How Decentralizing the App Layer Drives Innovation

TL;DR; By removing the need for aggregated storage, computation, and payment, crypto networks will provide a superior platform for application innovation.

One of the common themes of late on this blog is the idea that crypto-economics could alter (ranging from severely to mildly) capitalism as we currently know it.

An excellent article from the Economist, Thin Heads and Fat Tails: Understanding the Crypto Reinvention of Capitalism, had one line that just absolutely jumped out at me:

“Once the buzz and disenchantment phase pass, crypto and Web 3.0 can come of age.
That matters because it could decentralize the app landscape further and, for the first time, break the trend of centralizing of data,”

While the underlying technology infrastructure is really cool, it’s the apps that make it really valuable (for more, see The Myth of the Infrastructure Phase).

For example, you don’t care about TCP/IP, you do care about email. You don’t really care about 4G, but you love Spotify or Fortnite.

The same will be true of crypto.

But, what’s interesting about crypto is that the underlying “trust layer” to make this work, which consists of cloud-based servers for storage and processing as well as credit-card based payment systems, all had to be centralized. There was no alternative, so that naturally favors companies like Apple and Google.

However, in a crypto world, where you have control of your own wallet and funds (thereby immediately proving your ability to pay with Bitcoin or Zcash*) and storage and processing can be spread across the network (in the form of Storj, Sia, Arweave*, Filecoin for storage and Ethereum, ARK*, and others for computation), it’s a different scenario.

In this world, an app developer can combine those pieces (no need for the App Store), build an app, have it deployed and just pay for each of those services as they need them, without being beholden to any one platform.

That’s a big deal and it reduces risk for developers (since Google and Apple have been known to change terms of service unilaterally) as well as incentivizing app innovation…for the same reason.

Eventually, developers will move to the environment with the lowest cost for them and least amount of risk.

It will take some time, but the value proposition of crypto is superior.

*disclosure: pre-existing advisory relationship