A fun read, but to me it ultimately speaks to why blockchains are best suited to internal use by large enterprises (not consumer, small businesses, etc).
The web flourished due to its lightweight, comparatively easy-to-implement protocols. Applications could be built cheaply and easily on top of it. VCs and many entrepreneurs profited handsomely. Much of the past 20 years in tech has been pushing this concept to literally every person on earth.
Compare to the 'fat protocol': The protocols are tough to write, and tough to implement. The value is captured at the protocol level, not the app level, so there's little incentive to create inventive apps.
Few apps will be created on such systems, so few successful consumer applications will created with them. Seems like the winner here is in business-facing systems. For USV, it strikes me as peculiar to favor the 'fat protocol' and back other types of businesses (e.g. consumer).
> Compare to the 'fat protocol': The protocols are tough to write, and tough to implement. The value is captured at the protocol level, not the app level, so there's little incentive to create inventive apps.
I think the basic claim of this article is wrong. The false comparison comes from comparing the market cap of bitcoin and ethereum to "market cap" of existing protocols. There is no way to measure value of protocols before bitcoin. Therefore the whole basis of the article sounds like bullshit to me.
It is quite easy to write apps which use bitcoin protocol. Also many bitcoin businesses are quite profitable. Not billion-dollar businesses but very good businesses when you compare to the capital invested etc. Also they might be even better businesses longer-term, as the market develops. There is also loads of smaller brokers, gambling sites, atm operators etc who make small living out of bitcoin.
> There is no way to measure the value of protocols before Bitcoin
The point is not to compare the market cap of Bitcoin or Ethereum to the market cap of previous protocols at all. The point is precisely that the previous generation of protocols created immense value but most of it got extracted at the application layer while, as you said, there are many small but highly profitable Bitcoin businesses, but the bulk of the economic value is in Bitcoin itself, not in those.
Contrast that to the web where there is little economic value in the protocol and a lot of economic value in web applications.
The web flourished due to its lightweight, comparatively easy-to-implement protocols. Applications could be built cheaply and easily on top of it. VCs and many entrepreneurs profited handsomely. Much of the past 20 years in tech has been pushing this concept to literally every person on earth.
Compare to the 'fat protocol': The protocols are tough to write, and tough to implement. The value is captured at the protocol level, not the app level, so there's little incentive to create inventive apps.
Few apps will be created on such systems, so few successful consumer applications will created with them. Seems like the winner here is in business-facing systems. For USV, it strikes me as peculiar to favor the 'fat protocol' and back other types of businesses (e.g. consumer).