Prediction: Given enough time, blockchains will out-compete and replace most other forms of networks.

Humans are a highly networked species, the first one to network across genetic and geographic boundaries and thus expand its dominion. Networks allow humans to cooperate in an organised manner and to allocate the fruits of the cooperation. Overlapping networks create and organize our society, being the physical, mental, and digital roads connecting us all. Money is a network. Religion is a network. A corporation is a network. Travel and trade routes form a network. Electricity is a network. Of course, the Internet is a network. Ultimately, civilisation and culture comprises a network of such networks.

Networks must be organized according to rules. They require governance to enforce these rules against cheaters and freeloaders. Networks have “network effects”. Adding a new participant increases the value of the network for all existing participants. Network effects thus create a winner-take-all dynamic. The leading network tends towards becoming the only network. The rulers of these networks become the most powerful people in the society. Some networks are run by kings and priests who choose what is money and law, what is sacred and profane. Rule is closed to outsiders and based on power. Many are run by corporations – the social network, the search network, the phone or cable network; closed but (at least initially) meritocratic. Some are run by elites – the university network, the medical network, the banking network; somewhat open and somewhat meritocratic. A few are run by the mob – democracy, most of the current Internet, the commons; open, but not meritocratic, and, generally, comparatively very inefficient.

The XX century created a new kind of network – market networks; open, efficient, and meritocratic. Merit in markets is determined by the commitment of resources. The typical resource-equivalent is, of course, money, which itself is just a form of reified time. Market networks work where there is a commitment of money, otherwise they are just mob networks. Their applications have been somewhat limited, until now. Blockchain is the new invention that allows meritorious participants in an open network to govern without a ruler and without conventional money. They are merit-based, tamper-proof, open systems. The meritorious are those who work to advance the network. As society gives you money for giving society what it wants, blockchains give you coins for giving the network what it wants. It’s important to note that blockchains pay in their own coin, not the common money of financial markets. Blockchains pay in coin, but the coin itself just tracks and quantifies the amount of work done, and different blockchains demand different work: Bitcoin pays for securing the ledger, Ethereum pays for (executing and verifying) computations, etc. Blockchains combine the openness of the Internet with the merit-based modus operandi of markets.

To a blockchain, merit can mean security, computation, prediction, attention, bandwidth, power, storage, distribution, content, and so forth. Blockchains port the market model into places where it couldn’t go before. Blockchains’ open and merit–based markets can replace networks previously run by kings, corporations, aristocracies, and mobs with networks governed by anyone with merit to the network, optionally but preferentially delegating arbitrary complex parts of the governance process to formally verifiable smart contracts co-approved by the meritorious users of the network. It’s nonsensical to have a blockchain without a coin just like it’s nonsensical to have a market without money. It’s also nonsensical to have a blockchain controlled by a sovereign, a corporation, an elite, or a mob. Blockchains, therefore, provide novel ways to govern networks, whether for banking, research, voting, law, search, social media, phone and energy grids, or computation and communication in general.