Decentralization is important! And this cannot be overstated! In this article, I am going to explain how the new wave of web3.0 applications (dApps) is changing the entire perspective about the “owning” the data and monetizing it.
How did it start?
- The P2P transfer of digital information started with the advent of the internet, but then it morphed into centralized systems being controlled by a few actors
- Now we are coming back to a truly decentralized ecosystem which started with Bitcoin in 2008. Bitcoin provided us with a decentralized cryptocurrency which could be shared without any central authority and gave back the power to the people.
- While it is unfortunate that Bitcoin has been vilified through it’s use in the Silk Road and payments for ransomware because of it’s pseudonymous nature, the underlying blockchain technology is truly revolutionary in nature.
- Decentralization is becoming mainstream again, with shows like ‘Silicon Valley’ speaking about it.
How does it look in 2017?
With the evolution of Ethereum and other related P2P technologies like IPFS, today there’s a new way of building applications in a completely server less, decentralized manner. This stack is called the web3 stack. These are the important components in that architecture.
Ethereum goes one step beyond Bitcoin, wherein instead of just transferring “value” (read cryptocurrency) you can also transfer and distribute logic in a peer to peer manner in the form of Smart Contracts.
IPFS stands for Inter Planetary File System. You can look at it like a decentralized Dropbox, where the files are stored on a P2P network, and not stored by any one conglomerate.
One of the fundamental limitations of blockchain is that it cannot interact with the wider internet. To solve this limitation without relying on any centralised authority, Oracle systems like Oraclize are being used by the community in order to “trustlessly” feed data into the blockchain Smart Contracts.
It used to be the case that getting funded for a new project or startup meant relying on traditional funding sources like VC or PE funding, but today a new funding method has emerged — the token sale. The token sale can be likened to a crowd sale, but it is conducted in a completely decentralized way using cryptocurrencies like Bitcoin or Ether.
How is it being used in practice?
There are several projects which leverage the decentralized ecosystem in order to give back control to the people over their own data.
Golem is a decentralized market for computing power, wherein you can earn for renting out the computing power of your devices. This can be used by other projects which require computationally intensive simulations like scientific calculations, machine learning and CGI rendering.
Lunyr can be compared to a decentralized Wikipedia, where users can contribute by writing new content or moderating existing articles, and earning cryptocurrency for that. This data doesn’t reside in any servers but on IPFS. Thus there is little to no reliance on a central authority. In this case decentralization is important to avoid a single point of failure.
Our team at Attores is building a decentralized version of a Professional Social Network called Indorse where users can “Earn for being awesome”. Instead of putting your entire profile in centralised servers and lose the control over your data, we aim to give the control back to the users. The users also have a chance of earning for their contributions to the network based on their Skills Profile and endorsements. In this case, decentralisation is key to the platform because it is central (pun intended) to allowing users to retain control over their data.
Is the new stack more secure than the current architecture?
While I won’t claim that the new stack of dApps can completely stop or eliminate hacking, I believe that it is much more resilient to attempts at bottlenecks or trying to shut down databases. The new decentralized stack, by it’s inherent nature leads to replication of the data and hence it might prevent a single point of failure as evidenced by the current ransomware attacks spreading across the world and also the DoS attacks on the DNS service provider which brought several sites like Twitter and Reddit down for some time!
Disclaimer — The author of this article is the co-founder of Attores, which is the company working on Indorse