I was asked to summarize what would be needed for success apart from working technology (which we pretty much have)? My answer was four things:
- A sustainable business model
- Anti-trust enforcement
- The killer app
- A way to remove content
What Is This "Success" Of Which You Speak?Lets arbitrarily set a target for the decentralized Web of 1% market share. That would be the equivalent of:
- Decentralized social networks with, in aggregate, 22M monthly active users (Facebook has 2.23B, Snapchat has around 190M).
- Decentralized search handling in aggregate 35M searches/day (Google handles 3.5B for a 90% market share, Bing handles about 120M).
- Decentralized messaging handling in aggregate 5M messages/day (Twitter handles 500M/day).
- Decentralized video streaming in aggregate 10M hours/day (YouTube streams 1B for about 80% market share, Vimeo has around 1%).
Something around one-fifth the size of Snapchat and Bing, and about the size of Vimeo, would represent a significant market penetration, despite the fact that 99% of all Web use would still be centralized.
Sustainable Business Model
A convincing pitch to the funders needs to include a sustainable business model. What ideas for such models are being floated?
- The Web we have is powered by advertising, some $200B/year of it. The way almost all Web advertising works now involves tracking users and accumulating detailed information about them. Economies of scale mean that systems to do this will be centralized. The decentralized Web concept is that users would store their own data, and advertisers would buy it from them in some redacted or anonymized form via micro-payments. But advertisers don't want to deal with billions of individual suppliers. They want to buy access to aggregated data from a single, or at most a few suppliers. They're the ones with the money, so what they want is important. Users are the ones with the eyeballs, and they hate advertising so much that they have mounted the "biggest consumer boycott in history" by installing ad-blockers.
- For more than two decades people have been seeking the Holy Grail of micro-payments, but without success. Based on experience Clay Shirky in 2000 and Andrew Odlyzko in 2003 demolished the idea. But it is hard to kill. In 2008 Satoshi Nakamoto designed Bitcoin to handle micro-payments. It can't handle payments, much less micro-payments. In 2018 the Lightning Network was intended to be an overlay on the Bitcoin network to fix this problem. It doesn't work, and isn't decentralized.
- If you believe crypto-currency "prices", blockchain startups have been raising ludicrous sums via Initial Coin Offerings (ICOs), for example FileCoin's $257M. But note the "Initial". ICOs are a way to fund a startup by getting customers to pre-pay for services they hope eventually to obtain from the startup. This is almost the inverse of sustainable. After all the ICO proceeds have been spent building the service it has to be provided to the original customers for free.
- DuckDuckGo has a sustainable business model based on advertising that doesn't involve tracking or collecting information on users:
It turns out that startups are Trojan horses. We think of them as revolutionaries when in fact, they’re the farm team for the establishment.As the chart from Steve Faktor shows, these days startups get bought by the incumbent giants before they can become big and very profitable, and thus pose a threat to the incumbents.
At present the entire universe of decentralized apps on Ethereum has about 8.5K daily users and revenue of about $2.5K/day. Diaspora, an open source decentralized social network has 0.004% of the users Facebook has. Things like this aren't worth noticing, let alone buying.
But if the aggregate of the new, small decentralized companies closed in on my definition of success, the incumbents would buy them up and kill them off. What's to stop them? As Cory Doctorow explained in Big Tech's problem is Big, not Tech, his barn-burner of a closing talk at the recent Decentralized Web Summit, anti-trust law is the only thing that could stop them. But decades of Chicago-school economics have gutted anti-trust enforcement, so there really isn't anything stopping the incumbents continuing to buy up and kill off the competition.
Reviving anti-trust enforcement is a difficult political problem, but there are some hopeful signs. Lina M. Kahn's Amazon's Antitrust Paradox seems to have triggered an avalanche of concern, ranging from The Economist to Chicago's Booth School.
The Killer AppApart from a business model, another thing our new small company needs is a product., or rather a service. In What do you believe now that you didn’t five years ago? Centralized wins. Decentralized loses scalability expert Todd Hoff wrote:
Decentralized systems will continue to lose to centralized systems until there’s a driver requiring decentralization to deliver a clearly superior consumer experience. Unfortunately, that may not happen for quite some time.Hoff lays out the reasons why the overheads of decentralization ensure that centralization wins. The killer app will not be "[centralized app] but decentralized", because it won't be as good as [centralized app]. Even if it were, these days who needs Second Life, let alone "Second Life, but on the blockchain"? It has to be something that users need, but that cannot be implemented by a centralized system. Hoff has a list of 6 potential drivers for this, but he's skeptical of all of them and so am I.
A Way To Remove ContentProperly implemented, the decentralized Web is content-addressed; content is named by what it is not where it is, as in the Web we have. A request for a named unit of content may be satisfied by any of possibly many copies. Among the important benefits this brings is that caching works right, something that is very hard to do in the Web we have.
Content-addressing is what makes the decentralized Web's touted censorship-resistance work. A censor has to find all the copies of the content to be suppressed, and destroy all of them. Because of the way content-addressed networks work, the act of looking for the copies will probably cause more copies to be created. Much of what's driving the decentralized Web is concerns about the way the Web we have is censored not just by governments but also by the incumbent platforms.
Unfortunately, politicians love to pose as defending their constituents from bad people by passings laws censoring content on the Web, preferably by forcing the incumbent platforms to do it for them. Laws against child porn and "terrorism", and for the "right to be forgotten", "protection" of personal information, and "protection" of intellectual property all require Web publishing systems to implement some means for removing content.
Removing content from a decentralized, content-addressed system is difficult to implement:
- At the organizational level, who is the censor in a decentralized Web to whom the request to remove content is addressed, and who decides whether the request is valid? Facebook has a vast team of content moderators failing to purge deprecated content. Google has a whole organization handling DMCA takedown requests. How are their equivalents in the decentralized Web to be implemented and paid for?
- At the technical level, it is close to impossible to prevent abuse of the mechanism for tracking down and deleting all copies of some named content the censors need to do their job. Or even a mechanism for just de-indexing it.