As an undergraduate engineering major, I recall being surprised by the so-called three body problem
. In Newtonian mechanics, there are nice closed-form solutions to problems involving the motion of two interacting bodies, given their initial position and velocity. This isn’t true of systems with three or more points. How can adding just one more point to the system make it unsolvable?
N-body systems are chaotic for most initial conditions and their solution involves numerical methods–simulation–rather than nice, undergraduate-level math. In other words, it’s messy. Humans like simple solutions.
Like the n-body problem, decentralized systems are chaotic and messy. Humans aren’t good at reasoning about emergent behavior from the coordinated, yet autonomous, behavior of interacting agents. We build bureaucracies and enact laws to try to make chaotic systems legible. The internet was our first, large-scale technical system where decentralization and governance clashed. I remember people in the 90’s asking “Who’s in charge of the internet?”
In The Most Important Scarce Resource is Legitimacy (see link below), Vitalik Buterin, the creator of Ethereum, discusses why legitimacy is crucial for the success of any decentralized endeavor. He says:
[T]he Bitcoin and Ethereum ecosystems are capable of summoning up billions of dollars of capital, but have strange and hard-to-understand restrictions on where that capital can go.
These “strange and hard to understand restrictions” are rooted in legitimacy. Decentralized systems must considered legitimate in order to thrive. That legitimacy is tied to how well the systems and people enabling them, like programmers and miners, are seen to be following “the rules” both written and unwritten. Legitimacy isn’t a technical issue, but a social one.
Wikipedia defines legitimacy as
the right and acceptance of an authority, usually a governing law or a regime.
While this is most often applied to governments, I think we can rightly pose legitimacy questions for technical systems, especially those that have large impacts on people and society.
The defining characteristic … of a constitutional order is its basis for legitimacy. The constitutional order of the industrial nation state, within which we currently live, promised: give us power and we will improve the material well-being of the nation.
In other words, legitimacy comes from the constitutional order: the structure of the governance and its explicit and implicit promises. People grant legitimacy to constitutional orders that meet their expectations by surrendering part of their sovereignty to them.
Talking about “legitimacy” and “constitutional orders” for decentralized systems like Bitcoin, Ethereum, or your favorite NFT might feel strange, but I believe these are critical tools for understanding why some thrive and others wither.