The challenges decentralized systems face

Decentralized systems

User and developer adoption. Technical feasibility alone does not guarantee the sort of widespread adoption necessary to build a useful social network. Some of the more mature tools developed in this space have faced serious difficulties in attracting a permanent user base, and the problems those platforms suffer from may hinder the growth of new systems as well. Social networks, in particular, are difficult to bootstrap due to network effects.

Decentralized systems

We generally join social networks because our friends are already there. Systems like Steemit and Diaspora are currently incompatible with existing social networks, planning to supersede existing communities like Reddit and Facebook, rather than integrate with them.

Taking a competitive, rather than complementary, position in the market creates a difficult barrier to entry for new projects. Similarly, interoperable protocols require adoption at the developer level. Solid, which hopes to bridge between existing and novel social networks, faces a serious adoption challenge: Why should developers choose to switch to Solid’s new data model, and what’s the incentive for Facebook to make their data interoperable without legal requirements forcing them to do so?

Security. Another major issue is security. “Decentralized” networks generally means anyone can join, which implies these systems have to take strong precautions to enforce security, usually by pushing the responsibility of security to users in the form of managing public key cryptography. It is extremely difficult to develop software that is both cryptographically secure and easy to use.

Most of these systems, like IPFS and Blockstack, do not yet have a good story for how users will manage their private cryptographic keys and gain a good mental model of complex security protocols. As companies like Signal, an encrypted messaging service, have recently demonstrated, this is not impossible to achieve, but it requires an intense focus on usability that we did not see in many of the tools we review in this report.

Monetization and incentives. Given that user data is so important for monetizing these platforms, there is little incentive for the mega-platforms to adopt interoperable protocols – they would rather own all the data. Similarly, content that is viewed and clicked on the most generates the most advertising revenue, so mega-platforms have an incentive to prioritize viral, attention-grabbing or feel-good content. Steemit offers a fascinating alternative model to prioritizing and monetizing content.

However, it replaces opacity with a semi-transparent free market model that concentrates power in a few hands and, if not carefully crafted, might even incentivize more clickbait. Designing robust reward mechanisms for community-governed content is still an open problem, but if solved, this could be integral to placing curation control in the hands of a community.

Resisting market consolidation. Platforms benefit from economies of scale in multiple ways – it’s cheaper to acquire resources like storage and servers in bulk and as platforms become larger they become more useful as a social network and usually, more profitable. Even in decentralized systems like Bitcoin, there has been a natural market consolidation in the form of large mining pools.

This type of consolidation into a few super-participants might be inevitable due to economies of scale. We are increasingly persuaded that this isn’t necessarily a bad thing, and that a more realistic goal might be the development of a robust, competitive marketplace that offers a range of ground rules for online speech, rather than a return to a purely peer-to-peer architecture for communication online.

The challenges decentralized systems face
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