Firstly, Bitcoin transaction costs are way higher than alternative payment mechanisms.
James Hudon
341

I probably should have specified what I meant by minimizing transaction fees, aggregating capital, and providing job security…

Minimizing transaction fees: I’m not arguing about the present cost of the Bitcoin payment network relative to existing payment networks. I’m arguing that similar to how firms minimize externalities associated with offering a product (search and information costs, bargaining costs, and policing and enforcement costs), Bitcoin does the same.

Aggregating capital: Bitcoin has succeeded in aggregating capital to the early contributors of the project in a way that no grassroots technology invention ever has. Ben Wu’s The Master Switch does a great job laying out historical context here in the case of telephony, radio, TV, and the Internet.

As a result of profiting from the success of the project, early workers now have capital to devote to maintaining and progressing it. We’ll see — perhaps the Ethereum Foundation has done an even better job aggregating capital that can be devote to maintaining and pushing forward the project. But this has been part of the story for Bitcoin to date as well.

Job security: I mention this a few times throughout — the miners in Bitcoin are the only workers that have job security. A major challenge for decentralized moving forward will be figuring out ways to to provide stable streams for work that can’t be gamed. Colony and Rootcore are two interesting projects working on this problem, but there’s a long way to go here imo.

Regarding what I think a decentralized org is — I mentioned that in the piece. Giving ownership of the product to the users is just the first step and further steps are: creating an incentive system that persists over time without any central party and building out a decentralized governance structure. We’re likely a ways from this working at scale but I’m glad to see these companies take a first step.

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