Crypto’s Business Model is Familiar. What Isn’t is Who Benefits

That’s because there is a major difference between open source code libraries, which can be easily copied, and networks that form around running open source code as a service. An open source library is an empty blueprint. It’s dead code, until it’s run as an instance and is filled with data, users or both, forming a network or service.

What makes crypto unique is its potential to expand on that familiar framework. The principal innovation of crypto networks is their ability to grow network effects by enabling users to share in the value they create.

Like Web 2.0 platforms, a well-designed crypto network is a live, running service, and it too can be the basis of strong network effects that create switching costs. Given that crypto networks rely on open source code, it’s true that they can be more easily copied (or forked). But while replication of code may be free, the social cost of coordinati... See more