the core internet services will likely be almost entirely rearchitected in the coming decades. This will be enabled by crypto-economic networks

Cryptonetworks combine the best features of the first two internet eras: community-governed, decentralized networks with capabilities that will eventually exceed those of the most advanced centralized services.

Centralized platforms follow a predictable life cycle.

As platforms move up the adoption S-curve, their power over users and 3rd parties steadily grows.

When they hit the top of the S-curve, their relationships with network participants change from positive-sum to zero-sum.

Over time, the best entrepreneurs, developers, and investors have become wary of building on top of centralized platforms. We now have decades of evidence that doing so will end in disappointment.

Cryptonetworks are networks built on top of the internet that 1) use consensus mechanisms such as blockchains to maintain and update state, 2) use cryptocurrencies (coins/tokens) to incentivize consensus participants (miners/validators) and other network participants.

In short, cryptonetworks align network participants to work together toward a common goal — the growth of the network and the appreciation of the token.

Many of the most important software projects in history were created by startups or by communities of independent developers.

If you compared the two products in the early 2000s, Encarta was a far better product, with better topic coverage and higher accuracy. But Wikipedia improved at a much faster rate, because it had an active community of volunteer contributors who were attracted to its decentralized, community-governed ethos.

Centralized systems often start out fully baked, but only get better at the rate at which employees at the sponsoring company improve them.

Decentralized systems start out half-baked but, under the right conditions, grow exponentially as they attract new contributors.

Decentralized platforms, by contrast, often launch half-baked and without clear use cases.

they need to go through two phases of product-market fit: 1) product-market fit between the platform and the developers/entrepreneurs who will finish the platform and build out the ecosystem, and 2) product-market fit between the platform/ecosystem and end users.

In cryptonetworks, these decisions are made by the community, using open and transparent mechanisms. As we know from the offline world, democratic systems aren’t perfect, but they are a lot better than the alternatives.