Rethinking the Future of Bluesky: Challenges and Possibilities of a Decentralized Social Network

Bluesky was launched with the vision of becoming a decentralized social network, free from the control of a single corporate entity. Instead of one company owning the platform, the idea is that multiple independent “units” can interconnect to form a broader network.

It’s an ambitious vision. But in practice, several challenges—moderation, governance, legal frameworks, operators, and funding—stand in the way of achieving it.

The Limits of Community Moderation

Bluesky Social initially advocated for “community-driven moderation.” Each unit could set its own rules, with users collectively maintaining a healthy environment. In smaller communities, this model works: early internet forums and small-scale SNS thrived on shared norms and peer-to-peer enforcement.

But as Bluesky’s user base has grown, it has leaned more toward centralized moderation. Scaling makes community-driven models harder to sustain, and the platform risks drifting away from its decentralized ideals.

Moreover, real-world community moderation is messy. It requires constant judgment calls, often leading to conflicts of values and, in some cases, the exclusion of users who don’t conform to the dominant culture. The result is a paradox: a system designed to foster diversity may end up producing new forms of exclusion.

Anarchy and Diversity

If true decentralization takes root—where each unit governs itself while interlinking like states in a federation—then inevitably, anarchic and unfiltered nodes will appear.

For some, these spaces will symbolize ultimate freedom: no censorship, no restrictions. For others, they will represent risk—harboring harmful or even illegal content, undermining the credibility and health of the network.

The fact that a banned account in one unit can simply join another underlines both the promise and the difficulty of decentralization. What one person sees as resilience, another may see as irresponsibility.

Legal Inconsistencies

At present, Bluesky Social—the largest and most visible unit—operates primarily under U.S. law and partly under EU regulations. But that doesn’t mean users are actually protected under their own country’s legal frameworks.

Take Japan, for instance: Japanese users are not fully operating under Japanese law when using Bluesky. This mismatch highlights the “awkward” reality of a global network not fully aligned with local legal systems. In the future, localized units may be required, but balancing decentralization with national regulations will remain a tough challenge.

Who Runs the Units?

Even if localized units are built, the question remains: who will run them? In Japan, for example, a small unit could be maintained by an individual engineer. But scaling up to provide reliable, large-scale service requires the involvement of universities, corporations, or even infrastructure-level enterprises.

In the end, technical decentralization doesn’t eliminate the practical burden of responsibility. Costs, maintenance, and legal liabilities have to be carried by someone. Deciding who “owns” that responsibility will shape whether Bluesky can truly scale.

Funding and Sustainability

Perhaps the most urgent challenge is financial sustainability. Currently, Bluesky Social is funded largely through investment rounds. Experimental revenue streams like domain sales and even merchandise (yes, T-shirts) exist, but they’re hardly enough to sustain operations long term.

If investor money runs out without a viable business model in place, Bluesky could face dissolution. Even in a decentralized network, the foundations must be economically self-sustaining. Without solving this, the ideal of a free and open social web cannot survive.

Conclusion

Bluesky holds the promise of a decentralized, open, and diverse social network. Yet beneath that promise lie unresolved issues: moderation, law, operators, and funding.

How these challenges are addressed will determine whether Bluesky becomes a truly sustainable alternative to centralized social platforms—or just another bold but short-lived experiment.

Addendum: Bluesky’s Unit Structure and Sustainability

The Bluesky network can be understood as a hierarchical structure of interconnected units. At the top sits Unit A, such as Bluesky Social, a flagship unit equipped with all core modules: the app, relay, and private data modules. Beneath it, Unit B operates some or all of the infrastructure modules, while Unit C—the grassroots units—runs only the PDS module on a personal budget, delivering data upward to higher-level units.

Viewed this way, the network hierarchy is roughly: Entire Network > Unit A > Unit B > Unit C In fact, systems like Nostr are essentially based on combinations of Units B and C as the basic building blocks.

A practical size for each unit is around Dunbar’s number (≈150 people). Using an invitation-only system can help maintain community cohesion while keeping the unit manageable.

One key difference from Mastodon or ActivityPub is that, as long as inter-unit “diplomatic relations” exist, all accounts appear to exist on the same network. From the Bluesky Social client, it’s difficult to tell which unit an account belongs to unless you look closely. In this context, the domain to which a unit belongs serves as a form of identity verification and trust for the account.

From a sustainability perspective, relying solely on advertising or investment is risky. A practical approach could be to charge users an annual membership fee of around ¥20,000 (roughly $150–200), paid in one lump sum rather than monthly. While simple and straightforward, this model could provide the steady funding necessary to keep the network operational.