Can decentralized networks be cheaper?




Apr 14, 2023

Hint: Yes they can!


  • Decentralization results in inclusivity which leads to larger economies of scale than possible for centralized platforms.

  • Business arms of decentralized networks should not exist. Ideally, the value should be captured by the network and transferred onto its native token. With no overarching business, clamouring for margins/profits, selling price = cost price.

“Your margin is my opportunity”― Jeff Bezos

Decentralized networks are a paradigm shift in how people will use services. With no central authority, users will be able “trustlessly” engage with apps and platforms without the rules of the game-changing on them or at the very least have a say when they do. Users should also experience greater security and privacy while using these services with a greater sense of ownership, either by design or even because it is simply possible.

While these are all great tenets of any system, they usually come at a cost. In the more traditional, centralized systems, the costs are usually economic. Money is spent on resources to secure their systems and affording privacy and not owning user’s data means these systems lose out on opportunities to monetise it. These costs get factored into margins and transferred to users via the pricing of services.

Decentralized networks face costs too. Mainly UX costs. Managing keys, signing transactions, deciding on and paying gas, utility tokens… are some of the many examples of costs hindering mass adoption in the blockchain world. But these are, in the long term, shared costs that a burgeoning ecosystem will absorb.

While implementation and maintenance costs are indeed significantly lower, decentralized networks actually provide a whole new way for services to operate. With the advent of Bitcoin and smart contract platforms like Ethereum, BitTorrent seeding, for example, needn’t be an altruistic endeavour. Real incentives can be doled out for a richer experience on open platforms with responsible actors. This affords for new entrants to circumvent long-standing “moats” like the ones financial institutions had before Bitcoin, and produce novel business models, beyond balance sheets, top-lines, margins and profits like we are doing at Arcana.

Arcana can be cheaper than traditional service providers(AWS, GCP…) by:

Leveraging economies of scale

Well designed networks can scale massively because they are inclusive by design. On Bitcoin, anyone can be a miner(you just won’t earn a lot nowadays). In the context of decentralized storage, almost anyone can be a resource provider, providing storage and bandwidth in exchange for an incentive. At the edge of the network, the ever-growing numbers of connected devices like laptops, mobile phones… are a testament to the massive availability of unused or underused resources that can now power a storage network. There are an estimated 5.6B mobile phones, around the world and if each of them on average provided 1GB, the network would have 5.6 exabytes, which is more than the estimated capacity of Microsoft, Amazon and Google combined. Stable and efficient networks can achieve economies of scale at a global level that no company can compete with.

Not being a rent-seeker

Bitcoin has no company or CEO behind it, all you need is the internet and a wallet and you can send/receive a store of value. Transferring $BTC over the Bitcoin network costs a fraction of what the costs are with most banks and centralised remittance services. Post a bootstrapping phase, business arms of decentralized networks should not exist. Once mature, enhancements to and maintenance of networks should be the purview of an incentivised, open community. Governance should be driven by the platform’s protocols, on-chain and/or the purview of a DAO. With no rent-seeking and no “middle-man”, costs can be driven down massively and margins of traditional platforms become the area of opportunity for such networks. As a consumer, imagine buying produce direct from a farmer vs buying at your local supermarket, how much do you think you’d save?

At Arcana, we are under no illusions about the magnanimity of the task at hand and also the inherent risks and uncertainties in trying to achieve what we’ve set out to. But, the opportunity of building a decentralized cloud storage platform with no “off” switch, that resists censorship, that anyone can use, is cheaper and has no central provider that can impinge on your privacy or change the rules of the game on a whim, is not one we’re ready to pass up.

About Arcana Network

Arcana is the Web3 Infra to manage your data layer. Web3 App and wallet developers use Arcana’s SDK to authenticate users by generating wallets with Social and Passwordless Auth, Store Encrypted Data, and Manage Access. Built for Ethereum and EVM-based chains, with Arcana’s privacy stack, developers can build secure and privacy-preserving apps with a seamless user experience.

Arcana has raised 2.7Mn USD from some of the leading investors and founders in the ecosystem such as Balaji Srinivasan, Founders of Polygon, Woodstock, Republic Crypto, and Digital Currency Group.

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The call is completely free and no commitment is required.

Copyright © Arcana Technologies Ltd. All rights reserved.

Schedule a Demo

The call is completely free and no commitment is required.

Schedule a Demo

The call is completely free and no commitment is required.

Schedule a Demo

The call is completely free and

no commitment is required.