Blockchain: Differentiate Linux & Red Hat

Separate community-driven open source projects and business

Framework

Historically open source low-level protocols and tools are strived staying free. There is an ideology, on the one hand. There is a strategy, on the other hand. Metcalfe’s law (2) states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n²). Hence, if it is free of pay, it has a huge intrinsic potential to survive. But the history is telling us a different story. Building a community-driven product is not similar to selling a community-driven product. It takes much time, money and other resources. No doubt, Linux is a great technological product. But a minority of products have become a great Linux-based business.

Gentoo Linux — Google+: https://plus.google.com/communities/100146718762350759856/stream/09938b7e-4913-4bc5-bdd6-9635c4a1bf60

Every technology aspires to the industrial dominance. As it has been in 2000s, Blu-Ray won out the battle against HD DVD, then LTE battled WiMAX. Since 2015 something similar has begun in the blockchain ecosystem. On the basis of the W3C the Interledger Community Group has been organised. There are lots of different enterprise vendors and consortiums, e.g. Hyperledger, R3, and well-known public blockchain platforms, like Ethereum, Stellar. Those consortiums are called upon to collaborate on R&D, financing, partnerships, information sharing etc. Community-driven platforms and teams are great in creating technology solutions but it seems they fail the business development.

First, there is no enterprise-focused culture. So it is difficult to coordinate such products towards the real market conditions and requirements. For example, public blockchains are too much “public”. Is it desired and natural to distribute somehow even encrypted but personal data on somebody’s property using public blockchain? It is not difficult to conclude that secrets are something like sacral. Would you imagine SpaceX publishing all its contracts secured with trade secret publicly? Not at all likely. But community-driven public blockchain platforms are striving the full decentralization and publicity of smart contracts that means sharing it publicly, yet encrypted.

Concentration

As early as in 2015, the Interledger Protocol has been integrated this privacy requirement because “banks prefer not to have aggregate transaction data recorded on the ledger”. Community-driven public blockchain platforms are not going to make the same so far. Enterprise products centralize because there is no other way to coordinate its compliance, performance, and provide guarantees. Sometimes it seems dangerous but we would not have Apple, NVidia, BMW, Tesla products without centralization. The sociological law is such that it requires clear coordination from the time of irrigation constructions in China to the production management of Tesla Model 3 nowadays. We need aurea mediocritas reducing the market monopolies.

Red Hat: https://www.redhat.com/en

Red Hat (NYSE:RHT) made a great business in providing open-source software to the enterprise community. It also made 21 publicly known acquisitions and 17 venture investments. Something similarly great has been done by Canonical, the Ubuntu company. In 2003, SUSE has been acquired for $210M by Novell. This may happen on the blockchain market. In the future the most promising community-driven networks may be acquired by the banks and other financial institutions, then forked to comply with the law and business requirements (and so centralized). Like well-known branded ETFs (Barclays’ iPath) those networks would be also branded by an acquirer.

By the way, Novell was acquired (2010, $2.2B) by Attachmate , then Attachmate was acquired (2014, $2.4B) by Micro Focus (in 2005, it went public on LON:MCRO). Such a venture chain. At this time, higher value business-to-business payments brought in $240 billion revenue on $135 trillion in flows with the average transaction value of $15,000 to $20,000 and a typical fee of $30 to $40 per transaction. So it may be a new big war for the international remittance market and cross-border payments where some Bitcoin fork is branded by UBS, another Ethereum fork is branded by JP Morgan Chase or whatever. So the so-called Internet of Value might be.

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