Is decentralization the answer to Facebook’s data breach? Probably not.

Harry Simon
Mar 29, 2018 · 4 min read

This article is part of Radicle’s ongoing Crypto and Decentralization research.

The Facebook–Cambridge Analytica scandal has social media users and politicians asking important questions: How much personal data should I give up so I can use social media platforms? Should I be willing to give up any personal data at all? Should data collection be regulated? And how?

People feel betrayed. Facebook failed at one of its primary responsibilities — protecting its community members. Now, people are looking to delete Facebook all together (see: #deletefacebook). Or they’re looking for alternatives, but turning to Instagram or Whatsapp won’t solve users’ worries. Those platforms are owned by Facebook! Turning to Snapchat or Twitter won’t solve any problems either (as they, too, rely on data collection and monetization).

Where could users turn? An obvious answer the decentralization-inclined would say is decentralized social media. Indeed some have already proffered decentralized social media platforms as viable alternatives (see: here and here). But decentralization may not be the answer. At least not to the Facebook problem. Why? Because the incentives don’t necessarily line up.

If you’re not paying for the product, you are the product.

Decentralization is of course a novel vein of software development with discrete technological advantages (and challenges). Decentralization is also a great framework for understanding the problems with centralization.

The core of the problem in this case isn’t with Facebook, per se. The core of the problem is with centralized social media platforms. If you’re not paying for the product, you are the product.

  • User Data and Advertising: Free social media platforms rely on collecting massive user data stashes for precise ad-targeting and social engineering, manipulating what people see. The more personal user data centralized social media platforms accrue, the more precise their algorithms become. Social media platforms are incentivized to scale and be as competitive as possible.

Centralized platforms have other systemic issues like the pervasiveness of bots and censorship.

  • Bots: Because social media platforms are free and users can create as many profiles as they like, there are few consequences to bots spamming comment threads or inflating engagement data (such as likes, upvotes, and shares).
  • Censorship: Censorship may not be a large issue for the average user — but it definitely is for fringe users, such as those who’ve been kicked off Twitter for having ties to violent groups.

Yes, there are problems with centralized social media platforms. But how do decentralized platforms solve them?

  • Shifting of business models: Instead of relying on advertising or data collection, decentralized social media platforms rely on crypto asset appreciation. On decentralized platforms, users reward other users for posted content, contributing to the supply-demand dynamics of the native crypto asset. This reward structure also incentives users to post “good” content. In sum, decentralized platforms don’t need to have ads on their platforms.
  • Staking $$$: Having users make micro-payments for actions such as likes, upvotes, and shares prevents spamming and theoretically encourages more authentic engagement. Networks that don’t require staking don’t necessarily solve this problem.
  • Crowd governance: Just as centralized platforms are systemically censorship-prone, decentralized platforms are systemically censorship-resistant. Some decentralized platforms are completely censor-free, allowing anyone to post anything. Other platforms (such as Sociall) are community governed with moderators who screen content.

In theory, decentralization tackles most of the problems presented by centralization. But will it work?

As currently conceived, decentralized social media relies on one main premise: that users will pay each other for content.

Most decentralized solutions rely on users paying users. As the golden rule goes: “Pay others how you would like be paid.” Right? Maybe.

How many users are willing to pay others for a Facebook or Twitter post? How much money would they be willing to contribute? Our own survey data suggests that only 5% of people are willing to pay others for their content. If users are unlikely to pay other users anything at all for their posts, then a user-paying-user strategy likely will not succeed.

A decentralized Facebook competitor that doesn’t rely on users-paying-users may have a shot.

A decentralized system needs its incentives to line up in order to propel the supply-demand dynamics of its native crypto-asset. In other words, if those incentives are misaligned, then the platform will fail — regardless if its offer data protection or not.

Will Facebook’s recent breach push people to decentralized alternatives?

Just because there are problems with centralization doesn’t necessarily entail that decentralization will solve them. Decentralized solutions have an uphill battle.

Despite public perception, users value convenience over data privacy. Facebook users are entrenched in their networks. Switching from Facebook to a new platform will come with a cost. People will have to rebuild their networks, rebuild their followings, transfer all their photos. This is Facebook’s moat, and having your network intact is much more convenient than rebuilding it.

Will the #deletefacebook campaign have lasting effect? Probably not. Take the #deleteuber campaign for context. Between 200,000 and 500,000 users deleted their account after the campaign. For a company that serves 40 million monthly rides, losing 500,000 users is a slight hiccup.

Decentralized social media is still small (there are ~1 million uses on Steemit). Facebook is a behemoth, but the timing is better than ever. Decentralized solutions need to leverage Facebook’s misfortunes if they want any possibility of eating at Facebook’s enormous market share.

The Decentralized Social Media industry is a component of the Rad.Index. For more info, to see which tokens are in and out, click here. To view our initial Decentralized Social Media report, click here.

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Harry Simon

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Crypto @ Radicle Labs (www.rad.report/crypto)

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