Fallacy of Decentralization – Essays

Fallacy of Decentralization

27 Feb, 2026

Decentralized networks work well when everyone is following the protocol.

But there are always bad actors in large decentralized networks, they attack the protocol or attack other network participants.

Traditionally the way you mitigate this is by adding a sub-system to filter out the bad actors. This sub-system than ends up with so much power it centralizes the network.

Another way to solve it is by federation, which can decentralize the filtering. But the federations can also collude and centralize the network like the centralization of bitcoin miners.