When I started learning about cryptocurrencies many years ago, one of the most strange opinions on social media was the claim that Bitcoin had no leader and that it was the best thing for decentralization. Some people even claimed that Bitcoin doesn't even have a team, or that Bitcoin is modified by anyone who wants to. As a programmer and expert in network protocols, I immediately knew this was nonsense. Yet to this day, many people still believe it. Charles Hoskinson and the IOG team are sometimes seen as the problem, but it's actually one of Cardano's greatest strengths. Most people in the cryptocurrency space don't understand decentralization. They don't know what a team can and cannot do with a running distributed network that is decentralized through coins or hash rate. The lay public may not know that every software in the world has a team of maintainers and a decision-maker. We will try to explain why a team of experts, scientists, and programmers is the best Cardano can have and how we will all benefit from it.
The Cardano community should be proud of the IOG team and realize that the success of the project is dependent on the ability to improve blockchain technology and innovate. Unlike gold, problems of blockchain protocols can be solved. New features can be even added. If we want better money, it is comforting to know that we can improve a new financial system indefinitely.
Why does blockchain need a team of maintainers?
There will forever be competition between blockchain projects. While this may stir emotions as people perceive it through the squabbles between communities, at a technological level it is an inevitable and even desirable phenomenon. Technological progress cannot be stopped. You can't say that a network protocol is done forever and will never need updating. It's just the opposite. For a protocol to remain relevant, it requires constant maintenance and keeping up with innovation.
Obviously, the better protocols will win and the losers will be forgotten over time. It doesn't matter what your definition of better and worse is, because it's subjective. Some better form of an existing one will always replace its competitor because it is more effective at something. We all have this principle ingrained in us because it's how nature works. Whoever can better manage resources and adapt to new conditions in a given environment always wins.
Many people don't realize that cryptocurrencies are technology. In particular, economists see cryptocurrencies too economically and think that money must be immutable, stable, rigid, and, in a way, stupid. They often compare cryptocurrencies to gold, especially in the case of Bitcoin. But this comparison is false. Gold is a commodity and does not need a team to maintain it. Gold is not dependent on electricity, the internet, or people running a full node. Gold doesn't need new blocks to be created regularly. Gold is physical while cryptocurrencies are digital. A protocol is essentially a piece of source code. It's a set of rules and sub-technologies. Some rules need to be changed from time to time, some technologies need to be updated. In a competitive battle, it is necessary to innovate to stay relevant.
The gold is finished and has no problem. Even if gold has a problem, there is not much that can be done to change it. The network protocol is the exact opposite of gold. If you only have an economic view of cryptocurrencies and not enough of a technological one, you will never understand the essence of this technology.
No blockchain protocol is perfect and in fact, has many existing problems. Cardano, Ethereum, and Bitcoin all have problems. It doesn't matter what some influencers in the communities say. Each project's team knows exactly what problems their protocol has. Many IT experts know, or at least suspect it.
Unlike gold, problems of blockchain protocols can be solved.
For this, a team of experts, funding, and sufficient time to solve problems are important. Furthermore, the ability to describe the problems, find solutions, and define priorities. That's kind of how it would work in the corporate world. In the case of decentralized protocols, we need something extra. We need to make critical decisions in a decentralized way, ideally through some form of voting. We also need to secure funding if the community wants to avoid the influence of VC funds.
If you still believe that the protocol doesn't need a team, try to think about it more. Just look around. Do you think any well-known social network or other services on the Internet would maintain its dominance if it didn't have a team of maintainers? All services on the internet are also just network protocols with nice user interfaces, and large teams of programmers are improving them literally every day. If they stopped doing that, the competition would take over their position very quickly.
It is true that when a service is dominant, the desire (and need) to innovate decreases. Corporations often become less flexible and may not be able to respond to changes or user needs in a timely manner. But this is exactly why competition tends to be successful. Maintaining dominance is actually very difficult. Many experts make critical decisions and programmers implement them.
TCP/IP was launched commercially in the 1980s, and it has since become the dominant protocol for all network communication, including the Internet. Try to find a service on the Internet that has been around for over 40 years and kept a dominant position.
Blockchain technology has many unsolved problems
Blockchain technology has had many unresolved issues since its inception. Moreover, they have not been around long enough to stand the test of time. Their adoption is still too low for us to be able to answer the question of what will happen when they start to be used en masse.
Let's be more specific. We all know that blockchain is not scalable enough. Are 10, 1,000, or 10,000 transactions per second enough? It's likely that the second layers will take over a large portion of the transactions, yet it's not certain if 1,000 will be sufficient scalability. We don't know because people don't use cryptocurrencies much yet. If 10% of the population decided to use any existing blockchain tomorrow, the network would collapse. Will it be the same in 5 or 10 years? If so, blockchain as a promising technology will almost certainly fail. We need to solve scalability. People will not be willing to wait days for settlement and pay hundreds or even thousands of dollars for it.
Should teams wait to see what happens in 5 years or address the scalability issue today? Should teams focus on the second layers or address the scalability of the first layers? Do users want something different than what team members are thinking?
Another big unknown is the time test. Older blockchain projects run into security budget issues. This is especially significant for Bitcoin, as PoW is a very economically challenging consensus to maintain. All newer projects may have a similar problem in a few years or decades.
No one knows how long before a potential problem becomes a real threat. Why, because the security budget is related to the market value of coins, and no one can predict that. Governments may decide to close centralized exchanges. Capital outflows and reduced liquidity might be a threat to the security budget even this year. From our perspective, teams need to come up with a solution as soon as possible, as it may take as long as 5 years to get the proposal approved and implemented.
PoS partly solves the security budget problem as it is economically easier to sustain in the long term. However, even PoS has not yet passed a sufficient time test. We will need several decades for that.
Competition among blockchain projects will push fees down. People will want instant transactions, fast settlement, reliability, a friendly user interface, and many other things. Users will have requests and teams will either be able to meet them or their protocols will lose users.
People won't treat cryptocurrencies any differently from how they treat online services in everyday life, or how they choose goods and services. People will try different alternatives, make decisions based on recommendations from friends, or succumb to marketing. The network effect may be a key factor. However, the network effect can only be created if the protocol is capable of mass adoption.
Many people mistakenly believe that protocols that currently have a large network effect cannot be outperformed. Ethereum has already surpassed Bitcoin in this metric, so it is possible. The network effect cannot grow in principle unless the protocol is technologically capable of doing so. The major wave of adoption is yet to come and no one can predict people's behavior. But one thing is certain, people will use the protocols that are most usable from their perspective.
The role of the IOG team in the future of Cardano
What actually influences the success of blockchain protocols the most?
At the moment, it's probably mostly narratives, coin market value growth, project age, and the network effect. We dare to say that in the future it will be mainly the technology, or rather the usefulness that the technology will enable.
Narratives are good marketing, but probably not enough for success. Project capitalization growth will one day slow down and not play as significant a role as it does today. Cryptocurrencies are attractive today mainly because of speculation. We all know that you can't build something more valuable to society on speculation. If the value of cryptocurrencies stopped rising and was constant for the next 10 years, adoption would have to be based on something else, utility. The network effect of all blockchain projects today is very small in the context of the network effect of social networks or fiat currencies.
Technological innovation will be the main driver of adoption in the coming years. In order to grow the network effect, scalability must be addressed. It doesn't matter in principle at what layer this is solved, but it must be completely seamless and easy to use.
The utility of decentralized services must grow. It is now certain a transactional network is not enough for success. People expect complete financial services from decentralization. Programmability through smart contracts will be a key feature for wider adoption.
We could go on for a long time, but what is important to realize is that none of the above can be offered by any current project. If it does, it hasn't passed the test of time or the influx of large numbers of users. More users will attract hackers and only their failure will verify that the protocols and services are secure and reliable enough.
Only teams of experts from many fields, scientists, and programmers can continue to develop blockchain technology. They have to solve the current problems, but also the problems that are yet to appear. They must also innovate and implement the services that people demand. If a new idea or technology emerges, they must copy it and ideally improve it.
The IOG team's role in Cardano's success is incredibly understated. The IOG team is one of the biggest teams, if not the biggest. Using formal methods and a scientific approach may be a little slower than people might like, but it may be the fastest route to success.
The problems to be solved are complex and probably unsolvable without a scientific approach. Many competing projects have sacrificed the most valuable thing blockchain technology has to offer, decentralization. Preserving decentralization and building scalable services on top of it is a huge technological nut to crack. The lay public doesn't realize this. Economists want to pay with cryptocurrencies and don't realize that it's actually not technologically possible at the moment.
The IOG team knows very well what problems blockchain technology has. But it has something more. The IOG team knows how to solve these problems and implement the protocol in a way that reliability is scientifically verifiable.
The IOG team has plans to deliver a multi-chain wallet Lace, a second layer Hydra (with isomorphic state channels), a privacy solution Midnight, and a PoS consensus that will push the scalability of blockchain by orders of magnitude.
In addition to all these necessary improvements and innovations, it will add many other things. But more importantly, the IOG team will not be as centralized an entity as it usually is with similar projects. Cardano will be managed through on-chain governance.
The IOG team can remain present as an essential part of the project that is able to contribute to its success, but still be community-driven. Not all projects go in this direction. That's fine, it's fair to make more experiments in governance and try different ways.
This article is not meant to be about decentralized governance. It aims to point out that teams with a functioning community are one of the most valuable assets a blockchain project can have.
Many people believe that it is necessary to copy Bitcoin, which basically means (at least in the minds of some) pretending that the team has no leader and no team. From our perspective, it is important to stress the importance of teams for future success. What is important is transparency, communication, and some form of functioning governance.
The Cardano community should be proud of the IOG team. We can be objectively critical of some decisions. We can suggest changes and improvements.
Cardano belongs to those who hold ADA coins. It doesn't belong to the team or Charles. They have no power over him. All they can do is research, implement change and think about innovation.
It is very naive to criticize any blockchain project for having a team and maybe even a leader. People should study decentralization more to understand the links between the team and the decentralized network. Of course, Charles Hoskinson, nor the IOG team, have a STOP button to shut down the Cardano network. No one can force them to do that. If Charles and the entire IOG team disappeared from the world tomorrow, the Cardano network would keep running. The community would be able to respond to this unimaginable state of affairs.
Bitcoin may be an exceptional project that does not need innovation at the first layer. But that doesn't mean it doesn't need a team and some form of governance. It may only need maintenance to survive but someone must always do it. The Ordinals project brought NFT to Bitcoin. The prevailing view is that Ordinals are fine and that anyone can do whatever they want with Bitcoin. I confess that I am not comfortable with this attitude. I see it more as a kind of chaos or an inability to reach a consensus within the community. I always thought the changes would be conservative and thoughtful. Not that some functionality would be abused for something that many community members condemn. As a Bitcoin fan, I leave it as it is, but I don't think it's the best way for the project to go.
Fierce competition will take place, especially between smart contract platforms. Technological maturity and the ability to catch up with competitors and innovate will become increasingly important. Teams will play a key role in the competitive battle. New blockchain projects will find it increasingly difficult to catch up with the technological lead of older ones. This is true despite the open-source environment. It's not easy (or cheap) to build a team like IOG, to have facilities in many universities around the world, and to run one of the most decentralized networks. People should know how important the IOG team is to Cardano and should be proud that it exists.