# Economies of scale `kaal:entity:economies-of-scale` **Status.** derived This node is assembled mechanically from the 14 claims that carry the concept tag `economies-of-scale`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself. ## Every claim under this term 14 claims across 12 works, 2018 to 2024. **2018** - [3227933-019](https://wulfkaal.github.io/claims/3227933-019) [failure/argued] *(failure mode)* -- Most current blockchain applications lack complete decentralization: proof of work style validation has produced mining pools because of economies of scale and unbalanced reward structures. > For instance, the traditional mechanism for validating and verifying a new block of transactions – e.g., Bitcoin's proof of work protocol - has led to "mining pools" as a result of economies of scale and unbalanced reward structures. Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Why 'Blockchain' Will Disrupt Corporate Organizations (2018). SSRN: https://ssrn.com/abstract=3227933 - [3266953-012](https://wulfkaal.github.io/claims/3266953-012) [mechanism/argued] *(failure mode)* -- Because power exercised over a store of value inevitably produces economies of scale, cryptocurrencies and any other transferable store of value drive networks toward centralization. > Because of the store of value entailed in cryptocurrencies (and really any currencies or store of value), exercise of power over such value inevitably leads to centralization due to economies of scale. Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953 **2019** - [3405401-023](https://wulfkaal.github.io/claims/3405401-023) [mechanism/argued] *(failure mode)* -- Because cryptocurrencies, like any currency or store of value, entail transferable value, the exercise of power over that value inevitably leads to centralization through economies of scale. > Because of the store of value entailed in cryptocurrencies (and really any currencies or store of value), exercise of power over such value inevitably leads to centralization due to economies of scale. Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401 - [3406323-012](https://wulfkaal.github.io/claims/3406323-012) [mechanism/argued] -- Decentralized technologies increase consumer and market trust at unprecedented scale, which lowers transaction costs and raises confidence and certainty, thereby facilitating economies of scale that centralized structures may not be able to achieve. > Trust can help lower transaction costs but it also increases consumer and overall market confidence and certainty, which facilitate economies of scale that may not be possible in centralized structures. Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323 - [3406323-023](https://wulfkaal.github.io/claims/3406323-023) [failure/argued] *(failure mode)* -- Because cryptocurrencies embody a transferable store of value, the exercise of power over that value inevitably leads back to centralization through economies of scale, creating core points of attack that undermine the very nature of decentralization. > Because of the store of value entailed in cryptocurrencies (and really any currencies or store of value), exercise of power over such value inevitably leads to centralization due to economies of scale. Wulf A. Kaal, Decentralization - A Primer on the New Economy (2019). SSRN: https://ssrn.com/abstract=3406323 - [3411897-028](https://wulfkaal.github.io/claims/3411897-028) [failure/argued] *(failure mode)* -- Because cryptocurrencies embody a transferable store of value, the exercise of power over that value inevitably leads to centralization through economies of scale, which creates core points of attack and undermines the very nature of decentralization. > Because of the store of value entailed in cryptocurrencies (and really any currencies or store of value), exercise of power over such value inevitably leads to centralization due to economies of scale. Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897 **2021** - [3782198-021](https://wulfkaal.github.io/claims/3782198-021) [mechanism/argued] *(failure mode)* -- Earlier centralized companies defeated more decentralized peer to peer platforms because of the technology of the time and the incentive design built into capitalist civilization: consumer devices could not match industrial upload speeds, centralized firms had the incentive to polish user interfaces, and economies of scale made central bureaucracy worth negotiating. > The reason earlier centralized companies succeeded against more decentralized P)P platforms is due to the existing technology of the time and the natural incentive design that is built into our capitalist civilization. Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198 - [3782198-024](https://wulfkaal.github.io/claims/3782198-024) [failure/argued] *(failure mode)* -- Bitcoin proved that a decentralized peer to peer network can manage valuable assets without a central authority, but the centralizing force of competition concentrated power anyway, as economies of scale produced large mining farms in place of millions of individual members maintaining the ledger. > But the centralizing forces of competition led to concentration of power in the Bitcoin network, as econo- mies of scale led to large computer farms devoted to mining for bitcoins, instead of millions of individual network members maintaining the ledger on their laptops. Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198 - [3782201-007](https://wulfkaal.github.io/claims/3782201-007) [mechanism/argued] -- Code based trust in decentralized applications lowers transaction costs and simultaneously raises consumer and market confidence and certainty, which facilitates economies of scale that are only occasionally and temporarily possible in centralized structures. > code-based trust can help lower trans- action costs, but it also increases consumer and overall market confidence and cer- tainty, which facilitate economies of scale that are only occasionally and temporarily possible in centralized structures. Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201 - [3782210-031](https://wulfkaal.github.io/claims/3782210-031) [mechanism/argued] -- A reputation token is inherently worth more to the person who earned it than to someone who merely bought it, because of its secondary use in making future earnings, so reputation is harder to accumulate than cash and economies of scale are weakened. > A reputation token is inherently more valuable for a person who deserves it, than for someone who merely bought it, because of its secondary use in making future earnings. Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210 - [3808852-033](https://wulfkaal.github.io/claims/3808852-033) [failure/argued] *(failure mode)* -- Decentralization is not always efficient, because centralized economies of scale can create the near-optimal efficiencies for economic growth and decentralization may therefore result in the loss of economies of scale. > In fact, decentralization may not always be efficient as centralized economies of scale create the near-optimal efficiencies for economic growth. Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852 - [3808867-033](https://wulfkaal.github.io/claims/3808867-033) [mechanism/argued] -- Code based trust lowers transaction costs and simultaneously raises consumer and market confidence and certainty, which facilitates economies of scale that are rarely possible in centralized structures, despite the cybersecurity problems associated with cryptocurrencies. > code-based trust can help lower transaction costs, but it also increases consumer and overall market confidence and certainty, which facilitate economies of scale that are rarely possible in centralized structures Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867 **2024** - [4685567-024](https://wulfkaal.github.io/claims/4685567-024) [mechanism/argued] -- Because expert communities can be set up quickly and self organized through a WEB3 governance software suite, the agency structures used to supervise centralized legacy service providers become obsolete. > Expert communities can be set up quickly and self-organized through a software suite of WEB3 governance. Agency structures used in centralized legacy system service providers become obsolete. Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567 - [4734750-016](https://wulfkaal.github.io/claims/4734750-016) [failure/argued] *(failure mode)* -- It is ironic that some of the strongest forms of exploitation and centralized economies of scale have been created inside the code review market, which exists to support the decentralization of other industries. > it is a bit ironic that one of the strongest forms of exploitation and centralized economies of scale are being created in a market that is, from the outset, supposed to help support the decentralization of disparate industries Wulf A. Kaal, Code Review DAO (2024). SSRN: https://ssrn.com/abstract=4734750 ## Verify Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust. curl -s https://wulfkaal.github.io/entities/economies-of-scale.md | sha256sum **Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.