Tech

The Web Without Ads: A Web 3.0 Funding Model that Values People More than Attention

Humanity has been graced with The Internet for a few decades now. It seems as if we as a society are asking ourselves the question, “Are we better off now than we were before” with regards to the conectedness (or lack thereof) brought on by the Internet we know today.

In Digital Capitalism, a Sam Harris podcast interview with Douglas Rushkoff, best-selling author and technology/media theorist, the case is made that the economics and incentives driving the internet are fundamentally flawed.

Web 2.0 services are almost completely funded by paid advertising in a model where more attention = more profit. Therefore, the incentive for multi-billion dollar tech giants is to make their products addicting and turn their “customers” into addicts; which brings an eerie new meaning to the software development term for “users”.

Loneliness, depression, anxiety, laziness, sleep disorders, and filter bubbles — this is what the current model has caused for millions of individuals. Where is the Cyber-Utopia we were promised? Thanks to the ubiquity of technology and internet access we have today, there is a better way!

While none of these problems will go away over night, the next generation of Internet seems to be a step in the right direction. A Web 3.0 built with decentralized technologies shows promises of eliminating the systemic downsides of Web 2.0 and it all starts with how Web 3.0 services get paid.

A Proposed Web 3.0 Funding Model

Micro-payments. Hold on, don’t click away yet! I’m not saying that you should have to pay a fraction of a cent to read this blog post. What I’m saying is that you should become a partial owner of the internet as a whole, and as such, earn your right to use it as you please.

Let me explain…

Projects like the Inter-Planetary File System (IPFS) and Storj are building the backbone for a decentralized Web 3.0. Both projects are abandoning the client-server model in favor of a peer-to-peer file storage protocol. Anyone in the world with an internet connection can rent free space on their hard-drive to the network and be compensated in a cryptocurrency token.

Distributed cloud storage projects make a lot of economical sense. In this model, the content we access on the web is not housed in a multi-million-dollar data center with paid 24/7 security guards and a $1M/day bandwidth bill. Instead, it lives in people’s homes, encrypted, and stored with redundancy, using people’s extra bandwidth that they’re already paying for.

Now imagine if you’re new Web 3.0 capable router had a few terabytes of free space onboard. Plug it in, stuff it in your closet and forget about it. Every day, it earns Internet Access Tokens for storing and serving up the bits of data that make up the content on Web 3.0. You’re Web 3.0 browser keeps track of your Internet Access Token balance and sends micro-payments to the services you use as you browse the web.

This model puts the control in the consumer’s hands and lays the groundwork for a internet where value added is rewarded more than attention stolen. It maintains the set-it-and-forget-it user experience of web 2.0 as well as the convenience of the free-to-use model we’re used to.

Tech

What I Tell Crypto Non-Believers

We’ve seen this before

When a revolutionary technology comes around, it’s easy to get caught up in the hype without really understanding what the fundamental disruption really is.

I saw this happen in the dotcom boom when anyone with a website claiming to be a company got showered with money from investors. The investors and entrepreneurs who won after the crash were the ones who understood what the internet really did that could have never been done before.

The internet provided a new information exchange. For the first time ever, anyone with a connection could send and access information globally.

I saw a similar play happen with “crypto-mania” in late 2017. It seemed that anyone with a whitepaper and an ICO could rake in at least $1M USD. There’s the Useless Ethereum Token and, of course, Dogecoin.

I believe the fundamental disruption of cryptocurrency is that for the first time ever, we have a value store that is both digital and scarce.

What do I mean by this?

chart showing how bitcoin compares to gold and cash

Well, before, we had a currency like gold. Gold is scarce – there’s only so much of it on the planet – but it is clunky and not easy to trade around. Imagine mailing Netflix $10 in gold coins every month.

Of course, this is why we have fiat currency or dollars. Dollars are great because we can carry lots of them in our pockets and banks can even digitize them so paying for Netflix (and that gym membership) happens automatically each month.

But dollars are not scarce, the Federal Reserve can always make more. There’s nothing wrong with this – in fact, it causes healthy inflation. This is just one of the inherent properties of fiat.

A cryptocurrency like Bitcoin is scarce – based on math and cryptography, we know that there will never be more than 21 Million BTC in existence. Bitcoin is also fundamentally digitalin fact, it’s programmable.

Just like gold and cash have different properties, so does a new class of currency like Bitcoin.

With a cryptocurrency, not only could you pay for Netflix, but your self-driving car could earn it by delivering take-out and use it to pay for gas on your behalf.

The simple truth is that nobody can “un-invent” cryptocurrency. It’s already here and millions of smart driven people are figuring out how it will fit into your daily life.

What do you think? Will there be another crypto-mania? Or have we seen the last of crypto for a long, long while?

Tech

Blockchain and the Libertarian Uprising: The Bitcoin Example

This is part 1 of a 5 part series adapted in blog format from my senior research paper titled “Blockchain and the Libertarian Uprising“.

Why do we trust a currency backed by a government that is fourteen trillion dollars in debt? Ever since 1971, when Nixon announced that US dollars could no longer be redeemed for gold, the value of the dollar has been based on our faith in it; we trust that a dollar with be worth something tomorrow, so we accept dollars today (Source). Everyone who uses the dollar has put their trust in the central authority of the US Government (The Treasury, Federal Reserve, etc.).

If you are a government, you create currency by manufacturing tokens of exchange and stimulate the flow by requiring that all taxes and fees be paid in your approved token. If you are Satoshi Nakamoto, you create currency by releasing ingenious code designed to run on an infinitely scalable network of globally distributed computers. Enter bitcoin; enter the blockchain. “Now we have a small piece of pure, incorruptible mathematics enshrined in computer code that will allow people to solve the thorniest problems without reference to ‘the authorities’” (Source).

With blockchains, individuals no longer have to trust in an authority to keep secure records. Blockchains are to trust what the internet is for information (Source). If the internet has taught us anything it’s that when change comes, it comes fast. Suddenly, central government may seem as archaic as the feudal system. Perhaps, society no longer needs a government-backed currency to facilitate exchange. What if individuals had total control over their data online? Maybe a liquid democracy is not only possible but necessary in today’s blockchain economy. Libertarians have long advocated that the sole purpose of government is “to protect individual rights to life, liberty, and property, and not abrogate these rights” (Source). By this Libertarian view, the United States government is bloated with unnecessary duties that blockchain technology is poised to organically force into obsolescence. Should the blockchain fulfill its full potential, it will become the backbone of the Libertarian uprising.

THE BITCOIN EXAMPLE

Bitcoin is the first and largest implementation of a digital globally distributed decentralized ledger or “blockchain”.

“A blockchain is a shared, distributed database that acts as an immutable ledger, recording entries and verifying them across a number of independent participants. Once an entry is made, it’s marked with a unique hash code that places it sequentially in the ledger” (Source).

In the last decade, bitcoin has demonstrated that a currency can exist without any government to endorse or perpetuate it.

Bitcoin is like digital gold that can be traded from person to person without a bank to keep track of all the transactions and levy fees (Source). However, the gold analogy is misleading. An individual’s bitcoins are not stored in a computer file or as a record in a central database like a bank account balance. All of the bitcoins in “circulation” lie in bitcoin’s blockchain which is an active record of every bitcoin transaction since bitcoin came into existence in January 2009 (Source).

Every transaction recorded in the bitcoin blockchain includes the sender, the receiver, and the amount of bitcoin sent in the transaction (Source). Therefore, any individual’s bitcoin balance can be determined by simply adding up the individual’s incoming bitcoin and subtracting the outgoing bitcoin for every transaction that individual has ever taken part of. The bitcoin blockchain is assembled by a globally distributed network of computers that verify each and every transaction (Source).

Roughly every 10 minutes, like the heartbeat of the network, all the transactions that have occurred in that span are placed into a “block” and are cryptographically signed in such a way that it mathematically relates to the all the transactions in the block that came before it (Source). The computers that do this verifying and cryptographic hashing are called “miners”. Other computers, called “nodes”, store complete or partial copies of the entire blockchain and are updated as new blocks are appended (Source).

The computers that comprise the network that builds and verifies the Bitcoin blockchain are owned and operated by individuals who are incentivized for their service to the bitcoin network by automated bitcoin payouts proportional to the amount of computing power they provide (Source). There is a fixed supply of 21 million bitcoins that can ever exist (Source). Currently, 12.5 bitcoins are created every time a new block is added to the blockchain (Source). These newly created bitcoins serve as the payout to miners mentioned earlier. Individuals who wish to use bitcoin need only a small piece of software called a “bitcoin wallet”. Each wallet issued has a unique address made of a string of random numbers and letters (Source). In order to send someone bitcoin, only their wallet address must be known; thus making bitcoin a pseudo-anonymous currency.

Part 2: The Blockchain Principles

Tech

Blockchain and the Libertarian Uprising: The Libertarian Protocol

This is part 4 of a 5 part series adapted in blog format from my senior research paper titled “Blockchain and the Libertarian Uprising“.

THE LIBERTARIAN PROTOCOL

One of the first promising non-cryptocurrency applications of blockchain is the smart contract. A contract is generally a written agreement between two parties (e.x. A tenant agrees to pay $600 per month to lease a property for 12 months from the landlord.) Smart contracts are self-fulfilling contracts that are stored on a public blockchain (Source). Smart contracts allow “if this then that” statements and integration with the internet of things while removing the need for a centralized authority to manage the transfer of assets (Source). Smart contracts have applications in nearly any industry where asset exchange is core to operations (insurance, land title transfers, mortgages, securities, supply chain, and record keeping of any kind) (Source). Smart contracts could replace the need for heaps of paperwork, traditional centralized record keeping, banks and even attorneys.

Blockchain & Individualism

Your doctor holds your medical records, your school holds your transcript, your employer holds your work contract, your credit card company holds your purchase history and your bank holds your money. Pre-blockchain, this arrangement made sense. A trusted authority should hold the assets of individuals to ensure they are not tampered with or lost. However, since the advent of blockchains, technologists have discovered radical ways that the technology can be used to give individuals ownership of their personal assets and identities.

Blockchain Helix is one such company working to create a digital identity for individuals whose goal is  “enabling trusted and secure digital economies and societies” (Source). Blockchain Helix allows individuals to create profiles and build their online identities by adding personal information, certifications, diplomas, and official records (Source). All the information is recorded on a blockchain allowing the individual complete control over who has access to their personal information (Source). Blockchain Helix also partners with information providers to allow maximum interoperability and portability of the information (Source). “The Blockchain has brought us immutability. The combination of cryptography and distributed networks basically changes our understanding of digital security. And also it has created something completely new: An infrastructure that eliminates the need for trust” (Source).

A driver’s license contains way more information than just the cardholder’s birthday, however, we will disclose all this unnecessary information whenever we need to prove our age. Personal online avatars like the ones provided by Blockchain Helix will solve this problem of data minimization; limiting the personal data revealed to only what is needed. Blockchain implementations like this stand to give individuals more ownership of their data. After digital avatars become the norm, there is nearly no limit to the kinds of information that can be stored in them. Blockchains will create secure, trusted digital identities for individuals in this new digital society.

Blockchain & Individual Rights

Recall that libertarians believe that all individuals have the right to life, liberty, and property. While “life” and “liberty” may be a bit too abstract for blockchain to secure, property rights are where blockchain technology excels. “Property transfers enabled by smart contracts can deter fraud and improve transaction integrity, efficiency and transparency” (Source). Smart contracts remove the need for settlement agencies, deeds, and mortgage arrangements (Source). Smart contracts for property transfers are especially promising for the billions of individuals around the world who have no proof of ownership of their land (Source). Smart contracts bypass potentially corrupt government record keepers and create a secure, permanent and public account of who has the rights to a property. Before blockchains, property rights had to be enforced by either the individual or a trusted central authority. Blockchains for asset management are eliminating the middlemen and allowing individuals greater protection of their property rights.

Blockchain & Spontaneous Order

The “Spontaneous Order” tenet of libertarianism as described by David Boaz is deeply philosophical and difficult to address with only a technology like blockchain. The growth and integration of the internet into our daily lives may provide an analogy for how we could expect to see blockchains in the coming decades. After all, we no longer “log on” to the internet, we live on the internet. Similarly, as more and more processes (from supply chain, to management, government, and healthcare) become automated using blockchain technologies, we may find that society is behaving like an autonomous organism rather than a nation-state with a clear hierarchical structure.

The Economist calls blockchain “The Great Chain of Being Sure About Things” (Source). In the same way that two parties can transact in bitcoin without having to trust each other or some intermediary like PayPal, or Mastercard, blockchains are handling digitized assets without the necessary trust of an intermediary. Instead, the trust is in an network of self-organizing, self-serving actors (miners and nodes) operating by the incorruptible nature of mathematics. Well designed blockchains will create this spontaneous order out of thousands of individuals who are just going about their day to day, trading, speculating, and volunteering their computers in reward for digital tokens.  

Blockchain & The Rule of Law

In 2016, the tech non-profit Democracy Earth Foundation used blockchain to allow Colombian expatriates to express their opinion of the Colombian government’s decision to pass a peace treaty (Source). Blockchain made secure and fraud-proof electronic voting possible for expats who did not have access to traditional electoral mechanisms in Columbia. Democracy Earth Foundation wants to experiment with a sort of liquid democracy. For example, such an opinion poll could delve deep into the tenants of a specific treaty and find what clause, in particular, was a dealbreaker for citizens (Source). The Colombian Ministry of Information And Communications Technologies foresees that “governments may come to realize that the security and integrity of electoral processes is not just a matter for state control, but also an area that can be guaranteed collectively, supported by blockchain” (Source).

Prediction markets operate on the observation that large groups of people can predict future events with a fair amount of accuracy. Augur is a decentralized prediction market using blockchain to foster collective intelligence by gamifying the prediction process (Source). Augur allows anyone to create a conjecture based on the outcome of a future event (Source). Example queries include “Will Hillary Clinton win the 2016 Presidential Election?” or “Will Apple stock price rise more than 3% this quarter?”. Participants place bets on the outcomes and are rewarded if they predicted correctly (Source). Using machine learning on this model, Augur hopes to be able to harness the wisdom of the crowd to accurately predict future events (Source).

Pairing blockchain-backed voting mechanisms with decentralized predictive markets may allow individuals to provide useful input on critical policy decisions. In an age of instant global communication, representatives can routinely poll constituent views and even allow the platform for a liquid democracy. In an age of blockchain, we can rest assured that these votes are valid and that the voting system will not be compromised. Assuming high relative accuracy of prediction markets, policy makers will have a goto source for gauging how their policies will be received. The “Rule of Law” could develop out of a culmination of trustworthy polling mechanisms allowing politicians to better gauge public opinion and serve their constituents better.

Blockchain & Limited Government

Of course, assuming that politicians are ultimately driven by their devotion to constituents is a very optimistic view of the contemporary political landscape. Corruption and “Big Money” churn out dishonest politicians every election cycle. However, some applications of blockchains may help with the monumental task of making politicians more honest.

eBay currently manages the world’s largest reputation system (Source). Reputation systems are designed to create a metric of trustworthiness for individuals who transact or communicate with one another. eBay keeps a feedback score for all its members based on feedback generated by every other member that individual has transacted with (Source). However, eBay acts as the central authority, adjusting the feedback algorithm and holding each member’s score on its own databases (Source). Distributed reputation systems are similar to eBay’s except that they are stored on a public blockchain. There is no entity to adjust reputation weight, and more importantly, for politicians, there is no entity to blackmail or pay off. A distributed reputation system could permanently record a politician’s votes, bills, stances on issues, campaign promises, or leaked conversations in a trusted distributed ledger. “Elected representatives need to step up and show leadership in designing and implementing smart contracts. If you have integrity, why not encourage the creation of reputation systems?” (Source). Said differently, once a trusted distributed reputation system emerges, politicians who are not being monitored by such a system will immediately seem untrustworthy to the public. In a well managed and publicly transparent reputation system, inefficiencies would be apparent, corrupt politicians would be singled out and the result would be a drastically limited government becoming increasingly operated by smart contracts.

Blockchain & Free Markets

One of the first use cases of bitcoin was as a payment method on The Silk Road. The Silk Road was the name of one of the first and largest dark web markets (Source). It was a hidden black market on the internet where users bought and sold illicit goods of every imaginable kind using bitcoin for it’s anonymous and [at the time] untraceable qualities (Source). While the currency used for exchange on The Silk Road was blockchain backed, the website itself was hosted on a traditional centralized server and the distribution chain relied on discrete packaging sent via the United States Postal Service and other private shipping authorities (Source). The Silk Road was shut down by the FBI in October 2013 but hundreds of similarly structured dark web markets have come and gone since then (Source).

Today, the technology exists for a completely decentralized and unstoppable dark web market. Using Ethereum (decentralized blockchain cloud computing), BitChainDB (decentralized blockchain databases), and Interplanetary File System Protocol (decentralized blockchain file storage) dApps (distributed applications) can be created and released on to the thousands of globally distributed, individually owned and operated machines that make up this new-era blockchain-based computing network. A darknet market built on such a network would be nearly impossible to shut down. Pair such a site with anonymous cryptocurrency payments and a decentralized autonomous network of package delivery drones, as proposed by former Google employee Mike Hern, and you have the ingredients for an absolute free market operating outside of government regulation (Source). Anarcho-capitalists rejoice!

Blockchain & The Virtue of Production

Resonate is a music streaming co-op using a “Stream2Own” model (Source). Users of the service pay no flat monthly fee; rather micropayments are issued directly to the artist when a user listens to a particular song (Source). The first time a user listens to a song, she is charged $0.002 USD, the second time that song is played by the same user, a second payment is issued which is double the previous amount ($0.004) (Source). This pattern continues until a user has listened to a song for a total of nine times with total fees from the user amounting to $1.02 for that song (Source). After the 9th listen, the user “unlocks” the song and all future listens of the song are free (Source). The user can also choose to download any unlocked song (Source). Resonate uses the Ethereum network to issue instant micropayments to artists and bills the user for the amount spent each month in that user’s local currency (Source).

Resonate’s founder, Peter Harris, claims that his unique pricing model allows artists to be paid twice what they would be paid on traditional streaming services while keeping the average user monthly fee below the $9.99 typically charged by traditional music streaming services (Source). By permanently and publicly recording creative rights and rewards, blockchain technology has the potential to allow creatives to receive fair compensation for their work. The model described by Resonate rewards artists who produce songs worth listening to again and again.

Blockchain & Natural Harmony of Interests

The top internet companies today generate revenue from subscriptions (Netflix), intrusive advertisements (Facebook), commissions (Uber), and selling personal data (Google). The libertarian view of government intervention as the source of distress in a society can be seen equally with the internet corporations. The internet economy today is an extractive one; it takes in exchange for its services. To get around this, people pirate content, install ad blockers, and conduct business outside the platform to avoid fees. Additionally, media outlets generate clickbait articles or fake news to attract viewers and increase advertising revenue. The internet economy is lacking in natural harmony. A well-designed blockchain exhibits an extreme understanding of behavioral economics and aligns incentives. As we have seen with the bitcoin blockchain, all parties’ incentives are aligned perfectly so that any individual looking for personal gain is best off serving the network and making it stronger. A blockchain economy is a giving one; where users give their resources to the platform in exchange for services.

Flixxo is a decentralized video distribution platform (like Netflix or YouTube). Users need to acquire Flixx Tokens, Flixxo’s proprietary cryptocurrency, to view videos on the platform (Source). While a user can purchase Flixx Token’s at any time there are alternative ways to generate tokens (Source). Flixxo does not use centralized servers like Netflix, it relies on the free storage space on it user’s computers (Source). Users can opt-in and volunteer their personal computer’s storage in return for regular token payouts (Source). Flixxo also allows users to opt-in and view ads that reward the user directly with immediate token payouts (Source). In this way, a user can pay for the service if he chooses, or he can contribute towards making the Flixxo network stronger. Since Flixxo does not have to pay for server space, their operating costs are significantly reduced allowing them to better compete by charging less for their services.

Vitalik Buterin, founder of the Ethereum blockchain explains how the blockchain economy could unfold: “Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets taxi drivers work with the customer directly.”

Blockchains are poised to align incentives within societal and economic structures allowing for the libertarian ideal of “natural harmony” to emerge without an obvious middleman extracting profit from its users.

Blockchain & Peace

Any technology or ideology claiming to usher world peace should be seriously questioned. From the libertarian approach, it is a noble effort. However, blockchains are not a cure-all solution for the world’s ailments.

Tech

Blockchain and the Libertarian Uprising: The Authoritarian Razor

THE AUTHORITARIAN RAZOR

Libertarians hail the potential for blockchain to radically transform society according to their vision (Source). However, the open source nature of blockchain makes it equally accessible for governments and corporations to use it for tightening their authoritarian grip. The blockchain is a general purpose technology like TCP/IP (internet protocol), the general processing unit, and electricity.  Early adopters of the internet touted its potential to unite and democratize the world but did not anticipate mass government surveillance, fake news, or targeted advertising. Likewise, blockchain raving libertarians may be disappointed by the outcome of such technology in authoritarian hands.

Until now, the term “blockchain” has been used to refer to public blockchains like the bitcoin blockchain. Private blockchains are maintained and built by miners and nodes that are under private control. Governments and some startups have used private blockchains to maintain control over the infrastructure and network that builds their blockchain ledger. These blockchains can be distributed but are not decentralized.

China recently announced a successful trial run using its own government-backed cryptocurrency within its centralized banking system (Source). Japan, Korea, Sweden, Estonia, The UK, and The United States have all expressed similar interest in creating a blockchain based digital currency (Source). A government-backed cryptocurrency would allow governments to easily track all transactions and control nearly every aspect of the use of their digital coinage.

In 2014, China announced its plan to roll out a nationwide social credit system and enlist every Chinese citizen and business by 2020 (Source). In the United States, we are familiar with financial credit scores that are calculated based on an individual’s financial history and are used to determine an individual’s likelihood to repay a loan. Social credit scores are like reputation systems calculated based on the sum of an individual’s actions in a society and are used to gauge the trustworthiness of an individual (Source). In a social credit system, an individual’s score can determine who he marries, what job he is eligible for, how much he pays for insurance, and whether he can operate a business (Source). It seems Orwellian, especially when China plans to use the individual’s internet browsing habits as a criterion for calculating the score. The chief technology officer,  Li Yingyun,  of Sesame Credit, the Chinese corporation currently running trials of this future social credit system, said: “Someone who plays video games for 10 hours a day, for example, would be considered an idle person, and someone who frequently buys diapers would be considered as probably a parent, who on balance is more likely to have a sense of responsibility” (Source).

It is unclear if Sesame Credit plans to use blockchains for their final version of the social credit system. However, China’s interest in blockchain and their development of a government-backed cryptocurrency suggests that they are not shy to explore applications of this technology. As mentioned previously, smart contracts operating on a public blockchain can create a scalable reputation system. Using private blockchains, China can more securely manage their 1.3 billion citizens’ data and credit scores. Ultimately, this allows a centralized source of mass social control through behavioral incentives.

CONCLUSION

In 2013, Cyprus startled citizens when it announced that it would seize up to 60% of personal savings over €100,000 to bail out it’s dying banks (Source). Demand for bitcoin exploded as citizens reacted by moving their euros to crypto to keep it out of government hands (Source). Just a year later, China first declared its ban of all things bitcoin alongside its plan for a social credit system. Today, bitcoin looks more like an asset or a business-to-business payment network and less like a currency for the masses. Regardless of Satoshi Nakamoto’s original vision for bitcoin, his blockchain invention soon became recognized as an open platform allowing permissionless innovation. The technology shows promise for real societal change with applications in every industry. However, the course of change this technology brings will depend heavily on the motives of the people who build with it. It is up to the next generation of tech entrepreneurs to provide blockchain-based services unreliant on authority because the alternative is the authoritarian power that we have seen emerge from governments and Fortune 500s alike. Power that tends to corrupt; absolute power that corrupts absolutely. In reality, we will likely see a mix of both authoritarian and libertarian applications using blockchain. The authoritarians, however, will likely find it difficult, nigh impossible, to regulate their libertarian rivals operating with distributed and decentralized blockchains. Much in the same way that bitcoin is unstoppable by any third party. This leaves the market to decide which services will be deemed fit. Bitcoin and blockchain cannot be uninvented; the benefits are promising. We do not know what this new era of trustless global economies will bring, but we are about to find out.