What decentralization is good for (part 3): growth

Picking back up the series on what decentralization is good for (part 1, part 2), today I want to focus on one of the most exciting aspects of decentralization: growth.  

In this case, when I say “decentralized”, what I really mean is “open and non-proprietary”.  The two often go hand-in-hand.

Ok, so why are open, decentralized systems especially good for growth?  When a technology is open (anyone can use, extend, modify, build on) and decentralized (no one party or company is in full control), it has the potential to spread like wildfire, for exactly those reasons.  Since it is free to use without restriction, permissionless innovation is possible — meaning anyone who feels like it can pick it up and run.  And because open, decentralized systems reduce platform risk, developers can feel comfortable building on them with less of a risk of getting the carpet pulled out from under them.

When this works, it works really well. Many of the technologies we use every day — like HTTP, SMTP, WiFi, USB and Bluetooth — have become ubiquitous precisely because they are open, nonproprietary and decentralized in nature (in addition to being useful!). 

Everyone knows that it’s safe to build to the Bluetooth standard without platform risk.  And what that means is that anyone, no matter what company they are with, or what country they live in, has the potential to grow the platform.  This kind of omni-directional growth is really only possible with open, un-owned, decentralized technologies.  

Often times, however, a single company drives the development of these open, un-owned, decentralized technologies.  For example, the General Transit Feed Specification is on open data format that powers most of the public transit industry. As I have written about before, this standard came to market in large part because of Google’s initial efforts, and was then adopted and grown by a large community of others (including our work at OpenPlans back in 2009-2012). Or, to go farther back, we can look at the role that Mozilla/Firefox played in bringing modern web standards (includuing Cascading Style Sheets) to market.  Or to today, and Apple’s and Google’s role in bringing USB-C to market (of course, Apple does not have the best track record on this topic).  The point is, it can be difficult for open, nonproprietary, decentralized technologies to take off — they need some sort of catapult.  Historically that has come from companies with some self-interest — this has been a good thing (generally speaking).

Today, in addition to companies driving open technologies, we have the potential to use cryptocurrencies to drive initial adoption.  We seen this work to great effect with Bitcoin, Ethereum and other platforms, and while the specific mechanics are still being explored and experimented with, the basic concept is clear: we can use cryptocurrencies and tokens to bootstrap new open, non-proprietary, decentralized technology platforms.  It doesn’t work every time — and we will no doubt continue to see a parade of flameouts — but when it does work, it has the potential to work in a massive, exceedingly rapid, and global way.

   

  • jason wright

    Is a nation state’s fiat currency an open standard?

    • interesting question – essentially yes, if the definition of ‘open standard’ is that anyone can use it without asking permission first

  • Great post. High growth decentralized platforms understand and know how to leverage the power of what “open” and “permisisonless” means to developers. The second a smart developer, businessman or person, is constrained, they look for alternatives where they won’t be. Even if it means downgrading..

    open and permissionless provides the highest level convenience.

    • yep

      a major difference is that companies have big money and incentives to drive adoption

      until recently we haven’t had that as clearly with open standards, so they have been much slower t adopt