One of the most profound shifts taking place today – because of new technologies – is that of decentralization. I’ve written about this before, but I keep coming back to it because I find it so fascinating.
It’s happening to varying degrees, but as a general trend, I believe it is leading to better data (less information asymmetries), more efficient markets, and the removal of many middle people. In the past, some intermediaries were necessary in order to act as proxies for portions of the market. But I believe that is changing.
So what’s an example of this? Bitcoin. Bitcoin is an example of decentralization because no one entity controls it. It operates through a decentralized public ledger. And because of this, it has the potential to be highly disruptive to the way we think about currencies today.
Put another way, I see decentralization as a way to leverage the wisdom of crowds. I am convinced that large groups of people can be incredibly intelligent when they’re allowed to contribute in the right ways. And I think this could solve many different problems, from the infighting we see within cities to broader market phenomena.
As another example, there’s something new in the venture capital space called DAO – which stands for Decentralized Autonomous Organization. Essentially it’s a decentralized VC platform based off of a Bitcoin derivative currency.
But perhaps the most noteworthy and relevant feature is that it allows its large pool of investors to anonymously vote on which investments to pursue. This is in contrast to a more centralized approach where an investment committee would meet behind closed doors in a big boardroom and make a decision. This would be the more typical approach.
If you’re not in the tech space, the above may not seem all that exciting to you. But I see many parallels between venture capital and real estate development, which is one of the reasons I follow the space. So I can’t help but wonder what this trend could ultimately mean for real estate, design, and other city building industries.
I can certainly imagine a world where the forces that shape our cities are more collective and decentralized in nature. It’s already starting to happen through crowdsourcing, social media, ridesharing, and other online platforms.
