New Internet on Blockchain 🌐
New Internet on Blockchain 🌐
In the hyper-connected world that we all exist, can the blockchain rails create the new internet that decentralises the web we know?
Hello, y'all. Good lads from Decentralised.co present a deep dive on the new internet. You can read the longer version of this article here, published in June 2023.
Keeping with today’s theme of re-imagining the consumer internet - this podcast explores the reasons why and how advertisements could evolve to look within Web3.
Do tune in for depth, insight & numbers on how the internet is evolving 👇
Communication networks are a continuum.
The stronger these networks, the faster information flows through them.
Silk Road was a network. So were the ancient shipping routes that facilitated trade. Books and culture passed through them. These networks turned digital with the arrival of telegrams and telephones. As our communication networks became faster, the more information we passed through them.
It is believed that the stock market boom of the 1920s was partly caused by Telegrams, making it easier to get ticker prices of stocks.
Historically, communication networks were decentralised.
Ships were owned by many traders, who in turn reported to guilds. The state could command a tax on it, but very little went into censoring what went through them. If you owned a ship, the ship was yours.
In the early days of telephones, the same story. Distributed communities (or towns) often ran their networks. Over the 20th century, Telephone networks increasingly aggregated into a handful of networks. AT&T. Bell. And the like.
The increasing concentration of these networks in a small handful of firms means rising censorship and collection of data about users.
The same phenomenon happened with email and social networks.
In the 1990s, people often owned their email servers to take down their email addresses and the emails they held as and when they felt. There were close to 300 social networks as late as 2007, alongside many forums serving niche interests.
Reddit is quite possibly the last of those social networks where subreddits still serve niche-specific interests. But not the modern social networks.
Look at Twitter the content is entirely distributed via algorithms. TikTok, nothing changes. The bed rock of world’s internet existence? Google. It gets to snoop through your emails to have an understanding of the order that’s being delivered or your upcoming EMI payment.
How did we reach here?
Economies of scale partly explain the phenomenon.
Communication networks become more affordable if a single provider caters to billions of people. The model works if users give up their data to access a broader network. It’s not that you can’t make a clone of Twitter. You can’t make the network of people you follow and enjoy content from on Twitter.
Think of it as your social graph.
As long as social graphs cannot be replicated, you are forced to use the same social network powered by ads.
And how do these ads work?
They work by pushing things you don’t need in the pre-digital era.
Newspapers began subsidising print costs by slapping ads as early as the 1800s. Radio networks began adding ads in the 1900s. The power of 21st-century communication networks is that you can specifically target what a user might need by going through their data.
Over the past decade, the amount of sophistication platforms like Meta have in targeting users has increased substantially. They can predict the odds of a customer buying a particular good, at a certain time, if they have seen certain forms of content.\
Web3 social networks, offer a hypothetical parallel.
There are a few promises they hold today. Promises. Not reality. Not as yet.
They allow you to “own” your social graph.
That means you can have a direct relationship on-chain with the audience base that consumes your content. So if hypothetically you are banned from a product like Twitter, you could go to a different product (like Facebook) and have the same audience base.
Today, this happens in Web3 through what are known as clients.
Think of clients as interfaces for users to interact with an audience. GMail’s app is an interface for interacting with SMTP (the protocol). Censorship in Web3 social networks can (hypothetically) happen only at the client level.
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Importance of social graphs: Rise and fall of Clubhouse
In 2020, when the pandemic lockdowns kicked off, I found myself spending an inordinate amount of time on Clubhouse, a social audio app that had suddenly become the hot new thing.
I spent hours every morning discussing the latest developments in crypto, and my audience grew exponentially. But fast-forward to today, and Clubhouse is all but a distant memory.
What happened? As it turns out, Clubhouse's demise can be attributed to a fundamental flaw in its business model.
The app's success was deeply tied to its social graph – the network of users and their relationships on the platform. But as the novelty of the app wore off, users began to lose interest and move on to other platforms.
The problem was that Clubhouse's social graph was not portable, meaning that users couldn't take their connections and relationships with them when they left the app.
A lesson from history: This is not the first time we've seen a platform rise and fall due to its social graph.
In the early days of the telephone, independent operators would tie telephones to speakers and broadcast to entire villages. But as larger players like AT&T and Bell took over, these smaller networks vanished, taking their social graphs with them.
The problem with centralised social networks.
Social graphs are still the lifeblood of social media platforms.
The problem is that these graphs are controlled by centralised companies like Facebook and Twitter.
The users have no control over their own data and relationships, and are at the mercy of the platform's algorithms and moderation policies.
The promise of composable social graphs.
What if there was a way to create a social graph that was portable and composable? This is the promise of Web3, a decentralised internet that allows users to control their own data and relationships.
With a composable social graph, users could take their connections and relationships with them across different platforms, and choose how and what they consume.
A glimpse of the past: This is not a new idea. In 2007, a group of social networks, including Google and Facebook, collaborated on a project called OpenSocial, which aimed to create a standardised protocol for social graphs.
The project ultimately failed, and the internet was left with a patchwork of walled-off social graphs.
The future of social graphs.
Blockchains offer a new infrastructure for creating decentralised, user-owned social graphs. This could revolutionise the way we interact with each other online, and give users the control and agency they deserve.
As we look to the future of social media, it's clear that the importance of social graphs cannot be overstated. Will we learn from the mistakes of the past, or will we continue to repeat them?
Evolution of social networks: Walled gardens to Open ecosystems
As I reflect on the rise and fall of social media platforms, I'm reminded of a poignant metaphor by Siddarth Jain.
When a tree in the jungle dies, it contributes to the growth of other trees, whereas when a community on the internet dies, it leaves little behind.
This got me thinking about the fleeting nature of online communities and the importance of creating sustainable, decentralised social networks.
The problem with centralised social networks.
Social networks are controlled by centralised companies that own and manipulate our data. This creates a power imbalance between users and platforms, making it difficult for creators to monetise their content and for users to control their online presence.
The lack of portability and interoperability between platforms means that when a community dies, its social graph disappears, leaving users with little to no control over their online relationships.
The benefits of composable social graphs.
Composable social graphs have several benefits. They empower competition in social networks by reducing the entry barriers to creating new social networks. Founders can focus on building applications rather than bootstrapping a user base. Additionally, composable social graphs enable users to own their network of friends and reach out to them through third-party applications.
The challenge of monetising Web3 social networks
One of the biggest challenges facing Web3 social networks is monetisation. Unlike Web2, where advertising is the primary revenue stream, Web3 social networks need to find alternative models.
Token-based networks can have better chances of bootstrapping initial liquidity, but the means of monetising these networks is not yet clear.
The evolution of targeted advertising on the internet.
In the early 2000s, Google was struggling to find a way to monetise its search engine.
With the advent of user data, the company was able to develop targeted ads that could be tailored to individual users. This was the key to unlocking the internet's business model, and social graphs played a crucial role in making it happen.
Embedded social DApps: One way to approach this challenge is through the creation of embedded social DApps. These applications can be built on top of protocols , enabling users to consume content, trade assets, collect NFTs, or reward creators directly without the platform taking on the risks of these actions.
This approach has the potential to create a new economy around social networks, where creators can monetise their content and users can participate in the growth of the platform.
Community-driven content networks: They have existed as long as the internet has. Wikipedia is a powerful example of a decentralised, community-driven platform.
Web3 brings the probability of financialization and user ownership to these networks, enabling creators to monetise their work and empower communities to tap into it.
The future of social networks: More power to the user
As we look to the future of social networks, it's clear that the incentives need to be restructured. Rather than prioritising distribution and scale, we need to focus on creating sustainable, decentralised networks that empower creators and users.
This will require a shift in how we think about social networks, from walled gardens to open ecosystems.
Power to the user: Creating a new internet with entirely new incentive structures requires rethinking how the past three decades of the internet have evolved.
We need to prioritise user ownership and control, enabling users to switch between platforms without losing their social graph.
This will require a fundamental shift in how we approach social networks, from centralised, controlled environments to decentralised, open ecosystems.
New era for social networks: As we look to the future, it's clear that the technology to enable decentralised social networks exists.
It's a function of time before we see social networks of scale in Web3. While it may take a while, the potential for composable social graphs, embedded social DApps, and community-driven content networks is vast.
As we experiment and innovate, we may finally create a social network that truly empowers users and creators, rather than just shilling tokens.
Week That Was 📆
Saturday: PayPal's Stablecoin Play 🎲
Friday: Institutional Adoption Up 27% ⬆️
Thursday: $3B Tokenised US Treasuries 💰
Wednesday: US Bitcoin ETFs vs Satoshi Nakamoto? 💪
Tuesday: Kamala Takes Lead. Crypto On Edge 🤦♀️
Monday: Another Roller Coaster Week? 🛼
Week in Funding 💰
Chaos Labs. $55M. Automated economic security system for crypto protocols, for monitoring and simulations to verify a protocol's durability and stability.
Sahara. $43M. Decentralised AI network for customised, autonomous Knowledge Agent (Sahara KA) for individuals and businesses.
WSPN. $30M. Global digital payments company using distributed ledger for payments and WUSD is a USD-pegged token within the WSPN ecosystem.
Sling. $15M. Send digital cash to anyone, anywhere, for free. The funds are held in USDP, issued by Paxos Trust Company LLC.
Parfin. $10M. Platform for secure digital asset custody, trading, and management, developing Parchain, a permissioned EVM-compatible blockchain.
Rivalz Network. $9M. An AI-driven DePin RollApp. Data source of verifiable personal, credential and behavioural data with embedded privacy and IP-rights.
Satflow. $7.6M. Infrastructure for market makers and high-frequency traders, elevating Bitcoin L1 to institutional quality, and enhancing decentralisation.
Holonym. $5.5M. Privacy-preserving passport for Web3, for users to perform anonymous "KYC" and prevent Sybil attacks.
Orderly Network. $5M. Liquidity platform on Near protocol, smart contracts for peer-to-peer transactions and with risk management and shared asset pools.
KIP Protocol. $5M. Decentralised base layer that AI models, apps and data owners build on, to safely transact & monetise in Web3.
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