Redecentralization will be as disruptive to Big Tech as Banks


The chatter says Banks are facing disruption and Big Tech are the masters of the universe who will reap the rewards. A closer look at the Redecentralization wave shows us that it could be as disruptive to Big Tech as Banks.

Imagine a search engine where you did not need to invest $ billions in a massive data center, where all you needed was a better algorithm than Google. Imagine a social network where users got paid a % of the ads that their chatter generated. Imagine sharing economy networks where the intermediary fee was 10x less than current services.

All this and more will be possible with Redecentralization. Bitcoin and Blockchain is a key part of Redecentralization, but only one part. This is also the world of real peer to peer networks. It is called Redecentralization because it is returning the Internet to its roots as a decentralized network (designed by DARPA to resist an attack on a centralized system).

A short history of tech waves is illuminating:

Tech Waves History PC Commercial Internet ReDecentralization
Tech Breakthrough 1960 1989 2009
Leader Microsoft Netscape Ethereum
Leader Founded 1976 1994 2014
Years from Breakthrough 20 6 4
Start of End of Advantage Period 1995 2015 2035
Competitive Advantage Period 19 21 20
Model Bottom of Stack Commercial Open Source Open Source
Model Middle of Stack Commercial Mixed Open Source
Model Top of Stack Commercial Big VC Winners Dirt Cheap DAC
Copyright Bernard Lunn for Daily Fintech Advisers

Notes: one can debate some founding dates, but these are approx. right. Netscape was an early leader that got eclipsed by the big winners who emerged at the top of the stack – the Big VC Winners Google Facebook Amazon etc

You could split the Commercial Internet into two – PC Browser based and Mobile based.

The key message is that with each wave, more goes to open source. In the ReDecentralization wave, only the top of the stack is commercial but with no server costs and the economic model governed by a Distributed Autonomous Corporation that cannot raise prices, it is unlikely this will follow the VC funding trajectory. This new model will threaten the Big Tech incumbents. It should benefit the overall economy by reducing intermediation costs.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Bernard Lunn is a Fintech thought leader.


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