Dethroning the Titans: Can Blockchain Prevent another ‘Facebook-Cambridge’ Incident?
The fallout from Facebook’s latest controversy has led many to think (again) about how our personal data is stored and used.
The unconditional trust of Facebook to Cambridge Analytica’s use of personal information, then Cambridge’s abuse of that trust, shows there is a real gap in protecting data. Facebook has a responsibility to store its users’ data securely, and failed its users’ trust by providing access to it in a manner that was clearly not known or agreed to by the users.
What happened was morally wrong, and personal information should not be given away in such a way…
…but how should personal information be shared and used?
There are many cases where sharing personal information adds value to everyone. An obvious example is Waze, which uses geolocation information from users to provide optimized driving directions. Most users give away their location without thinking twice in return for the benefits of that service.
So which data should be shared? For what purposes? In which way and to what level? AND…who makes those decisions?
Regulators are trying to address these challenges, such as the case with the EU’s General Data Protection Regulation (GDPR). Unfortunately, that strategy is overwhelming banks.
In practice, most of these decisions today are made by what the Economist described as an oligopoly of Tech Titans. We as individuals gave up on our personal information and surrendered our control over it, in return for free services. Last week, the magazine’s editorial board in its commentary “How to Tame the Tech Titans” questioned whether this arrangement actually constitutes a socially desirable market equilibrium.
“The platforms have become so dominant because they benefit from ‘network effects.’ Size begets size: the more sellers Amazon, say, can attract, the more buyers will shop there, which attracts more sellers, and so on. By some estimates, Amazon captures over 40% of online shopping in America. With more than 2 billion monthly users, Facebook holds sway over the media industry. Firms cannot do without Google, which in some countries processes more than 90% of web searches. Facebook and Google control two-thirds of America’s online ad revenues.”
This centralization has many bad outcomes: Concentration of profits, elimination of competition, and most of all (as the recent Facebook events show) control over our data without us having any say about it.
Regulation around data such as GDPR is one way of dealing with this situation, but for those of us who think blockchain can make the world a better place, the discussion above poses a challenge:
Can blockchain and decentralization provide an alternative to this ‘market of the titans?’
I believe they can. Blockchain can be the basis for a new deal on data.
The monopolies of the Titans are not necessary in order to enjoy the network effects of big data. Blockchain — as a distributed, open, and transparent platform — can provide the way to collect and share the data.
So, we as a society are looking for a market for data but where data is private, And at the same time, this data can be shared by individuals as they join various services that make use of this data, much like the model Android has today around permission to applications (see MIT’s openPDS initiative).
However, we are also looking for a market where the safe storage, analysis, encryption, and authentication of data would take place (someone pays for it), and for a market structure that incentivizes various players (users as well as service providers) to participate and align with this new deal on data in a competitive and transparent way (as opposed to the regulated Titans model).
Blockchain can be the enabling technology for the new deal on data.
Using blockchains, it is possible to create markets around transparent information and rules using encryption to secure and enforce them.
Bitcoin (BTC), the mother of blockchain, created a market where miners have an incentive to keep the service available for users to transfer bitcoins between accounts in a secure way. The basis for the Bitcoin market is BTC’s blockchain, and the open source code around it.
A new deal on data implemented over a blockchain might seem far away, but it would come with the evolution of the technology, and the understanding of how to use it to create sustainable and fair markets:
- Privacy and Security: Blockchains can provide users the means to control identities and personal data using cryptographic keys, and can allow users to authorize or delegate access to their data (either as direct access to data or as “safe answers” to questions on personal data see openPDS/SafeAnswers).
- Transparent rules and enforcement: The exchange of data (or answers to questions) can be implemented as smart contracts using tokens. Contracts can govern the authorization of transactions (exchange of information), and the rules around them (i.e. payment for the data/answer in the form of an earned token)
- Incentives, competition and fairness: Blockchains can be used to define ecosystems that will involve and incentivise users, applications (i.e. navigation app) and service providers (personal data storage and analytics, personal health monitoring, content providers) who will use the data to provide value to users — with viable business models.
One of the biggest questions is whether users who got used to getting content and services for free (Gmail, Google Drive, Waze, Facebook, etc.) will be willing to pay for content and services, and whether in return service providers will be willing to pay users for using their data. Steemit and Minds.com are glimmering social examples for such alternative models using blockchain technology.
In any case, blockchain can set the scene for a different economy to thrive — a decentralized and transparent economy — that does not rely on advertising data monopolies to subsidize free services.
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