Cryptocurrency Utilize the Power of Open Networks
Open networks win over closed ones because they allow for the most optimal systems to win
There is a spectrum of what an open network is, but essentially an open network is a network with no limitations or constraints that someone has to follow to be a part of the network.
The most well known open network is the internet. It is a prime example of what an open network can fully be. Cryptocurrency ecosystems are also open networks and arguably are the best form of an open network society has ever seen.
Layer 1 Crypto Ecosystems
Layer 1s are perfect example of open networks (Bitcoin, Ethereum, Solana, Avalanche, etc). They allow anyone to build on top of the layer 1 infrastructure.
Anyone that wants to participate is able to. Sure, there are constraints on the skills required to build on top of a layer 1 crypto ecosystem, but there is no hiring process.
Below are two graphics for the ETH and SOL ecosystems. There is so much going on. And neither layer 1 had to source the ideas for each project, take any risks, or expend any resources for these projects to be built on top of the protocol.
ETH Ecosystem
Solana Ecosystem
This is the power of an open network. Full inclusion. Minimal bureaucracy. Ultra fast. Risk is spread to individuals willing to take it.
Today, a company may turn down a project because a multitude of reasons, but if several people in the company want to do the project, they are not able to. In an open network, they are.
Example: Python
I could speak of the internet as an example of an open network (social media, Amazon, Dropbox, websites, blogs, etc), but a key example of an open network’s potential and that best reflects a crypto ecosystem is the Python Programming Network.
Python is easily a top programming language at the same level as JavaScript or C++. It is one of the most used languages globally, and even though it’s almost 30 years old, Python is still relevant, given its ease of use, its vibrant community, and many applications.
In the python community, programmers can create packages and modules to perform certain tasks. These packages are available for others to use for free. The community recognizes this value and continues to share code and ideas for any and everyone to use.
For example, here is a graphic of the data analytic tools ecosystem on python:
What is incredible is that python apps are universal. Companies across every industry use Python code to create everything from simple lightweight components to full-fledged enterprise applications. Any individual can use or plug into the python community and share / use code.
Tensorflow
Google recognized this value with their package called Tensorflow.
“TensorFlow is an end-to-end open source platform for machine learning. It has a comprehensive, flexible ecosystem of tools, libraries and community resources that lets researchers push the state-of-the-art in ML and developers easily build and deploy ML powered applications.”
Google released this for free to the public in 2017 because it knew that it would benefit more from the value generation of an open network than expending its own resources. An open network is way more creative.
Google can benefit from other people’s work with out using resources
Cryptocurrency & Open Networks
Cryptocurrency ecosystems reflect the same value proportions as python, the internet, and any other open networks.
Actually, they are better. Open networks today remove the costs of idea generation and projects but they do not allow for the network participants to share in the upside of the network’s value.
Cryptocurrencies are open networks with an economy built in. Those that participate in the network directly benefit when the network’s value grows. With python, the individuals only benefit when projects or ideas in the network are shared and actually help them accomplish something.
For example, I am not a part of the Bored Ape community but I still benefit from their success indirectly by holding Ethereum and being a part of the ETH network.
Incentives are aligned with generating value for the open network. It is important to remember that in a closed network (i.e. corporations, etc), value can be created but it is a closed network of ideas and incentives. And value is only seen in the stock whereas crypto, we see a sum of the parts valuation of the network (ETH, NFTs, DeFi tokens, etc).
Open Networks & An Economy
Open networks layered on top of an economy are unmatched. Government and centralized organizations will have a difficult time keeping pace with these open networks.
And now that these open networks are turning into economies, they will be nearly impossible to stop. But why would you stop them? The value creation will be unmatched.
Only if you are an incumbent seeking to hold onto power but that will be like one person holding back a hoover dam of innovation. Keep in mind the same happened with the internet and trying to hold it back. Only a fully authoritarian country like China could hold the internet back.
The transition phase might be bumpy but if you close your eyes for 10 years, crypto will be winning the war and value creation will be exponential.
Authored by Derman Capital (Twitter)