The Internet Is Fundamentally Flawed
A Paradigm Shift To A Decentralized Future
The Problem Of The Internet
Over the last decades, the internet has emerged and created lots of new possibilities. With the current internet technology, it is quite easy to transfer and spread information like text, images or videos. Once a photo is taken, it can be distributed (copied) to as many people as desired. Thus, today’s internet is called the Internet of Information.
The opportunity to distribute information many times is great in case of information sharing, but it would be fatal in the case of values like money or assets. Imagine if you could simply send the same Euro or USD many times to different people, it would destroy the concept behind value creation. This problem is called “the double-spending problem”.
With the current architecture (Web 2.0), it’s not possible to solve this problem and to store and transfer value without a centralized party. Why isn’t that possible with the current architecture?
Today's internet is “stateless” and therefore has two fundamentally missing properties:
- A specific “state” can’t be held by an individual user without a centralized party
- There is no possibility to transfer a “state” without the use of a centralized party
The Internet Doesn’t Hold State
Whenever we want to store something on the internet for a subsequent usage we are heavily dependent on a centralized service (e.g. Amazon, Facebook, PayPal, …) which helps us to store our current state (e.g. personal information, ownership of something, …). Without those centralized services, we would have to enter all needed information again and again, which is not very efficient at all. You may have heard about “Data is the new Oil”, which is a result of this problem and that’s also why centralized services are worth those crazy valuations.
This situation brings lots of disadvantages to it. In the past, we have seen many data leakages and hacks of different service providers, which we daily trust in. In addition to the insecure storage of our data, it’s also not possible to transfer data from one provider to another. We can only copy our data and thereby create duplicate data and data silos. If you think about a user authentication on a new website, you have to enter your data once again. If your data changes at some point in your life, you have to change this information on all websites and services you have ever registered on. This perfectly shows, that a user is not in possession of his/her data and has to fully trust the service provider.
There Is No Possibility To Transfer State
As a specific state can only be held by a centralized service, there is currently no possibility to transfer a state without a third party. If you want to send some money to another person, for instance, you have to rely on a service like a bank. Or if you would like to transfer the ownership of your house, you are required to use different intermediaries like a bank, a notary, a land registry and/or a lawyer. A variety of 3rd party institutions are increasing the processing time and as a consequence decreasing the efficiency of the process.
A Paradigm Shift
With an emerging technology, called Blockchain or Distributed Ledger Technology (DLT), it’s possible for the first time in history to shift from an Internet of Information to an Internet of Value and Ownership. This enables totally new possibilities, like the ownership transfer of Digital Money, Digital Contracts or Digital Assets without any intermediaries.
With this new architecture (Web 3.0) a state can be stored on a distributed ledger in a secure manner without a centralized intermediary. As a result, completely new business models will emerge and create a paradigm shift over the upcoming years.
When thinking about one's identity data, blockchain enables a self-sovereign identity. This enables individuals or organizations to have the sole ownership of their digital identities and control over how their personal data is digitally used and shared. Therefore processes are getting more efficient and data is stored more securely.
Disclaimer: block42 is not a registered investment advisor, dealer, financial analyst, financial bank, securities broker or financial planner. The information is provided for information purposes only. The information is not intended to be and does not constitute financial advice or any other advice, is general in nature and not specific to you.
