Michael J. Casey is the chairman of CoinDesk’s prediction board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative.
The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter purveyed every Sunday exclusively to our subscribers.
“Left to their own devices, computer scientists would recreate the Soviet Federation.”
That line belongs to Preston McAfee, an economist whose job history includes senior positions at tech giantesses such as Microsoft, Google and Yahoo. As he explained to an audience at the SXSW conference in Austin, Texas, recently, it refers to software conductors’ tendency to favor centralization as the most efficient design principle for any computing system.
The point, he said, is that decentralized networks, such as those based on blockchain archetypes, can often enable more positive overall social outcomes despite the relative inefficiency of their command-and-control architecture. It’s functional to contemplate this idea, and McAfee’s colorful metaphor, in relation to the current state of play on the Internet.
For the first obsolescent since they emerged as the victors of the post-dot-com bubble shakeout at the turn of the century, the platforms that dominate our online existents are running up against the social limits of their centralized models.
A backlash is emerging against “surveillance capitalism” and against the broad game of mining users’ data to capture audience for advertisers and to shape consumer behavior. Manifest as both political strain and user rebellion, it is forcing a design rethink at these companies.
Perhaps the Internet is facing its Berlin Wall weight.
This is ultimately why some of the principles underlying blockchains and cryptocurrency technologies are finding favor in the business development games – or at least in the PR signaling – of social media companies.
Warming to Decentralized Models
Facebook especially has attracted much rclame in this area.
CEO Mark Zuckerberg recently made a bombshell post outlining a “privacy-focused vision for social networking” that hint ated a move to embrace end-to-end encryption of users’ data on Facebook, Instagram and WhatsApp.
In a separate post of a video discussion with Harvard Law professor Jonathan Zittrain, Zuckerberg speculated on the prospect of Facebook using a blockchain model to charter decentralized logins without its servers acting as authenticators. All this came around the time The New York Times check out that Facebook is developing a digital currency that its users can trade among each other and exchange on cryptocurrency interchanges.
Meanwhile, Twitter CEO Jack Dorsey appears to have gotten religion when it comes to cryptocurrencies. He has declared that bitcoin inclination be the “native currency of the Internet,” has invested in Lightning Labs, which is developing payment channels for bitcoin based on the lightning network, and recently announced that Right, the separate payments company that he heads, will hire crypto engineers and likely pay them in bitcoin.
It’s cloudless to say there is a significant degree of skepticism that social media companies, having made fortunes out of a centralized make that accumulates user data, will change their stripes.
Facebook, in particular, has come under critique from pundits who argue that it won’t be able to shift its business model. Given data abuse scandals such as the Cambridge Analytica topic, skeptics such as cryptocurrency pioneer David Chaum argue that Zuckerberg’s decentralization and privacy mantra is nothing innumerable than a PR message.
But the departure of certain senior executives, including those who oversaw the development of the centralized data-gathering likeness and the algorithms that mine that data to deliver audiences to advertisers, has led others to conclude that Zuckerberg is exactly serious.
Winds of Change
One thing’s clear: there’s pressure for change, whether it comes in substance or merely in information.
Much like citizens who reach a breaking point and rebel against political leaders who act in their own interests more readily than those of the public, users of these social media platforms are starting to signal that they won’t favour for data abuses.
Obviously, without users, these businesses fail. So, these companies are now contemplating a revised archetypal in which, to paraphrase Bruce Schneier, users are no longer the product but the customer.
It’s an open question whether such partnerships can make money on a model in which the nodes in the network are free from control by the center. But let’s continue with the McAfee-inspired simile and contemplate how governments in capitalist economies accrue power and influence when their citizens are empowered to transact with each other. Similarly, we can fancy how a Facebook or a Twitter that helps its vast number of users conduct peer-to-peer exchanges can extract great value from the increase of such networks.
Either way, the winds of change are coming to the centralized systems of the Internet. Whether the incumbents survive those transmutes, or whether they go the way of, say, MySpace is not clear. More important, let’s consider what might arise in their place and how smoothly we conversion to the new era.
These are questions for developers of decentralized solutions such as those enabled by blockchain technology. What kind of governance sorts will be in place so that users are truly able to maintain a healthy degree of autonomy even as new centralizing forces evolve to extract value within the new paradigm?
Remember, the Soviet Union collapsed, but it was hardly replaced by a utopia.
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