Meta-Platforms and Cooperative Network-of-Networks Effects

Why Decentralized Platforms Will Eat Centralized Platforms

Samuel M. Smith
SelfRule
Published in
45 min readMar 25, 2019

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Platform (Network Market) World

Blockchain technology has the potential to truly revolutionize network computing and associated markets such as finance, supply chain, social etc. One of its main attractions has been its promise of bringing more virtuous and trustworthy governance as a result of more decentralized control of the underlying systems. Decentralized control has the potential to cause a leveling effect that more fairly distributes value to users, limits exploitation, removes barriers to entry, and increases opportunities for disruptive innovation and value creation. But like any new technology that portends to provide such a leveling effect, blockchain has so far failed to live up to many of its promises. It’s still really early however and this article explain one way those promises may be fulfilled.

A concern comes from the fact that other leveling technologies, such as communication networks, first started as decentralized but then become more centralized over time with the associated value capture eventually becoming concentrated into a few very large business entities with higher rates of value extraction. This historic cyclic behavior is well documented in The Master Switch and The Square and the Tower. One can argue that the internet which started as a great leveler due to decentralized networking has now resulted in most of its value being concentrated in a handful of companies, namely, Google, Apple, Facebook, Amazon, and Microsoft each with valuations near one trillion dollars. Once centralization occurs innovation and value creation decrease and value extraction increases to the detriment of the average user.

One way to combat such centralization is with regulation. The breakup of AT&T is a largely successful example of a regulatory approach to restoring more decentralization that resulted in more innovation, lower costs and overall greater benefits to telecommunication users. Regulatory approaches, however, often come with very large deleterious side effects. What would be better instead is market driven decentralization. Appropriate applications of blockchain technology may enable such market drivers.

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Samuel M. Smith
SelfRule

Samuel M. Smith Ph.D. Is a pioneering technologist in multiple fields including automated reasoning, distributed systems, autonomous vehicles, and blockchain.