The revolution of our generation is the way we think
Why are the things that we build going to crash when we put them in the real world? What’s the nature of this? What can we do to avoid that? How can we then create the next generation of systems that will do better? Also, what happens when we succeed?
I’ve had the good fortune to learn about the idea of decentralization a few years ago, a concept that had a profound influence on the way I think about almost everything in our lives.
Put aside what you don’t understand about bitcoin, the blockchain technology and all the noise and speculation around it, the idea of decentralization introduced a new mindset. The mindset to share the value, an authority (e.g., a bank) is not mandatory. It’s a choice.
Going further, the mindset, that everything, as we know it…can turn upside down.
The most exciting part is that this concept is possible, really for the first time, as a result of the world going digital.
It doesn’t matter if it’s going to succeed or not — markets don’t happen by their own, we have to shape them — all that really matters is the mindset that this effort introduced.
The overlap with the old system
Historically, when a technological revolution begins, it overlaps for a while with the world of the previous revolution. During this period, markets need to be open and entirely liberal, so we can do experiments and fail/succeed fast. Eventually, the old economy declines and the new one — very small at first — is then moving, booming and eventually flourishing and bringing the new age. And this cycle repeats itself throughout the history.
A very important part is that the technological revolution of decentralized economies introduces protocols/currencies that are not owned by any authority, so they will need to be governed by us, the users.
A system without authority would not be easy to be maintained. That is why we created the concept of the coins/tokens to incentivize people to maintain the ecosystem.
This is how a pure decentralized protocol economy works.
Currently, the decentralization ecosystem is in an overlap with the old financial and investment system.
That’s why we see the oxymoron of “decentralized” protocols/currencies to get funded by old-minded VCs in the Valley through equity.
Receiving funds from equity investors immediately turns you into a company. And companies are by default centralized systems.
Besides that this action deficits and delays the whole idea of decentralization, these new companies create a structure with a single point of failure. The company can shut down their service because the investors no longer think that is worth keeping it alive, the team can disappear tomorrow, and all the applications that built upon their protocol would get destroyed too.
Imagine if the TCP/IP protocol of the internet had investors as board members making decisions for the future of it.
When the internet was born, there were attempts from private funds to build a private network as well. The reason it failed was mainly because they were restricted to proprietary interconnection, with restricted rights to both the users and other firms. Nobody interconnected with anyone else. The standards coming from universities were not proprietary, and that is actually why it worked…
How can we create the next generation of systems that will do better
It seems that one of the major things that is keeping us back as human beings is that analogy binds our thinking process to prior experiences. It might be the reason behind the fact that there is always a crash before a revolution.
The same is happening in every type of change. For example, most of the AI companies are designing systems based on what we already know, what we’ve seen.
As the new generation of investors and founders, instead of rolling back to the old, we can start thinking regarding the new economic/intelligent systems. We are lucky enough to learn from the mistakes of the last five technological revolutions, so we avoid them.
Back on decentralization and the new economy: How we can design better coin/token economics, so they make sense for both the investors and the community?
On my next article, my team and I will introduce a framework about a few token/coin economics that worked and how we can recognize the good from the bad investments.