HomeBlockchainBlockchain internet will end the monopolies era

Blockchain internet will end the monopolies era

Only blockchain internet can lead us to a real decentralization of ISP services.

When the Internet was born, it was conceived as a decentralized system: instead of having computers connected to a single server, as in BBS systems, there was a decentralized network of servers to connect to.  

Despite being designed with this idea, the services developed on it have suffered the so-called “net effects”, which determine natural oligopolies for a few providers.

And over the years we have experienced the inevitable and rapid concentration: born to be a server system without masters, but with a set of similar players, it has evolved in the opposite direction, towards a situation where market forces require that there is room for only a few service players who become oligopolists.

Networks, in particular, the Internet, are subject to Metcalfe’s law, which explains that “the value of use of a network grows with the square of the number n of its users” and Reed’s law, which explains that, if the value of a network is linked to the number of user groups (as in a social network), it grows as 2N (No. of users).

In summary, it means that the value created by a network to its users explodes with the growth of the number of its users. This explosion of value attracts additional users to the network once again with positive feedback (“network effect“).

The rise and dominance of Twitter, Facebook, YouTube and Instagram are a clear example of how the network effect: Winner takes it all!

This unavoidable outcome is confirmed by numerous studies, such as a recent analysis by Mozilla that shows that over 90% of searches are made through the Google engine.

And on the basis of this dominance, the latter also influences the design and development of operating systems for smartphones, via, Android and browsers with Chrome. Winner takes it all.

Web 2.0 and the laws that shape it have created centralized platforms and giants that govern billions of people – Facebook plus the 2.2 billion active users – now seem to give way to another technological evolution that will unfold its effects on society and the value created by users from centralized to decentralized platforms, in the wake of the propulsive thrust of models based on peer-to-peer networking, such as blockchain.

Starting from the basis of the web, let’s simplify this ongoing evolution.

On the Internet, the numerical address that identifies a website is translated into a name, for example, www.cryptonomist.ch, by a service called DNS, Domain Name System, but it is a centralized service: for example, one of the largest operators of DNS servers is Google.

This structure has two problems:

  • First of all, it can be used to censor some websites, preventing you from reaching some domains, with a system that is also used by the Great Chinese Firewall;
  • The system can be hacked by replacing an IP with a malicious URL, with a mode called DNS poisoning.

Now, thanks to the development of the 4 technologies underlying the bitcoin blockchain, projects and companies have been created that address the centralization illustrated above, for example, Namecoin, with which DNS server information is distributed on the blockchain, so it is no longer possible to block or pollute an address.

In fact, Namecoin assigns, instead of .com or .net addresses, .bit addresses and therefore connects them to IPs with the data stored on the blockchain which, being widespread and unchangeable, cannot be censored or hacked.

Looking at the social media segment, the business model centred on centralized platforms is leaving the field to its opposite.

In fact, the blockchain has seen the birth of numerous alternatives available, from the well-known Steemit, similar to Reddit, but decentralized, to Diaspora, Facebook’s successor, Mastodon, who wants to replace Twitter, all decentralized and without the possibility of inappropriate use of personal data.

There are also other examples, such as BATbrowser, the browser in which the user chooses whether he wants to see advertising and, if so, receives a remuneration with the BAT token to follow it, whose platform was completed last June.

Slowly, but no less inexorably, we have returned to the founding idea of the Internet, the “empowerment” of a growing multitude of people.

Fabio Lugano
Fabio Lugano
Graduated with honors from Bocconi University, Fabio is a consultant for companies and wounded shareholders of the Banche Venete. He is also the author of "Scenari Economici", and lecturer and analyst of cryptocurrencies since 2016.