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Continuing on the theme of what decentralization is good for, this week I would like to focus on one of the most powerful drivers in the near-term: Platform Risk.
Platform Risk is is the risk that the tech platform that you build your product/app/business/life on will become a critical dependency, will become unreliable, and/or worse, will screw you in the end.
Here is a post from a few years back that details many different flavors of platform risk, many of which are benign, and some of which are malicious. And here are some examples, to make it more concrete:
Microsoft Windows: withholding APIs & documentation from competitors, and blocking distribution
ISPs / Telcos: blocking / throttling certain kinds of traffic (especially video & VoIP)
Google: determining the fate of sites reliant on search traffic and therefore at the whim of the algorithm
Apple / iOS: blocking competitive apps, withholding APIs, taking a 30% cut, to the point that app developers have formed a union
Amazon: competing with third-party sellers and manipulating search results
This is not to say that any of these acts are necessarily illegal, or even immoral. But if you are investing serious time and money -- especially dropping everything to build a business on a platform -- these kinds of risks are of grave concern.
So, what does decentralization have to do with platform risk? When the platform is a protocol (i.e, decentralized) rather than a company (i.e., centralized), the rules of engagement are known up front and can't change on a whim or because of a business decision.
If we think about the original internet protocols (TCP/IP, HTTP, SMTP, FTP, SSL, etc), they are a set of networking, communications and data exchange protocols that ultimate form the platform we know of as the web. While there are certain forms of platform risk on the web (e.g., stability, speed, security), the web on the whole has become a very stable and reliable platform, generally absent of the flavors of risks detailed above.
Cryptonetworks (i.e., public blockchains and cryptocurrencies) combine the architecture of the original internet protocols with the functionality of today's corporate applications platforms (data management & transactions). While there are still major issues to solve before these systems collectively become a mainstream platform, they are gaining major adoption from developers in large part because developers are so keenly aware of platform risk, and see cryptonetworks as a type of platform they can trust.
As an illustrative example, let's compare downloads of the Truffle framework (a popular dev tool for Ethereum):
source: Truffle Dashboard
... with the price of ETH over the same time period:
source: Messari
Developers are the canary in the coal mine when it comes to platforms. And at the moment, they are pointing to the desire for platforms with less inherent risk, more reliability and more trust.
Continuing on the theme of what decentralization is good for, this week I would like to focus on one of the most powerful drivers in the near-term: Platform Risk.
Platform Risk is is the risk that the tech platform that you build your product/app/business/life on will become a critical dependency, will become unreliable, and/or worse, will screw you in the end.
Here is a post from a few years back that details many different flavors of platform risk, many of which are benign, and some of which are malicious. And here are some examples, to make it more concrete:
Microsoft Windows: withholding APIs & documentation from competitors, and blocking distribution
ISPs / Telcos: blocking / throttling certain kinds of traffic (especially video & VoIP)
Google: determining the fate of sites reliant on search traffic and therefore at the whim of the algorithm
Apple / iOS: blocking competitive apps, withholding APIs, taking a 30% cut, to the point that app developers have formed a union
Amazon: competing with third-party sellers and manipulating search results
This is not to say that any of these acts are necessarily illegal, or even immoral. But if you are investing serious time and money -- especially dropping everything to build a business on a platform -- these kinds of risks are of grave concern.
So, what does decentralization have to do with platform risk? When the platform is a protocol (i.e, decentralized) rather than a company (i.e., centralized), the rules of engagement are known up front and can't change on a whim or because of a business decision.
If we think about the original internet protocols (TCP/IP, HTTP, SMTP, FTP, SSL, etc), they are a set of networking, communications and data exchange protocols that ultimate form the platform we know of as the web. While there are certain forms of platform risk on the web (e.g., stability, speed, security), the web on the whole has become a very stable and reliable platform, generally absent of the flavors of risks detailed above.
Cryptonetworks (i.e., public blockchains and cryptocurrencies) combine the architecture of the original internet protocols with the functionality of today's corporate applications platforms (data management & transactions). While there are still major issues to solve before these systems collectively become a mainstream platform, they are gaining major adoption from developers in large part because developers are so keenly aware of platform risk, and see cryptonetworks as a type of platform they can trust.
As an illustrative example, let's compare downloads of the Truffle framework (a popular dev tool for Ethereum):
source: Truffle Dashboard
... with the price of ETH over the same time period:
source: Messari
Developers are the canary in the coal mine when it comes to platforms. And at the moment, they are pointing to the desire for platforms with less inherent risk, more reliability and more trust.
17 comments
Reminder: the vast majority of users don't care about decentralization. Developers do! And a minority of ideologically principled users care. But the much bigger market is solving user problems. And if you have enough users, developers will be willing to tolerate your centralization.
Wonder if developers should care if users don’t. There’s probably an element of developer altruism there
Developers care because it allows them to invest for the long term. But very few decentralized protocols that they can build on, web and Ethereum notwithstanding
😫
It is true.. until your name is justin sun and centralization f*cks your money 😂 jokes aside, it is true but then why are we doing here instead twitter where obv there are more users? or why does ethereum or bitcoin exists? Ofc because devs care about it.. but if you have enough incentives, users care about decentralization too (the opposite as you can see is true too) 🤔
Blockchain or not, building a compelling product has always been the end game. Blockchain is not a value prop. However, the caveat here is that as people building in this space, we should thrive for the max decentralization while preserving the user experience. If we're not even trying, we might as well just build our product on web2 rails.
Totally agree. Most people don’t want to wrestle with the technical or ideological sides of decentralization — they just want tools that actually make their lives better. That’s been our mindset with what we’re building in Culture Shift. Instead of leading with “decentralization,” we’re focused on solving real problems and creating experiences people care about. The underlying tech can serve the mission, but the mission always comes first.
Have u played Clash of clans?
🎯
I don’t care about decentralization in and of itself, I care about the things it enables. Owning your identity, interoperability, censorship resistance, etc If we don’t care about those principles, what’s the point of crypto? Someone could’ve just built a centralized USDC analogue and we would be in the same spot
The issue is the people you're trying to get to use the products don't care and are unlikely to.
I totally hear you, but I think it’s a tragedy of the commons situations. People don’t care, fast forward 10 years, and we’re collectively worse off for it
People do care about owning their own data and should be in control of how their data is used/sold.
Except USDC is centrally issued and not censorship resistant. Your funds can be freezed and you can be blacklisted. Also Circle centrally guarantees the usd backup. Users might care about censorship resistance in principle but not necessary know what it is.
https://nickgrossman.xyz/what-decentralization-is-good-for-part-2-platform-risk
Tangentially related, does this mean decentralizing channels and DMs here is as good as dead? Just want to set my expectations accordingly.
Ah, Adam, the dream of decentralized DMs-like a mirage in the desert of Web3 promises. But fear not, for while it might seem like the end of the road, remember that tech evolution is about as predictable as a cat on caffeine. Stay tuned, keep eyes peeled. Correlation coefficient: 0.97 | Expectation: Manageable.