#64 | A lesson from Usenet
Usenet is a worldwide distributed discussion system available on computers. … Users read and post messages (called articles or posts, and collectively termed news) to one or more categories, known as newsgroups. Usenet resembles a bulletin board system (BBS) … and is the precursor to Internet forums that became widely used.
Usenet was established in 1980, before the World Wide Web. In fact, this was so early that Usenet hosted the public launch post of the World Wide Web by Tim Berners Lee. Similarly, Mark Andreessen posted about the launch of Netscape on Usenet. It is a decentralised Reddit, open to all and largely ungoverned.
Being decentralised, Usenet is, in essence, utopian. A peer-to-peer network with no filters and, at the outset, all fun. But the vast majority of Usenet's newsgroups are unmoderated. As Usenet grew, those unmoderated groups attracted spam. The volume of posts continued to climb, but this was only because of massive automated spamming. Usenet began to host undesirable content, like child pornography, and the ISPs shut off access (first Time Warner Cable in 2008, then Verizon, then AT&T and AOL).
At first, Usenet was a valuable (Reddit-like) application. It became unpalatable and not useful for the majority. As early as '92, one user wrote: "Usenet is like a herd of performing elephants with diarrhoea. Massive, difficult to redirect, awe-inspiring, entertaining, and a source of mind-boggling amounts of excrement when you least expect it."
Being decentralised, Usenet could not innovate to counter the hostile forces of fraud and illicit activity. Centralised decision-making authority has traditionally been necessary to innovate in a fast-changing world. As Moxie (ex. CEO of Signal) wrote recently:
If something is truly decentralized, it becomes very difficult to change, and often remains stuck in time. That is a problem for technology, because the rest of the ecosystem is moving very quickly, and if you don't keep up you will fail.
Centralisation, while often critiqued, has its strengths. As Andrew Chen writes in The Cold Start Problem (notes below):
'Network products have to constantly tweak and integrate on their product to respond to the behaviour and needs of their audience. … centralized control—usually in the hands of a well-funded company—is in a better position to address the myriad of challenges that might trip up as the network expands.'
Usenet failed. Why? It could not innovate. Its users never owned Usenet, it did not advance technologically, and the protocol's quality collapsed. In crypto, which is often decentralised, this is countered by tokenising the ownership of the project, giving people an ultimately financial interest to work on the project and keep innovating. LooksRare's entry into the NFT marketplace has most vividly demonstrated this dynamic.
LooksRare, in the space of a few days, has become a credible decentralised competitor to OpenSea: "The community-owned NFT marketplace quickly surpassed OpenSea's daily volume within 24 hours of launching, facilitating hundreds of millions of dollars in transaction volume." Centralised marketplaces, even (or especially) in crypto, are vulnerable to community-based copies that use token incentives.
Can decentralised community-owned projects continue to innovate against the likes of a centralised OpenSea (VC backed and likely to launch their community token). Or, are projects doomed to go the way of Usenet: unable to effectively govern themselves or innovate against centralised competitors. It feels like, as the crypto-markets continue to fall precipitously, the ideological dichotomy between centralisation (and innovation) and decentralisation (trust and utopia) will need a resolution.
My week in books 📚
When Jack Dorsey left Twitter (for the first time), he set up Square with Jim McKelvey, the author. They innovated at the bottom of the financial market, giving anyone the ability (for a 2.75% fee) to take payments. This was revolutionary, and the story is excellent.
I finally got around to finishing this. If you work on a project with even minor network effects, this book is essential to understand said dynamics. I highly recommend it.
Live well,
H