Let’s be practical. Absolute decentralization is an ideal…
Decentralizing software is a worthy ideal but very difficult to accomplish. Decentralization (or the extent thereof) will become a critical differentiator between old and new protocols, especially when censorship resistance, immutability, and trust issues are integral to what a protocol serves.
Bob: “OK, I’ve got the lightswitch completely abstracted and almost fully decentralized!”
Alice: “awesome, I’ll start getting the ICO ready!”
Even as decentralization abstracts functionality previously embedded into centralized models, there will still be a need for some centralized or semi-centralized services to optimize the user experience of decentralized tech stacks. Processes that can maintain utter transparency of “what’s going on”, or those that do not require critical “trustfulness”, may be better operated centralized and still play nicely within decentralized ecosystems.
And it’s precisely the Nth degree of abstraction that allows entities to focus on specific things that can facilitate “the rest of” a new value chain, to appropriately specialize as rent seekers based on competence and functionality, where anybody can compete for profits, but where value MUST BE delivered or is vulnerable to economic competition every step of the way.
Somewhere in the “stack”, pure profit motives are going to
intersect with “purely” decentralized economies.
I buy into the trend towards “abstraction” completely. Of modularity and finding your niche. But the practical solution for now is to use decentralization for what decentralization is essential for, and use non-decentralized tactics (as transparently as possible) for things that can be done better without forfeiting critical decentralization benefits.
Consider if there were no “rents” willing to be paid and available to earn. It’s unlikely anyone would be motivated to spend the time and effort to design logical and beautiful user interfaces, with specific utility and process flows customized for discrete audiences and discrete purposes. The use cases are too varied and the potential customizations too granular to be catered to without profit motives.
Marketplaces for the exchange of value (“trading”) is an especially sensitive use case; moving assets between parties is non-trivial in both execution and perception. Not only is it important to make trading secure, intuitive, and efficient; but markets also need to be liquid. To achieve liquidity and other network reinforcing characteristics (such as those that exchanges depend on), successful marketplaces need to CAPTIVATE users to the platforms with utility, features and value.
Competing for eyeballs is expensive. Creating awareness is expensive. Design and designing great user interactions is expensive. Providing liquidity is expensive. Performing these roles deserves compensation.
Speculating on tokens is NOT the only “decentralization” business model. There’s no shame in being a landlord in a mostly decentralized community.
Ron Bernstein is an advisor to the Augur Project, and the founder of AugmentPartners Limited, a software development company building Apps and dApps that complement decentralized trading exchanges. He previously founded Intrade.com.