This assumes that people will pay for some service. But I think there will always be someone who will just provide a free service to get rid of friction as much as possible and monetize via ads. Nowadays it's extremely cheap to run an app. Which means these hypothetical blockchain based apps will always be competing with a "closed" yet free version of itself, which has 0 friction.
Using the Twitter example, I can't imagine how a service that makes you pay for Tweeting can grow larger than a service that's completely free. The only motivation I can think of is people actually making money (in the blockchain currency) by Tweeting or any value generating activity, but this is also based on the assumption that this network becomes huge, otherwise stacking up these points won't matter that much anyway. Which goes back to my first point--I can't think of how this decentralized Twitter can be larger than its centralized counterpart.
Just trying to understand if I'm missing something. Can anyone enlighten me?
> But I think there will always be someone who will just provide a free service to get rid of friction as much as possible and monetize via ads. Nowadays it's extremely cheap to run an app.
Dude if you have a point to make, by all means do it, but don't half ass your comments with one word, because I have no idea what you mean by it's cheaper to block the ads than pay for it. Blocking is done by end users. Paying for ads is done by advertisers. They are different people.
Again, this assumes that the service will get traction. My question is how will you get to that point, when the decentralized model inherently is inferior to its centralized counterparts in user acquisition.
This is especially important for the ad business model you mention, since online ads only make sense as a business model when a service reaches a meaningful scale. In 2016, having less than a million users won't make you lots of ad revenue. Basically it's a catch 22.
One answer to this is to be the first one who does it.
(It's also quite hard to succeed as a centralized twitter clone at the moment.)
Why do you think that the decentralized model is inferior when it comes to user acquisition?
A team with enough tokens in their pocket would have enough incentive to do the same kind of user acquisition as the centralized counterpart.
I mentioned above, but "a team with enough tokens in their pocket would have enough incentive to do the same kind of user acquisition" is a pyramid scheme unless there's some genuine value for the people they will invite. And no, "the privilege to follow these people" is not strong enough of value proposition to make this happen. You can look at whole slew of examples of social networks that tried to bootstrap using celebrities but all failed. Then there are approaches where people get paid to invite others in (an actual pyramid scheme), such as tsu. None of these succeeds because these networks are incentivized by money.
A lot of services and apps we take for granted today work because the usage itself doesn't involve any monetary interest (at least among most casual users). As soon as the primary focus becomes money, the network's main purpose becomes money (vs. communication for example) and people will optimize their behavior towards that. And this is how it becomes inferior to the centralized (yet financially neutral) models.
Summary
1. Quality of service is inferior because everything involves money.
2. The assumption is that you will need to pay for certain things (that's how people make money). If I have to pay to post a tweet, I would rather post on a centralized twitter where it's all free.
3. I don't want to share my storage with the world (If you really wanted to be a contributing user of this decentralized twitter network, you should function as one of the nodes, which means you will be sharing your storage with the world. Again, personally I would rather opt for a centralized service.
4. Looking at all of the above, this decentralized twitter is pretty shitty compared to centralized version when it comes to end-user experience. Which brings up the question: Why would I invite my friends? Only reason I can think of is so that I can make money off of them, which is shady (and which is why I wouldn't invite friends).
I am by no means an expert on blockchain technology so I could be wrong on this, but I think your assumption that the user would have to pay for a tweet is wrong.
I think posting and reading tweets could be handled off-chain.
Using the Twitter example, I can't imagine how a service that makes you pay for Tweeting can grow larger than a service that's completely free. The only motivation I can think of is people actually making money (in the blockchain currency) by Tweeting or any value generating activity, but this is also based on the assumption that this network becomes huge, otherwise stacking up these points won't matter that much anyway. Which goes back to my first point--I can't think of how this decentralized Twitter can be larger than its centralized counterpart.
Just trying to understand if I'm missing something. Can anyone enlighten me?