Humans are fundamentally irrational beings: we have the tendency to overvalue far-fetched stories and undervalue practical reality, especially in times of abundance. It is during these times when narratives take precedence over fundamentals, that ‘vaporware’ projects will spawn en-masse.
The term ‘vaporware’ is originally used to describe a product that has been widely advertised, but is late or never actually manufactured nor officially cancelled. In recent times, the definition has expanded to include overhyped products with no real path towards commercialization (e.g: unclear use case, doesn’t have a ready market, etc.).
Accordingly, ‘vaporware’ in crypto (or web3) refers to products (in this case, protocols or applications) in which its conceptualization is not underpinned by realistic market or economic assumptions — in other words, a solution looking for a non-existent or overstated problem. In most cases, these ‘vaporware’ products seek to replace the existing working model of centralized incumbents, while in fact the product would be better off positioned as a complement rather than an outright replacement.
To put things into perspective, below are two case studies of ‘vaporware’ implementations in crypto: decentralized CDN for streaming platforms, and decentralized infrastructure for virtual worlds.
We all know the argument for a decentralized Spotify or decentralized YouTube: to bring control of user-generated content back to the creators themselves. And yes, this presents an urgent market need that requires a solution.
Against this backdrop, the best solution that most people can think of is to spin up an entirely new decentralized ecosystem: content will get represented in form of NFTs, where watch or listen times, as well as its resulting payout, can be transparently tracked on the blockchain; a network of distributed nodes would store the content and maintain the platform; governance is in form of a DAO, and everything will be “linked” together by the chain’s native cryptocurrency. An ideal solution for all, eh?
Not so much.
Conceptualization is one thing, but executing the concept is another matter. Anyone can conceive the next great start-up idea, but whether the idea actually works in the “real world” is a different story. Capability-wise, we could probably develop our fix of flying cars, jet packs, and even Iron Man suits! But will current demand offset the costs needed to build these things? Heck, will demand in 10 years even reach a point where we can break even on costs and hence entice investors to finance this endeavor?
The takeaway is, that you should always think from the perspective of opportunity cost. In the case of developing a fully-fledged decentralized CDN, ask the question: “Will $50B of capital, 5-year time-to-market, 30% success probability, and a potential measurable benefit of $100B be a worthwhile investment than say, $15B of capital, 1-year time-to-market, 85% success probability, and a potential measurable benefit of $80B?”
Hence, rather than a fully-fledged decentralized CDN, we could simply “layer” cryptocurrencies on top of the existing infrastructure of centralized platforms — allowing creator payouts to be distributed via cryptocurrencies. Through this arrangement, the number one concern plaguing streaming platforms would still get addressed: transparency on creator payouts.
Building on the above, viewers of content on the streaming platform will be able to cross-check their own viewing or listening time with the actual payout for the creator just by looking at the blockchain explorer, since the advertised creator payout rate will be made public, as well as the crypto addresses of the platform and the creator itself.
Centralized platforms that employ capitalistic practices on their creator payout rate, as well as those not staying true to their word, will eventually face public backlash, and natural selection would mean that only “well-intentioned” centralized platforms get to enjoy a prolonged place at the top. You can bet that eager up-and-coming competitors would happily offer the public the low fees that they want, in case existing incumbents are unwilling to compromise.
While admittedly a “scrappy” solution, what matters in the end is once again the opportunity cost that would be “sacrificed” for the solution. Sure, the “inefficiency leak” from this “scrappy” solution would’ve cost us $1B per year, but is it worth risking an extra $35B and 4 more years, plus an additional 55% failure rate for the “fully decentralized” ideal solution?
Some of you might point out that the issue of censorship resistance hasn’t been addressed, and you’re right. However, censorship in the end is a byproduct of social construct: child pornography is wrong, so we ban them; hate content and racism is wrong, so we censor them as well.
Granted, some forms of censorship are subject to controversies: are far-left or far-right political beliefs “wrong”, or do anti-vaxxers deserve to be completely censored? But these are social conflicts that cannot and will not ever be solvable by technology alone — there are no “complete truths” and “blatant lies”: Jewish racism would be something that is wrong and should be censored, but hypothetically speaking, what if this happens in a world order where Nazi Germany is the global superpower?
Even on a “fully decentralized” solution, there must also exist a functionality to remove or censor content — an immutable and unstoppable platform would’ve been a gold mine for ill-intentioned people to spread child pornography or radical religious beliefs just to name a few.
Instead of bringing the whole infrastructure stack to the blockchain, the best course of action would be to just convert the censorship governance panel into a DAO. Instead of the “closed-off behind-the-door” approach that centralized platforms employ on censorship governance, each user account above a certain “activity level” can be allowed to be linked with a crypto address on the chain where the DAO is on, and each linked address can be used to raise proposals and vote on resolutions.
This ensures that resolutions are concluded transparently (since every vote is recorded on the blockchain), which helps relieve the tension on centralized platforms with regards to censorship controversies because at this time it is the people themselves deciding on which types of content to remove or censor. Similar to creator payout transparency, platforms that don’t stay true to their word will face public backlash, with eager competitors on the pounce.
Like the case of decentralized streaming platforms, you might’ve also heard of the argument that future virtual worlds must be hosted on a decentralized infrastructure, citing the need for zero downtime censorship resistance.
Once again, the ideal solution would look something like this: a network of distributed nodes will host the gaming world where each will get compensated based on contributed bandwidth and resources, governance in form of a DAO, and everything will be ‘linked’ together via the chain’s native cryptocurrency.
Again, conceptualization is one thing, but executing on the concept in the “real world” is another thing. Why do you think 90% of the world’s largest games hosts on AWS, including League of Legends, Call of Duty, and PUBG?
This is because AWS has the specialized expertise that these games want and rely on: Amazon GameLift as their low-latency game server hosting and matchmaking solution, built-in security standards to protect from threats like DDoS attacks, as well as numerous integrations such as Alexa voice-enabled gameplay or massive scale machine-learning and analytics.
The minimum prerequisites needed to be met in order to host a fully-fledged game, let alone a persistent virtual world, makes it very difficult, if not impossible, to do it successfully on a decentralized scale. If renowned game studios decide that they need AWS in order for their game to work, then what makes you think that future virtual worlds can have its whole infrastructure hosted in a fully decentralized manner?
The solution is that you don’t. There is simply no need to go through all this “hassle” of conceptualizing a fully decentralized virtual world, let alone the opportunity cost that we have to “sacrifice” if we ever decide to proceed with this grand experiment. Instead, let future virtual worlds use AWS for their infrastructure — what’s important is the “financial layer” of the game (ex: NFTs for virtual lands or in-game assets, fungible tokens for in-game currencies, etc.) is done via a decentralized public blockchain like Ethereum.
In extreme scenarios, AWS could indeed shut down the cloud infrastructure that the game depends on, but it could never take a penny out of the game itself — the only ones with the ability to tamper with its in-game assets are the private key holders themselves. AWS would have no incentive to do anything that might cause the virtual world to switch to a competing cloud provider — in fact, they will need to constantly prove to the virtual world that they are indeed the best cloud provider for them — otherwise the virtual world could just decide to move to other cloud providers, ridding AWS of a valuable revenue source.
With a secure public blockchain as its “financial layer”, the DAO of the virtual world along with its governance processes would be unaffected, and game players would not need to worry about their in-game stake.
Cryptocurrencies, without a doubt, present an innovation like no other — virtually every industry stands to be disrupted by it. However, an industry that can be disrupted doesn’t mean that it should be disrupted.
At the end of the day, ‘vaporware’ implementations are natural when capital and resources are aplenty. As the saying goes, you wouldn’t realize how much $100 is really worth, until the very moment when that $100 is all you have.
Also published here.