So, why do consumer apps decentralize?
Tokens are becoming the standard for the transfer of value in the digital world. They resolve many of the problems that fiat currencies traditionally suffer from. Unlike with fiat currencies, the transfer of tokens is practically instantaneous; tokens are cross-border and do not require separate implementation per geography; there are no middlemen like payment providers so fees are lower; tokens are easier to secure which also reduces fees; tokens support microtransactions; and they have inherent APIs that are easier to integrate with, programmatically.
2. Handcrafted economies
Consumer apps are known to be difficult to monetize. Relying on a token opens up new unorthodox forms of monetization for consumer companies. Since tokens are programmable and can be designed to follow a set of predefined rules, certain incentives can be baked into the economy. This creates a controlled environment that consumer apps can use to monetize more effectively. Kin by Kik Interactive is a great example, which relies on the Kin Reward Engine to compensate consumer app developers fairly.
3. Not being a bank
The economy revolving around a token can reach a value of billions of dollars. If someone had to protect this amount of value on a centralized server they probably wouldn’t be able to sleep at night. Effectively, this would be running a bank. Regulators would also step in and require that certain compliance protocols be met in order to protect consumers. This would mean following in the footsteps of PayPal and becoming more focused on compliance than on innovation. Decentralization helps reduce risk by securing the economy with multiple parties and making sure that no single party can control the ledger.
Decentralized models avoid concentrating power in the hands of the few. This creates environments that are inherently more fair. The economic value created on consumer platforms can be distributed to all stakeholders and particularly to end users. If consumers can be made to benefit from the value that they help generate on these platforms, they may no longer be looked at as being the product. This creates for a better user experience and reduces consumer abuse.
5. Ability to compete
The world of consumer apps is slowly consolidating into the hands of giants like Facebook and Google. This creates an environment where smaller apps are becoming unable to compete. This ultimately goes against the interests of consumers as choice becomes more limited and innovation is diminished. Decentralization helps break monopolies by aligning smaller players together without excessive reliance on trust. This paves the way for creating ecosystems made of multiple businesses whose combined power and user base can rival the dominators of the market.