Cryptonetworks

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= "they are essentially open-source, mutually owned & operated web platforms. Each network’s cryptocurrency or “token” acts as the internal currency, incentive mechanism, and “binding agent” for the other processes that help the platform function". [1]

Description

Chris Dixon:

"Cryptonetworks are networks built on top of the internet that 1) use consensus mechanisms such as blockchains to maintain and update state, 2) use cryptocurrencies (coins/tokens) to incentivize consensus participants (miners/validators) and other network participants. Some cryptonetworks, such as Ethereum, are general programming platforms that can be used for almost any purpose. Other cryptonetworks are special purpose, for example Bitcoin is intended primarily for storing value, Golem for performing computations, and Filecoin for decentralized file storage.

Early internet protocols were technical specifications created by working groups or non-profit organizations that relied on the alignment of interests in the internet community to gain adoption. This method worked well during the very early stages of the internet but since the early 1990s very few new protocols have gained widespread adoption. Cryptonetworks fix these problems by providing economics incentives to developers, maintainers, and other network participants in the form of tokens. They are also much more technically robust. For example, they are able to keep state and do arbitrary transformations on that state, something past protocols could never do.

Cryptonetworks use multiple mechanisms to ensure that they stay neutral as they grow, preventing the bait-and-switch of centralized platforms. First, the contract between cryptonetworks and their participants is enforced in open source code. Second, they are kept in check through mechanisms for “voice” and “exit.” Participants are given voice through community governance, both “on chain” (via the protocol) and “off chain” (via the social structures around the protocol). Participants can exit either by leaving the network and selling their coins, or in the extreme case by forking the protocol.

In short, cryptonetworks align network participants to work together toward a common goal — the growth of the network and the appreciation of the token. This alignment is one of the main reasons Bitcoin continues to defy skeptics and flourish, even while new cryptonetworks like Ethereum have grown alongside it." (https://medium.com/@cdixon/why-decentralization-matters-5e3f79f7638e)


Discussion

Rick Grossman:

"Our interest continues to be on the potential for cryptonetworks to provide digital services, such as computing, file storage, social applications, and more.

You might ask, why is it important to have another way to provide digital services? We already have lots of websites and apps that do that today. The reason cryptonetworks are an interesting addition to today’s digital services is their core architecture of decentralization. Just as the original internet gave us a decentralized layer on top of the telecommuncations network, which resulted in untold innovation, cryptonetworks are a decentralized way to provide digital services. Chris Dixon has a great post exploring why this is important, including the historical parallels to the original internet.

The decentralized architecture of cryptonetworks has the potential to address many issues in today’s tech and business landscape, including information security, market competition, product innovation, and equitable distribution of gains from technology.

Imagine, for instance, if the owners or users of Amazon/Google/Facebook/Reddit/etc. were able to “fork” the product and launch an identical competing copy, if they didn’t agree with the direction of the company? And imagine if all of the users of & contributors to a web platform also had a direct, monetary interest in the success of that platform, that reflected their own contributions as community members? This is how cryptonetworks work, since they are essentially open-source, mutually owned & operated web platforms. Each network’s cryptocurrency or “token” acts as the internal currency, incentive mechanism, and “binding agent” for the other processes that help the platform function. And further, the internal data structure of cryptonetworks, the distributed ledger or blockchain has unique properties that can improve privacy and data security." (https://www.nickgrossman.is/2018/cryptonetworks-and-why-tokens-are-fundamental/)

Cryptonetworks for Labor

George Zarkadakis:

"After the free-for-all of the 1990s, and the consolidation of the 2000s, a new, third era of internet evolution is being ushered in by ‘cryptonetworks’. Such platforms are decentralised by nature. Participants purchase and consume tokens (or ‘crypto-coins’) for their transactions on the network, which reaches a settled consensus or record-book of those transactions without the need for a central authority. These two factors – tokens and consensus – result in a democratic and communitarian governance model that was previously impossible without the presence of a trusted third party. And significantly, participants have a right to exit the network whenever they wish by simply selling their tokens, or coins, or – in extreme cases – by ‘hard-forking’ the blockchain, adopting new rules for how to settle the ledger while leaving the old version unchanged.

Cryptonetworks show that it’s feasible for workers to self-organise and build their own platforms – where they are the bosses, income is distributed equitably, and profits and losses are shared. In this collectivist scenario, workers might decide that their mission is to safeguard jobs, offer health insurance or pension funds, and improve employees’ quality of life. The dynamics of tokens make the interests of the participants align around common aspirations and goals, since the appreciation of their tokens comes through the growth of the network.

We’re in the early days of cryptonetworks. They’re still plagued by serious technical shortcomings, notably scalability and performance. Blockchains cannot, at present, process the huge number of transactions that centralised software systems can; and for technical reasons, the amount of energy it takes to secure a transaction on the blockchain increases over time. So why be optimistic that cryptonetworks might be the platforms of the future?

One reason is that centralised platforms are becoming stifling for developers. With a blinkered focus on how to monetise user data through machine learning, apps from the big tech companies are becoming less and less imaginative. Software developers have grown frustrated with the App Store and Google Play, which require approval in order to publish an application. The economics of platform collectivism offer much greater freedom and reward than the winner-takes-all approach of platform capitalism.

In the future, one can imagine an interconnected ecosystem of collectivist groups that provide services and produce goods. Where once there was a corporation, instead we find a network of cells that have expunged hierarchies and collaborate for the common good – ride-sharing services linked up to peer-to-peer lending and medical and health providers. The traditional structure of the firm might have reached its use-by date. But if societies can embrace the economics of the platform while shifting its ownership to workers, a more equitable, resilient and democratic society could well be in store." (https://aeon.co/essays/workers-of-the-world-unite-on-distributed-digital-platforms?)

More information

  • check the google slides deck linked in this article