How Governance Tokens Capture The Essence Of Decentralization

Jake Ryan
4 min readJul 14, 2021

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What does it mean to be decentralized?

The textbook definition of decentralization is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group.In other words. Decentralization means that not a single entity or individual has full control over a network.

The benefits of decentralization

Decentralization allows for a trustless environment, more network security, a community-first approach, and removes the risk for a single point of failure. Let’s use Bitcoin as an example. Bitcoin is a peer-to-peer currency that has no middle man. There is no bank or trusted third party required to settle a transaction. You may be wondering, with no company or individual controlling the network how can the network evolve and improve if it needs to? The answer to that question can be captured in a single word — Governance.

The idea of governance

Governance is a collective action that seeks out the best direction for a group of individuals. This concept has been around since the dawn of time. We see it in every country, company, and now we are seeing it in our lines of code. Governance plays a crucial role in the direction…

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Jake Ryan

CIO at Tradecraft Capital & Author of CRYPTO DECRYPTED & Crypto Investing in the Age of Autonomy, published by Wiley