Social Scalability

Written by George Adams

Introduction

Social scalability is a term popularized by Nick Szabo who defines it as - “the ways and extents to which participants can think about and respond to institutions and fellow participants as the variety and numbers of participants in those institutions or relationships grow.” Social scalability is about social limitations among humans which contrasts with technological scalability, which refers to consumption of resources and computational efficiency. This concept is important to crypto because blockchains make a fundamental trade-off: they trade technological scalability for social scalability.

In the context of Bitcoin, the network is secured by energy intensive cryptographic puzzles (known as proof-of-work), and whenever someone initiates a transaction, a message is broadcast to every node in the network. This explains why blockchains have much slower transactions per second than traditional payment systems. However, the cryptoeconomics of the system eliminate the need for a third party and allow anyone to participate in the network, which is more socially scalable.

Suggested Reading

Money, blockchains, and social scalability by Nick Szabo

What Gives Bitcoin Value? Or The Most Important Idea In Cryptocurrency by Taylor Pearson

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