Notes on Cryptonetworks

Chris Dixon wrote a interesting piece on decentralization. You can find the article here. Bellow is a summary and some thoughts.


We’re in the 3rd era of Internet:
1st: 1980-’00s — internet services — built on open protocols controlled by the internet community
2nd: ’00-present – GAFA built software and services that rapidly outpaced the capabilities of open protocols. Eventually, users migrated from open services to these more sophisticated, centralized services.

Problem: Today it’s hard for startups. creators etc to grow – they depend on centralized platforms.

Web 3 – 3rd era
– internet services — re-architected
– enabler — cryptonetworks – community governed, decentralized

Decentralization is important because:
when centralized platforms hit the top of their growth curve, their relationships with network participants change from positive-sum to zero-sum.

Enter cryptonetworks

Definition: Cryptonetworks are networks built on top of the internet that
1) use consensus mechanisms such as blockchains to maintain and update state
2) use cryptocurrencies (coins/tokens) to incentivize consensus participants (miners/validators) and other network participants

1. Multiple mechanics to stay neutral as they grow: e.g. open source code, “voice”&”exit” mechanisms.
2. Ways to exit: sell-off or fork

Main Cons(limitations):
1. perf and scalability

Why could decentralized networks win?
Decentralized networks can win the third era of the internet for the same reason they won the first era: by winning the hearts and minds of entrepreneurs and developers.

The lesson is that when you compare centralized and decentralized systems you need to consider them dynamically, as processes, instead of statically, as rigid products. Centralized systems often start out fully baked, but only get better at the rate at which employees at the sponsoring company improve them. Decentralized systems start out half-baked but, under the right conditions, grow exponentially as they attract new contributors.

Growth factors in cryptonetworks:
1. developers of the core protocol
2. developers of complementary cryptonetworks
3. developers of 3rd party applications/services that operate on top

Catalyzed by the incentives associated with the token.

PMF for cryptonetworks:

1) product-market fit between the platform and the developers/entrepreneurs who will finish the platform and build out the ecosystem
2) product-market fit between the platform/ecosystem and end users.

This two-stage process is what causes many people — including sophisticated technologists — to consistently underestimate the potential of decentralized platforms.

The hypothesis is that decentralization will spin better protocols. 
I wonder if that's trye. Intuition tells me the best distribution, 
PR and marketing dollars will win vs the best solution to the problem.

Crypto-network is a term well nailed - it has its own coin store of value
uses that coin as an api-key for transaction.