Death by Wealth
Fundamental Misalignment of Decentralized Technology
Today’s blockchain platforms are designed as single networks, which presents a serious weakness. The weakness comes not from being architecturally wrong, but from being architecturally specific. Specificity of designs — computational, architectural, and economic — makes such networks unsuitable for subsequent innovation by their users.
This is coupled with upgrade difficulties inevitable in the decentralized context. Blockchain networks suffer from the “adoption conundrum”: new networks will always provide better features than those with significant existing adoption. This is because pre-adoption networks are free to learn from the experience of incumbents faster than the incumbents themselves.
What’s worse, the perceived need of decentralized platforms to channel value into their own tokens exacerbates this problem. Upgrades to the network can only happen if they generate additional value for the existing token holders with minimal risks. This significantly limits the route innovation can take. Forks are incredibly contentious. Conflicts arise in the context that entirely lacks formal governance and become bitter and destructive.
Each new blockchain platform comes to market pre-programmed as a self-fulfilling and self-aggrandizing money machine for its creators and early supporters. This sets the stage for bitter economic wars whose victims are user experience, architectural freedom, and innovation itself. These wars rage in the space between technology, economics, and politics — wars for control of the digital economic space whose landscape is all but clear at such an early stage.
The industry is suffering from intellectual insecurity — the misguided belief that the number of good ideas is fundamentally limited, that the digital economic landscape of tomorrow is a finite territory. This is becoming so bad that participants are turning to the trusty old tool, legal IP protection, which has previously been misapplied to turn whole industries (notably, pharma) into monopolistic money machines of destruction in the name of shareholder value.
Those not taking such radical approaches instead channel plentiful ICO money into ecosystem funds, whose sole reason for existing is increasing value of the fundamental token of the platform. Whatever the platform design, they hope that pumping money into development on such a platform will generate good returns on investment.
People place much faith into numbers. If you hold 95% of some token supply the number you use to measure your wealth is truly staggering. It is also meaningless. You can never sell 95% of your supply at the current market price. Nevertheless, growing that number at whatever cost seems to motivate some people. Stifling innovation by promoting a product that can not be meaningfully upgraded is then the chosen route to do so.
I do not believe that innovation is finite. I imagine that we can all become infinitely enriched by calmly expanding our collective knowledge through non-competitive exploration of this truly amazing space of possibility. I do not oppose personal wealth as a goal, but I do oppose it if it comes as the expense of innovation, cooperation, and relationship.
I also hold the belief that monetary incentives are inferior to simple gratitude. When people ask me how the developers will be incentivized to build and maintain a product that doesn’t have the staggeringly gargantuan incentives of today’s networks, I usually shrug and point to Linux, GCC, and Wikipedia — examples of incredibly successful, useful and agile products that will likely survive Ethereum, Bitcoin, and Stellar. There is plenty of non-predatory ways to economically sustain one’s contributions. Most importantly, however, contributing to something that benefits others may be the best incentive.
Why is inventing a new consensus protocol the reason for someone to become a billionaire with tunnel-vision? Surely an advanced piece of software, consensus protocols were designed to benefit people, by enabling them to be fully in control of their digital economic experience. Decentralized networks are falling radically short of this vision. By virtue of their once-size-fits-all architectural specificity they offer very limited opportunities for improvement at the user experience level. By leeching value into their own economic models, they encumber everyone driven to decentralization, while offering a false promise of freedom and creative opportunity.
I do not agree with this direction. As some of you may know I have been working on a design of a toolkit that is not intended to be a tokenized network. The system will simply enable people to launch their own networks, focused on what their users need. Please stay tuned.