We often hear these three keywords about blockchain: Trustless (no middlemen), Permissionless (everyone can participate), and Open/Transparent (open-source).

If you’re like me a few months back, I’ll be like: Okay…… That’s nice. But really, I think the most important thing about these three characteristics is that they will push forward innovation like we’ve never seen before.

Enter the world of PERMISSIONLESS INNOVATION

Let’s talk about that today. But before that, let’s enter the web2 world to draw some parallels.

To be fair, even right now, we do see permissionless innovation happening all around us. Entrepreneurs are able to push their ideas forward because generally, innovation is not treated as a threat from the start. For the more regulated spaces, such as financial services sector, there are sandboxes!

I’d like to believe the first wave of permissionless innovation came after the commercialisation of the internet, with the Clinton administration advocating for the private sector to lead the market.

Listen to this short clip of Naval Ravikant, founder of Angelist, talk about permissionless innovation here. In this podcast that features Naval too, he says that

“Almost all innovation that we rely on in the last 50-100 years, especially in information technology, happens because it is permissionless. I don’t need anyone’s permission to take a computer, write some code, start a website etc. So moving towards permissionless networks, opens up innovation, opens up participation, and opens up ingenuity.”

But all is not well.

Regulation by the government can still stagnate growth, with Europe being the biggest example. In the past decade, Europe has stifled innovation with regulatory barriers, with them leaning on precautionary principles and overregulating its startup ecosystem. A fiction piece by Deloitte even predict that Europe will be a tech wasteland by 2030 due to regulation. They need permission before innovating, and that slows things down. Though, it’s probably good to keep in mind that regulations may be getting better to drive innovation in Europe.

Closed systems are also a problem. As companies get larger, they start closing their doors. Many things become proprietary, information gets transferred less, API access is restricted, all in the name of ‘being competitive’ and ‘building a moat’. As they establish dominance, they (and their employees) have less incentive to innovate.

Intermediaries are relied too heavily upon for coordination. Think of Airbnb, Grab, Shopee, and our banking systems - we have become overly dependent on this platforms. These big players will eventually move from ‘attracting users’ towards ‘extracting value from users’. On a whim, these big players can change the rules of the game that can make you and I suffer (e.g. higher fees, platform risk (removing your business)). Just think about how easily iOS/Google app store can remove apps, or how Grab fees are absurdly high nowadays. Users have less incentives to participate, and this definitely stifles innovation.

Open source - users can create and share information with each other freely. Being open source and driving innovation isn’t new (think Wikipedia). When people are allowed onto a technology, further applications will proliferate and the technology will spread. Don’t believe me? Even Elon Musk and Tesla made their patents open to the general public to advance electric vehicles. Many blockchains like Ethereum are open source, allowing anyone to contribute through a number of ways, like working on open issues, adding community articles, creating decentralised apps and so on, without the need of anybody’s permission.

Aligned Incentives - with native tokens, stakeholders (developers, entrepreneurs, investors and users) will be aligned on a common goal from the start till the end, which is to grow the network and increase the token’s value. Participation, whether in the form of coding, providing feedback, or voting, from all parties will be rewarded as the protocol (or dApp) grows. Same as above, everybody can participate without permission. I can’t describe this better than Chris Dixon:

“Decentralized systems start out half-baked but, under the right conditions, grow exponentially as they attract new contributors….There are multiple, compounding feedback loops involving developers of the core protocol, developers of complementary cryptonetworks, developers of 3rd party applications, and service providers who operate the network. These feedback loops are further amplified by the incentives of the associated token, which — as we’ve seen with Bitcoin and Ethereum — can supercharge the rate at which crypto communities develop.”

I’ll end this article by a quote from our very own Malaysian founder from CoinGecko:

"Nobody has to give you permission to do anything. When there is permissionless innovation, things move at a very rapid pace."