Tech giants like Google and Facebook could soon be dethroned, knocked down from monarchs of the internet to well-funded public servants. How? Decentralization. Many of blockchain technology’s true believers already see the next reincarnation of the internet on the horizon: A decentralized web where direct peer-to-peer interactions, fueled by digital sovereignty, replace many of the business models we know from Uber to Twitter. Even old school investors are joining the movement to replace corporate platforms with democratized networks.
The New York-based tech company Blockstack just launched a $25 million venture capital fund for startups and projects working to create a decentralized internet. CoinDesk reported venture capital firms such as Lux Capital, Compound, OpenOcean, VersionOne and Rising Tide Capital are already backing the Blockstack Signature Fund. This is big news for anyone who uses the internet. Yet, although “decentralization” gets bitcoin aficionados all riled up, it often still inspires confused puppy dog eyes from the rest of us, pleading the speaker not to explain the significance with abstract words like “revolutionary.” So let’s break down why this matters.
Digital sovereignty is when you own and control your own online identity. Your identity, like a Facebook profile, wouldn’t belong to Facebook any more. It would belong to you. In a decentralized future, Facebook couldn’t freeze or shutdown your account. It could probably stop you from broadcasting through their platform. But all your contacts, your photos and other personal data belongs to you. No company or external party could tamper with it. “We wanted to make sure no censorship could be globally enforced,” Blockstack co-founder Ryan Shea told International Business Times. “That’s very important for democracy and for preserving our history.”
In a decentralized social network, users also have more control over filtering what they see and what they don’t want to see. Right now, when you use Google or Twitter you can do so for free because you are the product tech companies sell to advertisers. Your habits. Your eyeballs. In return for free access, they control what you see on your newsfeeds and when you search. “A few large companies have had a strangle hold over our user data and our ad networks,” Shea said, claiming this business model curbs real innovation.
A decentralized internet is far more free and democratic than the model we have today. The Atlantic reported tech companies now dominate journalism, not to mention many other industries reliant on mass marketing. A decentralized network runs on user participation, potentially including corporations without being exclusively controlled by them. In this decentralized future, marketplaces like Etsy and Amazon could still exist. But merchants won’t be forced to surrender a chunk of their profits in exchange for credibility or payment processing.
Blockchain-powered smart contracts can automatically verify transactions without a middleman to establish trust. People might still want review features on sites like Amazon, because the algorithms can’t test the lipstick you bought and say if the color goes on smooth. However, the blockchain system can guarantee that specific lipstick actually shipped, tracking the product with a QR code, then process the payment.
Imagine a future where you could still surf the web even if Google’s whole business collapsed. Tech companies would have to prioritize customer service and added value, because people would already have access to mobile networking regardless of corporations. That’s the vision Blockstack’s fund is bringing to life. And the founding team is already well on their way toward their goal.
Blockstack, which was founded in 2013, has a reputation for being one of the most most trusted incumbents in the blockchain industry, even though it isn’t strictly speaking a blockchain startup. Blockstack uses blockchain solutions for security and has a community cryptocurrency, the Blockstack token. Although the veteran startup plans to raise additional funds with its own initial coin offering in the next couple of months, the team sees decentralization as so much more than bitcoin and Ethereum.
”We try to do as much as possible off of the blockchain,” Shea said. “To have a decentralized system does not require a blockchain.” Think of Blockstack like Apple for the world of democratized technology. It provides a decentralized internet browser and developer tools, the way Apple made Safari and a slew of resources for its app developers. Within hours of announcing the new Blockstack fund, dozens of projects applied to join. One such team is working on a decentralized type of Airbnb model. Blockstack already offers a decentralized storage system with identity and payment features.
Blockstack offers its services through a hodgepodge of in-house tools and external cloud services, like Dropbox, combined with encryption and even the option to host your own drive if you want. There’s no one central place a hacker could infiltrate. Cloud service providers can’t tamper with the data, see the data or destroy it because there are multiple encrypted backups under the user’s control, not the service provider’s. “It actually gives you really good performance.” Blockstack co-founder Muneeb Ali told IBT. “You get the same quality of performance as if you were directly using cloud computing.”
The startup’s cryptocurrency fuels this network and helps with governance, since Blockstack’s system doesn’t exclusively run on group consensus like the bitcoin network. This system lets everyone contribute without all the participants having to agree to verify processes. “The token is used for access control, to prevent scammers from flooding the network,” Ali said. Their new venture capital fund is the first fund of its kind for decentralized apps. “We’re not building an application or a company. We’re building an ecosystem,” Shea added. “We don’t want to have a single company in control of the system.”
Shea and Ali are just two prominent members of a wider movement for decentralization, according to Colin Pape, project lead at the decentralized search engine project Presearch. “There’s a growing awareness and a movement for transparency,” Pape told IBT. “Google has Wall Street to answer to and you have a small group of people in charge of a ton of information.”
google 2 Damore's memo was critical of Google's approach to diversity hiring and staffing. Photo: Getty
Google dominates internet searches, monopolizing global access to information in an almost unprecedented way. Quartz reported Google handles around two thirds of all web search queries. That’s completely antithesis of democratized internet freedom. So Presearch plans to launch a beta decentralized search engine in September, which could be fully operational by the end of the year. Pape described it as more like Wikipedia than Bing.
“The users who are running it will basically act as the web crawlers,” Pape explained. “They will basically put a portion of the index on their machines. To put it in basic terms, we’re distributing the processing power needed to run the search engine.” The Presearch ICO has raised $5 million so far, according to Pape. The tokenized fundraising campaign will continue until around the end of September.
These PST tokens will incentivize people to contribute to the peer-run search engine. Tokens can be cashed in for advertising, similar to Google ads but without the tracking and monitoring. Plus, users will receive small cryptocurrency payments just for viewing these advertisements. Splitting revenue between contributors and consumers is the opposite of what most tech companies do today. “Google and other advertising companies or search engine providers treat you like the product. They are kind of monetizing you. We wanted to be really clear with what is advertising and what is not,” Pape said. “The premise behind the whole concept is open and transparent.”
All things considered, cryptocurrency and blockchain technologies are a crucial part of a wider shift towards decentralization. Many of these bitcoin-loving idealists aren’t just griping about powerful institutions while swapping tokens among themselves. They are building replacements. Decentralized technologies are attracting more funding, which could turn these dreams into reality much sooner than experts previously predicted. “We’ll see a massive explosion of innovation,” Shea said. “Especially in the software sector. We believe it will be heavily accelerated.”