Crypto Decrypted

13Peer‐to‐Peer Models

As the previous chapter has proven, the economic dynamics of blockchain are embedded in the economics of decentralized peer‐to‐peer models and architecture. We have more to learn about peer‐to‐peer issues to inform our understanding of investing for the long run. Consider this our master class in peer‐to‐peer.

In a peer‐to‐peer transaction, people create cooperative value directly with one another in a business or personal interaction, contributing to shared production with one another with little to no intermediation by third parties. The Internet and blockchain are force multipliers in increasing the ability of people to engage in peer‐to‐peer economic activity. For example, Airbnb rentals depend on a complex cooperative system of Internet‐based consumer and owner reviews. This virtuous feedback cycle fosters the trust needed for the renter to fork over cash for a rental with no third‐party certification and, conversely, for the owner to open their home or apartment to strangers. It's the community that fosters the trust; however, the centralized corporation (Airbnb) is the facilitator of this two‐sided marketplace. We think it's pretty clear that these two sides could work without a central arbiter, but up until the blockchain breakthrough this was just not possible.

Designing your sneakers on the Nike platform isn't peer‐to‐peer; it's a co‐creation between a behemoth corporation and a consumer. Venmo transactions are not true peer‐to‐peer, because ...