I disagree with the taxi medallion analogy.
Jean-Rodney Larrieux
191

Hi Jean-Rodney

Several things for you to think about:

  1. We are today nowhere near equilibrium. In fact, there are virtually no actual widely-adopted use cases for these protocols. When there are in the future, don’t you think there will be pressure on cost of use like there is on any other product or service? Alternatively, if cost of use is high, wouldn’t you suspect use cases to be limited? In the case of protocols, the mechanisms for moving to a competitive equilibrium outcome are stronger than in the case of networked businesses not based on open-source software, so the speed and degree of movement to a such an equilibrium are even higher.
  2. Forks can happen for cost reasons but other reasons too. A successful fork needs to offer something differentiated from the original protocol, but it doesn’t have to be lower cost. Reagarding your example of ETC, as you know, the origin story of ETC was censorship-resistance (a reaction to the fork done to reverse the DAO debacle), not cost. ETC wasn’t created to be cheaper but rather to offer a more censorship-resistant Ethereum. Apparently, but perhaps not surprisingly, censorship-resistance appears not to be a priority for users in the case of cryptokitties…
  3. If you read my paper, you know that I don’t discard the value of developers at all. On the contrary, I point out that developer incentives are a key problem for protocols. One of the problems is that developers are not contractually bound to a protocol and are incentivised to compete with one another by copying each other’s work, forking, etc.
  4. As far as Dapps are concerned, they are in fact very portable. Look no further than the Kik example cited in my paper. It’s quite easy (and in fact inevitable) for a Dapp to work on multiple blockchains or change blockchains if the blockchain it’s on becomes expensive to use. And in the case of a fork, such compatibility is automatic since at that moment the software and user-base are identical.
  5. You allude to the fact that transactions on Ethereum are relatively inexpensive. One key reason for that of course is that you pay for transactions in GAS, which is decoupled from the value of ETH over time. So, the question you must ask yourself is, why therefore would ETH have the value it has the actual amount required to purchase the GAS needed to pay for blockchain maintenance is very low?

John