authorities finding them, but they simply don't need the extra protection.

On the other hand, lets take for example, a much more nefarious operation. Instead of operating unauthorized radio broadcasts, lets assume a person is trying to run an online crime syndicate. Instead of simply being in international waters near the boundary, this operation has to be deeply in international waters, maybe even in a submarine deep below the surface. This concept I'm going to call "maximum oceanization". It is likely that a government will ignore the neutrality of international waters when something very bad is being done.

To recap, "minimum oceanization" is required when the action is illegal, but not blatantly illegal. "Maximum oceanization" is when the action is not simply illegal, but also blatantly wrong.

Decentralization can be split up into these two categories as well. "Maximum de-centralization" is needed when a computer system is doing something so bad that governments are likely to try to shut them down no matter what. "Minimum de-centralization" is needed when a computer system is only technically breaking the rules.

Which level of decentraization does bitcoin need? The "big blockers" seem to think minimum de-centralization is whats needed. The "Decentralizationists" seem to think maximum de-centralization is needed. It all boils down to how illegal you think the the government thinks of bitcoin. Do they see bitcoin as relatively harmless, yet technically illegal, like pirate radio station? Or do they see bitcoin as a deeply immoral system akin to child porn and nuclear weapons?

In my opinion, it's still an open question. At this point in time, both sides have a compelling case. Since there are a lot of darknet markets in operation that use bitoin, it is possible that some government people see bitcoin as a very bad thing that deserves to be wiped off the planet. If you believe that then the bloksize limit should stay at 1MB to make it as hard as possible for world governments to shut down when the time comes.

While at the same time, bitcoin is 7 years old, and so far there hasn't been any real effort to shut the system down by any governments. In that case the blocksize should be raised as much as possible. Even if the number of nodes drops to, say, 10 full nodes, decentralization is still preserved, just on a "minimum" basis. As long as there is more than 2 nodes, we are still in international waters so to speak. We may be on the edge but that's all that's needed.