Decentralization of Power in Cryptocurrency: Vitalik's Highlighted Design Crisis

Ethereum co-founder Vitalik Buterin explicitly pointed out in his latest essay that many cryptocurrency projects are facing vulnerabilities in their power structures. According to his analysis, the fundamental issue is that the entire industry is losing sight of the balance between “business model sustainability” and “risk of centralized power.”

Two Paths: Spontaneous Decentralization and Deliberate Design

In Buterin’s view, there are two different patterns to achieve decentralization. In some systems, decentralization occurs naturally. For example, the English language system and open protocols like TCP, IP, and HTTP inherently lack a central controlling point, making it fundamentally difficult for a single entity to hold all the power. These systems’ designs inherently produce a pluralistic power structure.

However, many real-world cryptocurrency projects face a completely different situation. In these cases, decentralization does not happen automatically; clear institutional design and organizational restructuring are essential. The current situation is that, in the pursuit of resources for business maintenance and growth, issues of power distribution within the project have been postponed.

The Dilemma of Efficiency and Power Distribution

The challenge emphasized by Buterin is how to build a power decentralization mechanism that maintains the advantages of centralized decision-making efficiency and speed while minimizing systemic risks. This is positioned as a strategic challenge that the cryptocurrency industry must continuously address over a significant period.

He strongly urges project development teams to incorporate the re-examination of power structures and decentralization as design goals, on par with the importance of business model sustainability.