Decentralization could usher in a new era of transparency, accountability and engagement for businesses.
As the internet has evolved, so have problems in general. In recent years, we've woken up to the fact that our personal data is one of the most valuable assets in the world right now. It's also increasingly apparent that we don't control that data.
Edward Snowden may be a controversial figure, but he was among the first to expose the stark reality of this problem back in 2014. When we discovered that the NSA had been using Google data to spy on citizens in the name of national security, it seemed like it could be a watershed moment.
Despite Snowden bringing the issue to public attention, though, not much has changed. If anything, the extent of the issue has become even more apparent. It's now common knowledge that the 2016 presidential election may have been subject to Russian interference, facilitated by Facebook.
Furthermore, the incentive model in social media is currently very lopsided. Social media companies are incentivized to gather our data so they can sell it to advertisers. No individual makes money directly from Facebook or Instagram, but influencers with large followings can be paid by companies to promote their goods.
All this has created a system where, as users, we are reduced to mere commodities. Our data is harvested and sold, and we're expected to consume ads and promoted posts with little regard for what we actually want to consume. There's precious little incentive for anyone to create genuine, high-quality content based on unbiased truth.
The root of the problem
If we are ever going to solve these problems, we need to understand the root of them. Earlier this year, one of Facebook's co-founders, Chris Hughes, wrote a piece in The New York Times that called for the tech giant to be broken up. He explained with eloquence and anguish that Mark Zuckerberg and his company have simply amassed too much power.
He's probably right. The rise of the tech giants has centralized control over the internet, and all our data is in their hands. Centralization of this extent is proving to be too dangerous. It has led to data, and the processes by which they're managed, being held in black boxes. This lack of transparency means that we can never really be sure if what we're seeing online is truth, fiction or somewhere in between.
This degree of centralization also creates a single point of failure. The reason that hackers have found it so easy to steal data from companies like Marriott Hotels is because all information is hosted on centralized servers. When data breaches happen, we aren't always made aware of the issue. Companies are aware that these incidents damage their brand reputations and often attempt to cover them up. The data black box only makes this easier.
Growing momentum for decentralization
With all this in mind, it's hardly surprising that there's a growing movement around the idea of decentralization. What started with Bitcoin has burgeoned into an entire industry revolving around blockchain technology. Blockchain stores data on a decentralized ledger. No single entity can change, manipulate or delete data on a blockchain without their actions being visible to the entire network that runs the ledger.
Furthermore, in this decentralized environment, no single entity is in charge. If you're wary of the level of control the tech giants have over our personal data, then the idea of democratizing access and control over data is bound to be pretty appealing.
So how can we apply these concepts to real-life situations that demonstrate the power of decentralization in action? As a business owner or decision-maker, you should stay abreast of ways to build trust and engage with your customers and the public. Here are some ways businesses could use decentralization to their benefit – and the benefit of their users.
Restoring trust and transparency
Transparency of information on the internet is a great place to start. Fans of the TV show Silicon Valley will be familiar with the concept of the decentralized internet. Maybe the show writers have a crystal ball, because I recently came across a similar concept called Arweave, an open-source project that launched a decentralized version of the internet called the Permaweb. This is important because the concept of a Permaweb, through data hosting and webpage archiving, is to build an internet that is absolute – unalterable and democratic.
So, what kind of companies are using this service? One example is TrueUSD, which is one of the cryptocurrencies that falls under the class of stablecoin. Stablecoins met with some controversy earlier this year when it emerged that the biggest in the group, Tether, wasn't fully collateralized by cash as it had previously claimed, and the company had stealthily updated its website to reflect this.
TrueUSD wanted to demonstrate its credentials in this respect, so it took the step of publishing audit reports confirming its assets to Arweave's Permaweb. Now, anyone can see for themselves that TrueUSD is fully backed by reserves, helping to restore trust in stablecoins among cryptocurrency users.
The ability to permanently store documents and web links offers vast potential across various industry sectors. For instance, births, deaths and marriages are a matter of public record, held by local government offices all over the world. With the shift from paper to electronic records, this information is now stored on central servers, but it could be held permanently on a decentralized internet in the future.
Fields such as research, journalism and law all rely on the integrity of information and, as such, stand to benefit from a decentralized internet. Any company can demonstrate transparency by uploading policy documents, mission statements, or terms and conditions. As consumers, we can now start to demand it, and as businesses, we can leverage this opportunity to build public trust. [Read related article: How Business Transparency Empowers Your Company]
Gamifying social media
The lopsided social media incentive model is another candidate for disruption by decentralization. A core feature of blockchain technology is gamification. Bitcoin runs on game theory, providing mining rewards to the network participants for keeping the blockchain running and verifying transactions. Many other blockchain initiatives revolve around similar principles – rewarding users for their participation, whatever form it may take.
Although there have been a few attempts to introduce decentralized social media, none have yet managed to gain the number of users needed to compete with the likes of Facebook. However, news recently emerged that an established Latin American social media platform called Taringa was acquired by a blockchain company called IOVLabs. Taringa has 30 million users, and the company has already attempted to transform the social incentive model by rewarding content creators in cryptocurrency. Now, Taringa is set to become the first decentralized social media platform, providing blockchain-enabled services to an established user base.
So, how will a blockchain-powered social media platform work? IOVLabs is also powering a project called RSK since 2018. RSK is a smart contract platform developed as a second layer on the Bitcoin network. It enables developers to build decentralized applications in a similar way to Ethereum.
Work is already underway to enable Taringa users to be rewarded in the RSK token (RBTC) for becoming active members of their communities and creating content. Rather than external companies paying users to promote their services, Taringa users will be rewarded on the basis of the engagement they generate from their activities. The project has indicated it intends to be driven by user feedback in exactly how these incentive models will operate.
Rebalancing the incentive model is just one component of the plan to make Taringa an entirely decentralized social network. IOVLabs also runs a partner project called the RSK Infrastructure Framework (RIF), which is a kind of operating system for blockchain. It offers developers a series of features such as decentralized data storage and user account creation.
Soon, these features will be incorporated into the Taringa platform, enabling secure, untamperable user account creation. Similarly, the data storage protocol will be used to enable decentralized storage and distribution of content on Taringa.
If they can pull all this off, Taringa will be the first social media platform that doesn't work on an ad-revenue model and offers unprecedented security and transparency to users with regard to their personal data. It has the potential to rebalance the incentive model in favor of users, while decommodifying personal data and eliminating the reliance on advertising. Perhaps most critically for a platform operating on relatively nascent technology, it already has mass adoption.
There are thousands of blockchain projects out there, many of which are working on the premise that decentralization can disrupt existing business paradigms. TrueUSD and Taringa are only two examples of companies seeking to solve specific issues in their sectors. As blockchain technology evolves, businesses and users will naturally flock to the use cases that best solve their current challenges, unveiling the true value of the technology across all sectors of society.