Bitcoin has created a public utility (payment rails/value storage) out of thin air just by taking advantage of people’s greed. To see how far we can replicate Bitcoin’s success in other real life businesses, let’s try to decentralize several businesses.
Manufacturing a Table
The steps in making a table are: make a design, source material, work the material into shapes, assemble pieces.
Design: extremely subjective. Many people will come up with different designs, and any decision has to be made by a human with ‘good taste’.
Material sourcing: the choice of a material over another depends not just on its performance, suitability to the design, but also its price and availability. Which means a human will make this decision.
Working the material: perhaps a machine can shape the material and inspect the finished product. Realistically though a human is involved.
Assembling parts: a machine could do this, but humans are still needed for QC.
Conclusion: table manufacturing has no business being ‘decentralized’ a la Bitcoin, because the work done is physical and human taste is needed to judge almost all parts of it.
Plus, being ‘decentralized’ wouldn’t bring any benefits for the end user.
End user benefit: an email service that doesn’t read its users’ email, but yet doesn’t need a user to pay money.
Steps: Setup hardware, software, hosting service: same as when setting up your own blockchain node
Hey, this already exists and is called self-hosting! But self-hosting is just running the email server for yourself, let’s go further than that and offer the service to others.
To prevent abuse we have to ask for a cost again, which could either be
- time (run the email server on your own machine)
- token (fiat money or cryptocurrency), which begs the question: how should the user earn the token. Perhaps he could host the software too, but then that would be back to self-hosting.
Conclusion: email is already decentralized, and we are simply being spoilt by Gmail being free. Everything has a cost.
End user benefit: a search/recommendation engine that isn’t corrupted by advertising, yet still manages to exist without asking users for money. A true common good.
Scraping webpages: This seems like a great task to hand off to random distributed computers, except it isn’t: the content of a URL should be objective, but isn’t – pages change with time, and even by IP geolocation. Thus the truth is subjective. We must guard against an attacker who wants to game the recommendation algorithm by submitting a fake version of his webpage. We can do this economically by requiring that tokens be staked, but it should not be the only safeguard as it depends on the token’s price.
Alright, scraping webpages takes resources and introduces subjectivity. Let’s instead record which users liked which items, which means we don’t need to know anything about the URL except that it isn’t a 404.
A like/dislike button in the web browser influences what is shown in the browser sidebar, called ‘Similar Pages’.
The user earns tokens by expressing his like/dislike for pages. To make this data available on a distributed database, he stakes tokens on his preferences, and receives the tokens as his reward for adding his preferences to the dataset.
However, what a user likes/dislikes is subjective, and any participant trying to game the system (to earn tokens, to establish false relationships between content) can hide behind that argument and the system cannot slash him for acting dishonestly. Again we find that the difficulty of verifying something external in an automated way is the problem.
OK let’s go back to scraping webpages and labeling them using an AI. It’s less subjective and therefore less complex. Companies have done this before. Maybe we can keep the centralized company but reimagine the economics.
It turns out you do need humans in the loop to make good search results after all, so at some point you will have to pay humans. According to Wikimedia Foundation Financials humans are the biggest expense item, so even if you decentralize the system enough so that it runs entirely on users’ computers, you have to pay humans to maintain it.
Humans currently maintain Bitcoin, Ethereum and Solana, so this isn’t a showstopper. So why is humanity willing to pay for decentralized computation when it’s not willing to pay for search, which builds upon computation and storage?
Because search is already available elsewhere for free, and it’s good enough, whereas immutable, censorship-resistant computation always costs, no matter where you look. Google is bad, but I can work around it, and there are other free search engines.
So just because something is immensely valuable (like water) people aren’t going to pay for it. People will only pay when their relative circumstances force them to.
Decentralization adds massive complexity because of the need for objective, easily verifiable truth.
Bitcoin is simple because it relies on simple objective truth (mathematics) which does not rely on external data. This allows it to know for sure when someone deserves its newly minted currency.
Aligned values and being decentralized are two different things. Search engines like Neeva and Kagi show that if users pay, values are aligned.
To align values between a user and a provider, a cost must be paid, either in a token, or time (participating in running the system). If there is a token, the question is how does the user earn it, besides buying it with fiat money.
If humans are doing work in the system, they will be the bulk of the costs. Thus you will eventually need to pay money for the token (otherwise it will go down in value), or just pay money for the service like in real life.
People don’t pay for absolute value. They pay when they can’t get that value anywhere else (or not without a steep cost in time/energy).