Is Decentralisation The Future?, Risk Back On

Is Decentralisation The Future?

Anyone who has spent time listening to the crypto markets will be familiar with the advocates of decentralisation.

The whole point of the blockchain is that it exists outside the control of any single entity. Anyone can verify or record transactions on the blockchain. Most particularly, it does not run on a central mainframe, so it cannot be shut down.

Bitcoin’s existence proves that decentralised networks are capable of surviving. That is not quite the same thing as being essential or delivering a strong enough argument that they are viable alternatives to the existing architecture.

However, decentralisation has been a significant theme over the last decade.

The advocates of wind and solar are essentially arguing that distributed power generation is better than centralised power.

Another way to think about this is that economies of scale model is potentiallly outdated.

Oil refineries and production facilities are exceptionally capital intensive but deliver products at a market rate for decades once complete.

Putting solar panels on your roof and using them to charge a home battery and/or electric vehicle is a decentralized solution. There is a lot of argument about whether it is a cost effective solution, but it exists, and a solid percentage of the population have chosen it.

I saw an article today on NewAtlas discussing how a team at the University of New South Wales developed a new method to create ammonia using AI. Here are two important sections:

“We achieved a sevenfold improvement in the ammonia production rate and at the same time it was close to 100% efficient, meaning almost all of the electrical energy we needed to make the reaction happen was used to make ammonia – very little was wasted,” says Jalili.

And

“For a century, ammonia production was based on massive, centralised factories that cut costs by operating at enormous scales, but those projects take years to build, require billions of dollars in capital, and cannot adapt quickly as energy markets change,” Jalili says. “Our approach breaks away from the era of centralised, giga-scale plants and opens the door for smaller, decentralised units that require much lower upfront investments.”

Since ammonia is being promoted as a transportation medium for hydrogen developing cheaper production methods is a significant innovation.

However, it also suggests that technology improvements are capable of out competing centralised supply.

This chart from Torsten Slok at Apollo suggests AI is finding its way into the corporate world.