The era of Bitcoin and Ethereum: How should we confront "power"?

Fear of monopolies by large corporations, concentrated government power, and tyranny by the majority—these three forces evoke apprehension in everyone’s heart.

In a recent paper, Vitalik Buterin offers a response to this fundamental dilemma. The solution is redesigning social structures around the concept of “balance of power”. For those of us living in the world of crypto assets, this perspective is absolutely indispensable.

A World Dominated Simultaneously by Three “Great Powers”

Traditionally, excessive concentration of power was naturally suppressed by geographic distance and communication limitations. However, in the 21st century, this natural restraint has completely vanished.

Governments possess law enforcement authority and can directly control individuals’ lives. That’s why libertarians have spent centuries trying to “tame Leviathan (the mighty state power).”

Large corporations grow more capable of distorting markets as they expand. For example, Starbucks’ contribution to urban homogenization far exceeds the combined influence of 100 competitors with just 1% of its scale. The transition of the video game industry from “fun” to “gambling mechanics” is a typical example.

Civil society also has the potential to misuse its power. Instead of healthy pluralism through independent institutions, there is a risk of falling into populism—charismatic leaders directing millions toward a single goal.

Economies of Scale Are Disrupting the Balance of Power

Historically, two forces maintained this balance:

Diseconomies of scale—large organizations inevitably experience decreased efficiency due to internal conflicts of interest, communication costs, and geographic constraints.

Diffusion effects—technology and knowledge flow across borders and companies, allowing latecomers to “catch up and grow.”

Today, however, these two restraining forces are rapidly weakening.

Automation enables a small team to complete global tasks. Widespread proprietary software and hardware mean consumers can receive products without ceding rights to modify or control them. The advent of the internet has reached unprecedented levels of “idea diffusion,” but simultaneously, “control diffusion” has weakened.

Against this backdrop, extreme concentration of power is becoming an unavoidable trend.

Strategies to “Enforce Diffusion”: From Policy Design to Implementation

So, how can we prevent power concentration while maintaining rapid progress and prosperity?

The answer is to forcibly promote more “diffusion.”

1. Policy-Level Interventions

The EU’s push for standardization of USB-C has made it difficult for companies to build monopolistic ecosystems. Similarly, the US’s ban on non-compete agreements prevents employees from taking skills learned elsewhere, thereby spreading knowledge across society.

Likewise, governments can introduce mechanisms to tax products based on their degree of “proprietariness.” For example, companies sharing technology via open-source methods could enjoy zero tax rates.

2. Counter-Interoperability: Destroy Platform Dominance

Cory Doctorow advocates “counter-interoperability,” which means enabling new services to be compatible with existing products without the permission of the original manufacturers.

Specifically:

• Alternative social media clients: users can choose their own content filtering methods
• Browser extensions that identify AI-generated content on platforms
• Decentralized exchanges for swapping fiat and crypto currencies

Most of the value captured in Web2 occurs at the UI level. Therefore, developing alternative interfaces that are interoperable with existing platforms allows users to remain within the network while avoiding the platform’s value absorption mechanisms.

3. Diversity-Driven Cooperation: Democratizing Economies of Scale

Open-source communities, composed of multiple independent projects rather than a single entity, share the benefits of economies of scale by increasing their “diffusion levels” and maintaining competitiveness against centralized giants.

This approach differs from Piketty’s “tax on wealth to reduce inequality.” While the latter addresses outcomes, the former traces back to the source—dispersing the means of production itself. This is a more fundamental and comprehensive solution.

An Example of “Power Without Power” in the Ethereum Ecosystem

Ethereum’s staking pool “Lido” is a fascinating case.

Currently, Lido manages about 24% of all staked ETH in the network. At first glance, this appears highly centralized. However, concerns about this are much lower than if a single entity controlled 24%.

The reason is that Lido is not a single entity. It has a decentralized DAO structure internally, operated by dozens of node operators, and employs a “dual governance” design. ETH stakers have veto rights over decisions.

In other words, Lido “possesses the capacity to exercise power but is structured to prevent abuse of that power.” This is precisely the ideal form that the crypto world should pursue.

Future Challenges: D/acc and Designing Decentralized Models

Multilateralism faces theoretical risks. As technology advances, entities capable of causing catastrophic damage to all humanity may increase. In such cases, dispersing power is the safest option.

D/acc (Defensive Accelerationism) is a strategy to develop both offensive and defensive technologies, making them accessible to everyone. This reduces the demand for power concentration driven by “fear of insecurity.”

Going forward, projects need to clearly design not only “business models” but also “decentralized models.” That is, they must incorporate structures that prevent becoming nodes of power concentration and address the risks associated with centralized power in advance.

The Ethereum community has also made it clear to Lido: even with these safeguards, excessive concentration of staked assets should be avoided. Currently, they are still far from this risk threshold, but maintaining this vigilance is critically important.

An Ethical Conclusion

Slave morality says, “You are not permitted to become strong.” The morality of rulers says, “You must become strong.”

In contrast, an ethics centered on the “balance of power” should declare:

“You are not permitted to establish hegemony, but you should pursue positive influence and empower others.”

This is the ideal that crypto assets embody and the future that Web3 should aim for.