Web3's Great Gambit: Incentives for the Almost Impossible

But that assumption, that centralized systems don’t know what they’re doing, is delusional. These tech companies are fucking smart. They are led by nimble (and paranoid) leaders, with a ton of money and other treats to hand out, who have no problem understanding the importance of disrupting themselves (see Facebook).

Crypto is a direct, maybe even desperate, financial and emotional appeal to shift your ass from passive consumption to active collaboration.

So the real argument for crypto, and more broadly decentralization, is not that centralized systems are broken. Or that the current business models of the internet are not working. Because, in fact, they are for most consumers and many tens of thousands of creators. It’s that they are so functional that only a radical redistribution of control and ... See more

The competitive disadvantages of decentralization are so immense that it only works if the offered incentives (economic, cultural) outweigh those disadvantages.

‘Centralization’ isn’t failing or fatally flawed. Centralized products and platforms are popular and successful. Centralization provides users with convenience, incredibly low prices, comprehensive directories and marketplaces, and just about everything else we associate with compelling innovations. Netflix, Spotify, Amazon, Apple, and Twitter are ... See more

Not only that, but the incentive-seeking folks on the decentralized side will be overjoyed that they are being embraced by the big centralized companies (see Twitter verifying NFTs!). Because it increases the value of their ‘shares.’

But it should be noted, this incentive system does lead to a signaling problem. To keep people motivated to believe, work hard and spread these decentralized environments, it’s very helpful that the prices of the shares (ie., tokens, etc) and that triumphant vibe within the culture — all plausible evidence of the potential size of the prize and our... See more

But centralization absolutely does limit the number of big ‘winners.’ The omnipresent power law skews value relentlessly to the top. We see this across top companies, investors, creators, influencers and beyond. The more centralized the platform or business, the more this tendency proves true.