Bazaar Services | Ethereum Foundation Blog

I’m a great believer in judging the present through the knowledge of the past. In the past 25 or so years one of the biggest trends in business and technology was what might loosely be termed as the open source revolution. The notion of it being good business to share your source code might not yet be cemented into the eyes of many a traditionalist, however the idea of leveraging existing open source software is. We are swiftly getting to the point where nearly all important, non-niche software is, one way or another, open. In all Android phones, all Mac computers, practically all mainstream web technologies: servers, databases, browsers, compilers; all of the foundations are open.

This is in stark contrast to when I was writing my degree dissertation “open source software in the business environment”, shortly after ESR wrote “the Cathedral and the Bazaar”, when Microsoft and its gigantic closed source codebase was the undisputed leader and there were but one or two serious examples of open source software being used commercially.

So why? What changed? Did people suddenly realise that, as Raymond put it, the “bazaar” model was the right way to go? No. The introduction of ideas alone rarely make the difference and in any case, the notion of a distributed workforce, through individual interest working on a cohesive whole is not exactly ground breaking.

In fact, software development, as a process, was always perfect for decentralisation – the one thing is lacked was a ubiquitous communications infrastructure for the developers – some way for them to share code seamlessly and work together easily. It is no surprise that the rise of the internet with CVS, IRC, Usenet and mailing lists coincided with that of open source software.

So was much else provided by the previous “cathedral” model?

Actually, yes. It facilitated a bunch of business stuff which we might loosely consider “value plumbing”; firstly, it incentivised the practitioners – it paid developers to spend their time and energy on a project. Secondly, it provided all necessary support assets to allow the development to take place (hardware, software, tools, educational material &c.). Thirdly, it acted as a sink for funds – it collected payments from those who benefited from the work being done. In a nutshell, it looked after cash flow, scooping a tidy profit in return for enabling and incentivising solution production.

Assumed at first to be important, it turned out less so; turns out people will often work on software just for the fun of it. Nonetheless, we cannot deny that this “value plumbing” still pays an important role in human activity and service provision.

So what does this tell us about the future?

Business, and in particular the service industry, has, until now, followed very much a “cathedral” approach to the service commission, provision and management that would fall under this “value plumbing”. We might recognise it by tight coordination, enforced consistency, explicit top-down management, centralisation and rigidity. The fact we have singular legal entities with authority and responsibility over large swathes of production output is a very clear signal of this.

eBay, as an enabling platform, was a trailblazer in truly global decentralisation; it functioned as a key enabler for small businesses and cottage industries throughout the developed world (not to mention a lucrative source of funds for some of the less scrupulous operators in internet-enabled parts of the developing world). With the Web 2.0 platform, and mobile (to which is it heavily entangled), we see a new class of decentralising applications. The so called “sharing economy” is beginning to form with Uber, AirBnB and TaskRabbit as notable examples. Much like eBay, these operators reduce the relevance of a whole class of “structural intermediaries”, and replace their “value-plumbing” with one large, technologically-adept match-maker.

The high-level deconstruction that they entail typically comes with some accidental degree of openness (Uber’s “safe-driver fee”, AirBnB’s “cleaning charge”; it typical to know more about your matched service provider). So what do taxi firms, hostelries and un-/semi-skilled labour outfits have in common that made them key examples to the “decentralised services”? From where do their profits come that allows them to be reduced to a scalable automaton so easily?

They manage their reputation (through basic word of mouth, marketing and advertising), they manage their workforce (through finance, recruiting and agreements) the manage their market (through adapting to changing levels of supply and demand) and they manage their risks (vetting, indemnity, insurance and bonds).

Though they cannot seriously claim to have created truly new or open markets, they are coming close. In the world of open source software they’re a sort of shareware. Not quite commercial, but not really free either. There are still singular entities, match-makers, behind the decentralised veneer, as is evident when you go to statist and technosocial-lagard Germany and see that the only kind of Uber you can request is a regular government-sanctioned taxi.

So though these are not quite there yet, these are the beginnings of a social shift in expectations; as consumers we expect greater transparency in the operations of our provider (from knowing the name of our driver to the precise origin of the rubber in our trainers) and greater freedom over the selection of our service; as individuals we expect greater ability to sell our skills, time, possessions or potential; as businesses we expect reduced barriers to entry in whatever markets we wish to compete. Just like in open-source software, it won’t be long before legions of sufficiently-good amateurs (or professionals seeking to go it alone) will be competing, in a bazaar fashion, on an equal or greater footing to the cathedrals of industry.

And the idea of “bazaar services” is the eventual conclusion to this social shift. As open source software is practically zero-barrier to entry and fluid in terms of leadership and authority, so we will find the world of service provision following. The worries are the same as they were 20 years ago. The answers are similar.

Software writing was just the first thing to go fundamentally decentral, and only because of the natural tech-savviness of its people and its nature of being entirely information-based. With Ethereum, crypto-law, Web 3.0 and the ilk, all aspects of services will follow the same route. The idea of a rigid organisation or corporation will evaporate and left will be the true essence of human interaction patterns, policed only by openness and information-theoretic mathematics. Whereas once the “interaction-pattern-manager”, “value-plumber”—or “corporation” for short—would be subject to laws on the emergent behaviour it was enabling, strict legality of the emergent behaviour will become increasingly less relevant as it becomes drastically pluralistic and unpoliceable with no entity, legal or otherwise, coordinating it or profiting from it.

We will begin to see a world without middlemen, intermediaries, trusted authorities, where services are not only delivered, but also advertised, found, matched and insured, directly from provider to consumer. Interaction patterns arise and continue not through the clumsy, inefficient legal system and slow and rigid corporate rules, but rather through the inherently adaptable emergent effects of flexible, agile and direct economic incentives. This is where we’re heading and if it delivers as well as open source software has, it surely can’t come fast enough.

Can we make profits from this new social model? My opinion is a resounding yes; profits will come, as always, from servicing (perceived) human needs or providing efficiency gains to those incentivised to recognise and deploy them. However the sorts of models that are lucrative are not yet obvious. Don’t expect the profit-making entity to look like any now, or you’ll be stuck like those searching for the next Microsoft back in 2000 and placing their money in VMLinux and RedHat. What we think are great differentiators now will turn out to be commodity in 20 years, much like operating systems and browsers back in ’95.

To understand where these differentiators may lie first requires understanding what will be made commodity. Some food for thought: what if “commodity” turns out to be a digital marketplace, fully vendor neutral, open and trustless? Ubiquitous “value-plumbing”, business logic constantly evolving yet maintaining readiness that everybody, whoever they are, be able to take part in… Bazaar Services.

5/4/2015 ADDENDUM: Having re-visited CatB, I must apologise for my abuse of Raymond’s analogies; the original work was more about the distinction between traditional working practices (mostly commercial software, but it did include some OSS such as GNU) and decentralised working practices (what we now tend to think of as open source software development), rather than strictly proprietary/commercial vs FLOSS. Still in circumspect terms, the notion of decentralisation within software development is prevalent in and correlated to open source development. Interestingly, even aside from OSS, some of the Agile methodology (I’m thinking SCRUM) could be argued to be joining this general trend towards the self-organisation, decentralisation and no-authority-operation of the Bazaar.