So far, decentralized blockchain is best known as the technology that underpins Bitcoin and Ethereum. These public blockchain networks dominate the scene, both in terms of developer activity and cryptocurrencies traded.

Thats unsurprising considering the innovation both have enabled. A decade ago, Bitcoin provided a way for us to exchange value digitally and in a peer to peer manner with anyone else in the world. Roughly five years later, Ethereum enabled us to build sophisticated services around these value exchanges in the form of smart contract-enabled decentralized applications.

All of this innovation is understood by most people to revolve around decentralization. But what actually is decentralized blockchain?

This is an important question to be clear about before we look ahead to what the future holds and it is one that L3COS, a regulated blockchain-based operating system I recently discovered, does a good job of explaining.

It describes decentralized blockchain, as proposed by the creator of the Ethereum blockchain, Vitalik Buterin, as having three parts political decentralization, architectural decentralization and logical centralization.

Political decentralization means there is no regulating central authority, as is the case with Bitcoin. Architectural decentralization relates to infrastructure, with a network of distributed computers keeping the blockchain running together, so there is no single point of failure.

Logical centralization relates to the commonly agreed state of data, with all computers in a decentralized network sharing a single database.

As mentioned, these characteristics have been established norms for decentralized networks for many years now. However, as blockchain increases in significance with a wider variety of entities using the technology, the question of whether this will always be the case is an interesting thread thats worth pursuing.

Its worth stating that Bitcoin and Ethereum seem very unlikely to disappear entirely. Although they have not been adapted en masse, there have been signs in recent months that more and more of the traditional finance world is increasing its exposure to these key digital assets.

However, there is another important dynamic emerging in the world of blockchain that could have an important impact on the evolution of decentralized blockchain. Governments around the world are investigating the idea of issuing Central Bank Digital Currencies and using blockchain as the technology that underpins them. If they do so, they are unlikely to choose a blockchain that is politically decentralized in the way that Bitcoin and Ethereum are. This is noteworthy in relation to L3COS, which describes itself in the following terms:

Unlike most blockchains, L3COS is politically centralized. The operating system is designed to be regulated by the government.

It goes on to say that the system is based on three user levels, governments and members, businesses and their representatives, and society and individuals. Each level has its sublevels and permissions can be regulated on a personal basis, with the government ensuring every participant complies with these regulations.

The L3COS blockchain is architecturally decentralized but it is politically centralized. It claims to provide all the benefits of decentralization in terms of security, scalability, attack resistance and direct transactions between participants. However it also claims that regulation by government means the power of the technology will finally be recognised by businesses and individuals.

It seems clear that, now blockchain is really moving into the mainstream as a result of more and more governments and businesses using it, the technology will change from what we have today. In truth, the established decentralised networks may be extremely popular within the blockchain community but they are still just a tiny slice of the digital world.

These networks are unlikely to disappear as so many within the community have invested so much in them. But for new entrants who arent already affiliated with a particular network or community, they will be looking for the best solution for the needs. Who knows what this will mean for the future but theres no doubt government use of blockchain will be an increasingly important force and could have a dramatic effect on the evolution of decentralized blockchain.

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How will decentralized blockchain technology evolve in the future? - Gary Skentelbery