Is Web3 the Solution to Online Trust Issues?

by | Feb 11, 2022 | Blog

The internet, for all the solutions it provides, comes at a cost that many users are simply unaware of. What started as a way to prevent nuclear destruction by hacking, has become a ubiquitous device that enables people to connect instantly around the world. While most people understand that social media services are provided in exchange for your personal data, many internet users do not know that the system is controlled by a few oligarchs.

So what is the alternative to centralized power? Decentralized power: power that is distributed across many and relies on a system that is incorruptible – mathematics. Blockchain is the solution that drives Web3, and it provides the solution to a powerful few having control of a system on which society has come to rely. Web3 is the natural evolution of the internet, however, to reach a level of distributed trust people need to become aware of the current system in which we are beholden, and the opportunities that blockchain presents.

How Humans Trust

Historically, human communities were about 150 people. Within this close network, people were able to trust each other because of interconnection (Dunbar’s number – the notion that there exists a cognitive limit on human groups of about 150 individuals. This is because ‘to maintain group cohesion, individuals must be able to meet their own requirements, as well as coordinate their behavior with other individuals in the group.). Smaller groups have a moral imperative to care for each other and do not require oversight as such because of the feeling of loyalty and connection.

As society changed and numbers in communities increased, the need for trust systems developed. Third-party institutions became the center of trust for human interactions. Banks, governments, universities, churches, and other institutions that centralize power and distribution were slowly installed in the psyche of humans. These centralized power structures became so important that the word ‘corporation’, derived from the Latin corpus – body – was used to describe them as far back as the European middle ages. This status of personhood attributed to faceless institutions has served for thousands of years to connect people, handing trust to central power and ‘protecting’ the interests of various parties involved in transactions. The system also makes this central power very wealthy, very powerful, and often corruptible. Examples of the corruptibility of central powers can be seen from governments to private institutions.

When the internet was conceived, it was used to distribute power, to ensure that there was not a central corruptible power that could be attacked. The long history of the development of the internet during the cold war era under the Kennedy administration is fascinating.

Joseph Carl Robnett Licklider laid the foundations for the internet with networking and ARPANET. The American psychologist was working with a tech company when he became interested in computer science.

Before networking, computers were big mainframes that used batch processing. Programs were entered one at a time, often by punch card, and the computer did the calculations and gave answers.

Licklider worked with others on the Semi-Automatic Ground Environment (SAGE), the Cold War computer system designed to link 23 air-defense sites to coordinate tracking of Soviet bombers in case of an attack on the US.

The SAGE computer required human operators to input data to calculate the best way to respond to an incoming Soviet bomber. It was a decision-making tool for nuclear Armageddon. SAGE operators had individual consoles that displayed information visually and they worked directly with the consoles using buttons and light pens. SAGE was the first demonstration of interactive computing, where users gave commands directly, and where multiple users could work with a single computer.

Web1

The first web application was created by Tim Berners-Lee in the 1990s. The ‘hyperlinked information system’ was essentially a giant library of data. The data was made accessible on computers across a network. Users could browse items by clicking linked text and images. While this is similar to what the internet offers today, 30 years ago the user was passive.

Initially, the internet was used almost exclusively by academics. It wasn’t until browsers like Mosaic and Microsoft Internet Explorer that the internet became a tool used in libraries, universities, schools, and homes in wealthy nations.

Dial-up internet was slow, and images took too long to download. Site design was not a factor and the presentation of pages resembled bad self-published articles using clunky fonts and scrolls of unformatted text. However, there were positives in the early incarnations of the internet that were later lost when the tools were better adapted for everyday use.

Web1 was:

  • Decentralized — Powered by regular computers and regular users.
  • Open-source — Anyone could publish on the web.
  • Read-only — However, publishing required some coding skills, so most users were read-only users.

Web1 was decentralized. Anyone could publish anything for anyone in the world, without the permission of central controls. This version of the internet lasted about 10 years, from the late 1990s into the early 2000s. When it started to evolve away from this socialist-style platform, it rapidly became a marketplace with central powers and fights for control over users.

Web2

MySpace, Facebook, YouTube, and Twitter changed the way users were able to interact with the internet. They were able to publish online in open forums, telling the world about their taste in music, sharing photos of their dogs, and expressing their feelings about anything from breakfast cereal to geopolitics.

The internet became a place dominated by users interacting with each other. This interaction, initially a few hours a day checking emails and posts on social platforms using desktop computers, fast became our addiction with phones keeping us always connected. With this shift came two important changes; users are no longer ‘anonymous’ and the internet is no longer decentralized.

One of the central components of ‘trust’ is knowing who is in your community. Social media makes it easier for people to generate trust. Using a shared platform, you share information on a corporate database, and therefore, feel that because of this intermediate power, other users are ‘trustworthy’.

That generation of ‘trust’ has come at a price; a centralized power from which communities are formed, and online oligarchies that have more power than any private or public entity in human history.

Social Economy

Most people have used an asset of the ‘sharing economy’. Riding-sharing services, home-sharing, and food delivery services are all sharing economy assets that have a worldwide appeal. These services rely on the trust that is generated by a corporation – an app – that actually has no control or responsibility for the people using the app services. However, users continue to trust that Bolt will send a driver who is safe and competent. They trust that the electrician on Task Rabbit is qualified and that the data uploaded to Facebook will only be used for the marketing purposes the user has agreed to. In all cases, users have been proven wrong, and yet, user trust remains.

Most people are aware that although they pay in cash for internet access, they pay with private data to use sites. Every photo uploaded to Instagram is owned by Meta. This data is used to sell advertising space, which is highly targeted towards individuals based on their data – the cycle goes on. The selling of personal data in exchange for ‘free’ services is not new, but it is now the most segmented and analyzed it has ever been. When you click to join Facebook, you are selling your life for the privilege of access to a highly-addictive platform that is designed to keep you in a bubble. This bubble is created to ensure that you are protected in your community and will continue to ‘trust’ those in your circle. As we are all well aware, this echo chamber has become highly problematic, as it seems we no longer live in a world where people can respectfully disagree, but in one where the ‘other’ has become an enemy.

Whether it is because we can no longer remember life without the interconnection of the internet or if it is because we feel there is no alternative, people now live their lives always connected through the power of a few corporations. It has led to a centralized power architecture that is dangerous not only for our personal wellbeing but for our globalized society.

The Oligarchs

Amazon, Google, and Microsoft are the three oligarchs that make it cheap to build on the web. Instead of having to buy and maintain expensive hardware infrastructure, you can rent it from vast data centers around the world. Cloud networks are essentially closed systems interacting with each other.

Imagine that everyone you want to communicate with is using App A. You live in another country, far from everyone you know, but because of App A, you can keep in touch, anytime, anywhere, all in exchange for a little of your data.

Then App C comes along. It promises to protect your data, and you only need to pay access of US$5 per month. You join, but everyone you know is still using App A. You cannot convince them to pay the US$5 access fee to App C, and so you are then forced to return to App A despite your desire to leave. This is essentially how the big social networks operate. They rely on users not wanting to pay for better platforms that would protect their data, and they rely on people not abandoning their service because it has become a central part of people’s lives online.

Google (Alphabet Inc.), Amazon (Amazon.com Inc.),  Facebook (Meta Platforms Inc.), Apple (Apple Inc.), and Microsoft (Microsoft Corp.) or the Big Five (GAMAM) are the tech giants. Excluding the Saudi Arabian oil company, Saudi Aramco, the GAMAM companies were the five most valuable public corporations in the world in January 2020 as measured by market capitalization. These oligarchs control our conversations, searches, content, media, and data. The open forum is no longer a space for communities to share information, but a closed loop where people are divided by data and placed into neat boxes for marketing and money-making.

When the internet first became mainstream, people weren’t willing to pay for services, such as email or access to documents. The attention economy became the exchange for value online, and simple email inboxes with ‘hello’ messages from family fast became space filled with junk mail vying for attention. Having an email account meant agreeing to this spam filling your inbox, or alternatively, paying for premium services to avoid spam. It all happened so fast that many people didn’t pay attention to the Terms and Conditions which meant they were exchanging their privacy for ‘free’ access.

Attention is the currency of the internet. Sites compete for attention with algorithmically generated content loops that keep users scrolling and clickbait that keeps people numb. While the attention economy is not new, the personalization of content is new. The nightly news, radio broadcasts, and even TV shows are homogenized to attract a target audience and draw in some peripheral viewers. Internet content is highly-targeted and curated to create a bubble for the user. That bubble can become dangerous as people seem less able to connect with those who do not share their same ideals, values, or views.

However, this provides value for social platforms. When people troll or do combat online using social media channels, they are getting people to engage on the platform, to use the site. This means more views for Facebook, Twitter, or Instagram. Each click is revenue. Platforms forcing users into bubbles that then create tension and conflict generates revenue for the Big Five.

You, the Product

Platforms own everything you create online. Your profile data, the behavioral data you generate, the photos, videos, songs, and comments you upload on social media are owned by that platform. You agreed to that when you created an account and became a ‘user’.

When you upload anything to an internet platform, the file is copied onto its servers, and ownership is passed to the company. This is the raw material mined to generate attention. This is what advertisers are willing to pay for, the data that is proved will translate as focused eyeballs on their brand.

For users, the payoff is the social connection. People can stay in touch with instant connections worldwide. Artists and musicians and other creatives can reach and expand to a global audience. A whole new job role has been created – the influencer – who was once the socialite, can monetize the benefits of online attention. However, should influencers attempt to remove themselves from the popular social platforms and venture out on their own, they will fast discover that there are no opportunities for an online presence outside the Big Five. Former US president Donald Trump discovered this after he was banned from Twitter, then attempted to reach his audience on Parler, an American microblogging and social networking service with a reach of only 1 million users. Apple and Google removed Parler’s mobile app from their app stores, and Parler went offline on January 10, 2021, when Amazon Web Services canceled its hosting services. This was due to its alleged involvement in the US’ January 6th, 2021 Capitol Attacks. The platform is to return to app stores, but with many changes to its content that was in violation of Apple’s guidelines around violent content. For the time the app was offline, Trump was silenced online, and the constant bombardment from an all-to-powerful voice stopped. The discourse was able to correct towards the center again, and more qualified voices from other powerful nations were able to again be heard in the discourse about how to live in a pandemic, what might threaten the economy and how to address the climate crisis, among other global issues.

When you, the user, is the product, it is in the interests of the platform provider to keep you hooked and reeling with provocative content. Imagine if you turned off your social media and just looked at the clouds? Companies don’t make money when you are not online, so the goal is to keep you in a state of anxiety so you will check updates, click headlines and shout at the ‘other’. The term ‘user’ to describe social media account holders is the same word used to describe addicts.

About 90% of the web is stored with only four hosting providers, the biggest of which is Amazon Web Services (AWS). Their data centers run sites and apps like Facebook, Netflix, Uber, Twitter, Reddit; services most of us use daily. These hosting providers are the central source of our ‘trust’. They control who can access website services, from you as an individual user right up to government sites and apps. They have more power over the content and access that is available than most democratically elected governments. So, five oligarchs that have not been elected, do not have a social responsibility or are answerable to ‘users’ control the majority of the world’s connections. They are private entities and do not owe users answers, only shareholders. This ‘mistake’ of consolidated power in the hands of a few businesses happened because of the meteoric rise of the internet, and the general public’s lack of understanding of trusts systems, corporate ownership, and responsibilities.

Hackers Paradise

For hackers, decentralized data creation with centralized storage is an open treasure trove.

Billions of users storing all their data on a few servers make it very easy for hackers. Smart homes are making it even easier, as we connect every aspect of our lives, from our washing machine to our ATM card, to make life convenient, but storing that information in a central location. It means cyberterrorists can easily freeze ATMs, shut down power grids and paralyze hospitals.

Cybersecurity is an urgent issue that is not easily fixed. Every day, new users connect, new apps, devices, and programs keep billions of people joining online, using the same scant few servers to store all our most valuable data. Cybersecurity costs about US$123 billion every year and is projected to rise to US$10.5 trillion in yearly damages by 2025, or, the greatest transfer of economic wealth in history.

A centralized internet poses a permanent risk. As long as users’ trust is placed in a centralized system, it poses a risk. There is not enough distribution of data storage to ensure that those billions of users, from individuals to institutions, are protected.

Institutions provide a greater perimeter of trust between strangers by keeping records of exchanges. Institutions of trust hold records of who owns what, who owes what. Records affirm truth and truth constructs trust. These institutions, be they private like a bank, or public, like a government, provide a common narrative for people to understand and relate to. This creates the ‘trust’ that complex large societies need to connect and agree on. Centralized trust is an intrinsic part of functioning modern society. If I have US$1, you, me, and the centralized power all agree on the value of that dollar, according to the narrative set by that centralized power. This trust management is so important to our understanding of how humans connect that inviting this same structure to a fast-growing internet made sense.

However, the beginnings of the internet did not ask us to rely on centralized power, it was built in antithesis to that idea of storage in one or a few easily accessible spaces.

Trust Economy

We open an app on our phone, order a driver and jump in the car with an unqualified and unvetted stranger to drive us home. We rely on reviews and ratings that other users have provided. Peer-to-peer platforms that encourage users to partake of the sharing economy rely on our sense of collaborative trust. We believe that the people in our bubble are similar to us, have the same values, are aligned with our ideals – are trustworthy.

The idea of P2P networked software solutions subvert the bureaucratic, fee-collecting middleman and provide benefit directly to peers. However, the networks are owned and they still make huge amounts of money, largely in a more exploitative and less secure environment than in traditional regulated settings.

The reason P2Ps are so attractive is that institutionalized power has so often let us down. Bias, corruption, and ineptitude have left consumers feeling exploited and powerless. As we become further connected, the failings of centralized systems are becoming ever more apparent. The very wealthy continue to become even more wealthy than imaginable, while the exploited fear how much more of their data they need to share to stay connected on the internet. The power structures are unbalanced and in danger of toppling us all off the cliff together.

The Solution is Mathematics 

There are two inherent issues when it comes to trust.

  • Record keeping is the centralization of versions of the truth that large groups of people agree on. These records are not truth itself, but a tool for approximating truth. Subjective valuation is inevitably inherent in ‘recording’.
  • The record keeper is not trustworthy because they are human and humans are naturally self-interested. Bias and corruption are givens.

Institutionalized trust has been so exploited, and we as the people placing our trust in these institutions, have all felt betrayed at some time. From incorrect fines to email hacking, we’ve all experienced the failings of centralized power structures.

Mathematics has always been the answer to non-fungible trust structures, but until the internet, we’ve not had the ability to access that power on scale. The blockchain is a decentralized digital list (ledger) on a network. The ledger can record transactions, money, property titles, medical records, votes, and more. The decentralized blockchain structure relies on a network of computers all agreeing on numbers to record a transaction. Without this agreement, there is no hash (a work number) given and the transaction is not completed.

  • Decentralized means every user in the network has an up-to-date copy of the ledger.
  • Records are unchangeable. If a user makes a change to the ledger, the entire network must agree with that change.
  • Cryptography (mathematics) ensures that new records (blocks) are unhackable.
  • Users that agree to provide computing power to ‘hash’ blocks are ‘miners’. Miners are paid in cryptocurrency for securing the ledger.
  • Mining makes a cryptocurrency scarce, giving it economic value.

Essentially, a blockchain is a distributed ledger that requires decentralized agreement using cryptography to make a record on the blockchain. The network provides the trust to verify records. It’s a self-governing networked community of complete strangers. Different blockchains demand different values, such as storage, security, computation, bandwidth, and even attention. People misunderstand cryptocurrency, how it is valued and what it means as a ‘disruptor’. Traditional institutions are threatened by blockchain and its power, while other people keep the mystery and hype around cryptocurrency going to try and encourage its value against fiat. The truth is that blockchain is a technology that could change the way we operate as a society, and these changes need to take time. In a world of billions of people, the solution to trust is cryptography – for the time being. Quantum computing will change our trust dynamics again, but until that time, blockchain is providing billions of people worldwide access to secure ledgers that prove their home or land ownership, keep medical records, store financial records, and provide truth.