Blockchain beyond the hype:The decentralized internet

In our first article we examined the current state of Blockchain and Distributed Ledger Technologies (DLT), followed by a deeper look into DLTs real advantages over classic protocols and structures (owning your own data, reliability, resilience and fair distribution of revenues). In the last article we have been exploring the foremost challenges DLT will face on their way to adoption, mainly scalability, usability, interoperability and regulations as well as verbal and visual communication (thanks for the valid argument, Iryna Nezhynska!).

With the Revision Summit coming up next week we want to finalize this series of articles now with a look at the future of DLT and their promise of a decentralized internet — how could a “reference architecture” for the decentralized internet look like? Spoiler: it could change the established digital economy completely.

What are the essential elements of a decentralized internet?

With DLT, a new, fully decentralized internet without (the currently heavily profiting) gatekeepers and error-prone centralized servers becomes feasible. There are three challenges to realize a fully decentralized internet:

• Distributing data storage — we need to distribute any kind of information (bigger files in chunks) so that it can be stored and retrieved within the network.
• Distributing computing power — (foremost simple computing like smart contracts, nice to have but not necessarily supercomputing) and most challenging,
• Distributing digital communication — locally and globally.

Fortunately there are already some successful efforts to solve these challenges, Ethereum and other smart contract platforms already compute smart contracts on distributed virtual machines, Golem, iExec and SONM have developed working solutions to distribute supercomputing power. Siacoin, Filecoin, Swarm, BigchainDB and IPFS are the foundation for a distributed storage of all kinds of data, RightMesh, BlockMesh, Helios Wire, Nexus Earth and Blockstream are working on solutions to circumvent classic communication bottlenecks.

What else?

There are already a shitload of DLT out there. Fortunately not only because some are redundant, tackling the same problem from different angles, but also because there is a need for a lot of different application specific DLT. A big challenge will be Interfacing between these application specific DLT. This is where interoperability projects like ICON, Polkadot and Cosmos are stepping in. They bridge the gap between (financial) transactions with different conflicting priorities like speed and security through atomic swaps, information transactions, etc (see our last article).

Apart from that, anonymity protocols (e.g. zk-Snarks) will be necessary to make DLT GDPR compliant. However, the compression that is the key enabler for a decentralized internet in the tv series “Silicon Valley” is surely beneficial, but not really necessary. Compression still is a valid argument though, if the decentralized internet needs to run solely on smartphones. Apart from smartphones becoming more and more the primary devices, this is maybe even how the DLT revolution could start: The third world has already been leapfrogging landlines for smartphones, now it could become the first showcase for a decentralized internet by substituting centralized server infrastructure with a smartphone network.

What will the decentralized internet look like in the real world?

So much for the rather technical digital infrastructure perspective, but how will all of this manifest physically? To circumvent locally centralized servers (currently mostly in the US of A, courtesy of Amazon, facebook and the other usual suspects), information will ideally be stored in chunks on individual computers. A good alternative on the way to get there are so called Masternodes, a special kind of smaller more decentralized servers. This development is very comparable to the changes the formerly centralized energy networks are undergoing right now with the advancements of renewable energy technology.

Decentralizing communication will most likely be realized through MESH networks that coordinate the flow of data directly between devices (WLAN-SI is a successful example in Slovenia). Preferably the gaps between densely populated areas without a sufficinet amount of devices would be bridged via satellites. Apart from that, Exchanges with banking licenses like coinbase were the first monetary interfaces to the real world. Currently Stablecoins are trying to improve the interface between old finance and DLT. Slock.it and XAIN have developed physical interfaces like digital locks & keys. Decentralized Oracles like Augur will bring trusted real world data into the system.

Changing digital economy?

Today the internet is under control of a handful of companies. This fragile construct is often under attack, data is stolen or monetized in unethical ways, servers go down or get hacked, local Governments can restrict access, censor data and monitor citizens. Most of the big players already recognized the value (unfortunately mainly in USD) of DLT and decided that they want to embrace this new paradigm. Of course the big players like FAMGA and SAP are already working on their own messed up version of DLT: private permissioned chains, closed ecosystems with rather centralized control.

On the other hand there are a lot of very successful new companies in the DLT universe that are emerging with hyperspeed, foremost ConsenSys, grown to more than a thousand heads in the last three years. When Ethereum introduced the first usable framework for smart contracts in 2015 (a concept already presented in 1994 by Nick Szabo), the foundation for a new level of automating online transactions to the point where they are autonomous was laid. Eventually automated transactions could enable decentralized autonomous organisations without any centralized governance, completely different from how classic corporations and other organizations work today. In combination with a decentralized internet, most of the current revenue generation models of the digital economy are under attack, the constantly cited substituion of the middleman will only be the beginning of the revolution.

The future

In a perfect future the digital infrastructure would be completely distributed — even the governance — leading to ubiquitious trustworthy information availability with everybody getting paid fairly for his contribution to the infrastructure and in control of their data. There is a lot of potential to get there, but without a clear direction, the development can go both ways: On the one hand the technology could have an incredibly positive social impact. On the other hand harmful economic incentives could lead to another level of turbo capitalism or control (China for example is also looking into combining blockchain and satellite communication). There are a lot of bottlenecks where the big players could step in and take over — substituting current digital infrastructure without big players will be a huge challenge. Let’s hope the aforementioned (and upcoming) organizations that are working on a fully decentralized digital and analogue infrastructure will succeed with their vision.

In order to change an existing paradigm you do not struggle to try and change the problematic model. You create a new model and make the old one obsolete.

R. Buckminster Fuller