Major Social Media Disruption Ahead
Juan Villaverde is an econometrician and mathematician devoted to the analysis of cryptocurrencies since 2012. He leads the Weiss Ratings team of analysts and computer programmers who created Weiss cryptocurrency ratings.
Last week, I demonstrated how highly successful distributed applications (killer dApps) will be the driving force behind mass adoption of cryptocurrencies and distributed ledger technology.
Plus, I explained how the platforms best equipped to handle these applications — such as EOS, NEO, Cardando and the upcoming Hedera Hashgraph launches — will be the market leaders in years to come.
But what are the most likely killer dApps to emerge the soonest? Those that promise to thoroughly disrupt social media.
Compared to centralized platforms owned by big companies like Facebook, Twitter or Instagram, decentralized systems owned by the user community are ultimately far more compatible with the entire ethos of the Internet.
Indeed, the dream of Ethereum was to create a free and decentralized internet: Public virtual spaces where like-minded people can meet and interact and transact in ways not possible with current internet infrastructure.
Never forget: In the current internet age, there’s almost invariably a central organization behind every site that we visit. And the overwhelming majority of those are for-profit corporations with a strong incentive to monetize customer data anyway they legally can.
Sadly, data security often takes second place; user privacy, a distant third.
Even in the best of environments — with companies acting responsibly and customers keeping the faith — management will always struggle to find the right balance between the priorities of shareholders and users.
Distributed Ledger Technology (DLT) completely bypasses this dilemma by creating an entirely different kind of internet:
Popular sites are jointly owned by the community of people who use them. Owners and users become one and the same.
This is a dramatic paradigm shift, one that will have far-reaching ramifications in the way people interact on the internet in the 21st Century.
Just consider how BIG this really is …
Facebook has 2.25 BILLION active monthly users. That’s about seven times the entire population of the United States.
YouTube has over 1.8 billion.
On Twitter, about 6,000 tweets go out every second, adding up to roughly 500 million per day and 200 billion per year.
But if you think that’s a lot, consider Google search queries. The company processes an average of at least 40,000 per second, 3.5 billion per day, or 1.2 trillion per year. If each search were worth just $1, it would be enough to finance America’s entire budget deficit and still have hundreds of billions left over.
Clearly, most people on the planet use these platforms every day. It is a fundamental, ubiquitous part of our life. But it also represents …
The greatest concentration of power in corporate history and a looming epic battle between owners and users.
Some people still think the users are the customers. But they’re not. They’re the product. The real customers are the advertisers that mine their data and pay real money for it.
Thus, the business model of all social media app providers today is to extract as much personal information as possible from users, package the data, and sell it to the highest bidder.
This opens a Pandora’s box to abuse (such as the mining of friends’ data by Cambridge Analytica without user consent).
Furthermore, all of the major social media companies remain highly vulnerable to hacking. The user data is stored in massive, centralized databases, containing a great treasure-chest of valuable information. Those databases, in turn, are connected to employee computers all over the world, many of which have high-level administrative access. All hackers have to do is penetrate the computer of one, single employee, and they’re in.
The end result is two threats:
• Proven privacy abuses that are sanctioned, played down or ignored by management in order to satisfy anonymous clients that seek to influence our lives in ever more subtle ways, plus …
• Proven security risks that are getting progressively worse with the growing sophistication of hackers, cyber criminals, and foreign spy agencies.
It is a travesty of the ideals espoused by the giant social media companies themselves. These platforms were originally intended to be a safe environment where like-minded people would meet free from the barriers imposed by physical space and time.
Instead, bilateral conversations and multi-lateral discussion forums are ultimately beholden to the demands of advertisers and, in some countries, to the dictates of authoritarian governments. Despite major efforts to fix the problem, they drift further and further away from the fundamental open-space concept of their founders.
Result: Everywhere, censorship is on the rise.
Sound familiar? It should. We’ve seen the cycle of censorship repeat itself many times over the centuries. But this time it’s different in two ways:
First, it’s not just censorship of one-too-many publishing. In many countries, it’s also morphing into censorship of, or spying on, one-to-one communications.
Second, just as the internet provides a powerful medium for individuals to self-publish their content, it also provides a frightening vehicle for governments to monitor, demonize, persecute and punish those same individuals.
What is the solution? Until now, there was none. Even when confronted with proof of the risks, most users shrugged their shoulders. “If I have to give up some of my privacy to get all this free access,” they said, “so be it.”
But now a major paradigm shift is in the making; and for companies that ignore it, that shift is going to hit the fan.
Four major advantages of distributed ledgers for social media
Much like Bitcoin, the social media platforms of the future will be decentralized, permissionless, peer to peer, neutral, borderless, and censorship resistant.
That, my friend, is the future of social media — thanks to four overwhelming advantages that distributed ledger technology has compared to the old ad-based model:
DLT advantage #1. No formal owners.
A DLT-based social media platform is truly a public space that anyone can access. No companies, stockholders, or advertisers can exploit an individual’s private data. The model is not complex, and we’re seeing early stages of its evolution in platforms like Steemit, based on the Steem blockchain:
• A finite number of validators host content on their computers. These validators get paid not by advertisers, but simply for the hosting and their content.
• This content is shared across hundreds of different computers, spread across the globe.
• This ensures that no one is empowered to remove or exploit the data.
It has essentially the same features that made Bitcoin so successful. And it has every sign of doing the same for social media sites.
DLT advantage #2. No middleman.
Revenues generated from the creation of content flow directly from the viewer to the creator.
Smart contracts ensure that the rules are transparent, the same for everyone, and enforced in an immediate, efficient, equitable manner.
This transparency replaces unknowable “black box” algorithms created by faceless company technocrats who determine what type of content is fed to whom.
It’s a true peer-to-peer public forum with potentially unlimited benefits for all concerned..
DLT advantage #3. Privacy guarantees.
DLT social media guarantees that users’ private information remains private.
• Users not only own their data and get paid directly for access to their content, they also control who gains that access and how.
• Thanks to privacy-focused data sharing protocols such as Enigma, it is possible for users to share their private information with anyone, including an advertiser, without giving them direct access or visibility to that information. The advertisers can still run their various data searches and analytics. But they do so without downloading or seeing each user’s data.
• A good example is a computer model that predicts the weather. The model can use temperature data collected by millions of users on a DLT-based social media site — all without getting any data on the individuals themselves.
This approach serves a dual-purpose …
First, it protects intellectual property rights. Unlike Cambridge Analytica, which sucked out the data once and mined it repeatedly, in the DLT-based model, organizations never take possession of the data. For any re-use, they must go back to the original source and pay for it again.
Second, it restores privacy in the internet age. The data never leaves the source. No matter how much they might want to pay, no one is ever able to know your private facts.
DLT Advantage #4. Community-based governance
The fact that there are no formal owners doesn’t mean there are no rules. The key difference is that the rules are set by the users of the platforms themselves.
There’s no top-down decision-making structure. Instead, every feature that gets implemented — plus every piece of content or user that’s removed or banned — is the result of a discussion between all users of the platform.
And always remember …
The opposite of central authority is not anarchy. It’s autonomy.
Yes, historically, the fall or removal of central authority has led to chaos. But thanks to Distributed Ledger Technology, it will not.
Yes, some may associate this new trend with a political campaign from one group our another. But it is not that either.
Instead, thanks to DLT, the opposite of central authority is simply decentralized authority, a new world in which the decision-making process is transferred to autonomous communities that make the rules.
In other words, a more democratic democracy.
Who will lead the charge?
It’s still uncertain.
Steem was an early mover, but now others have followed.
Kin is a second popular chat platform that’s looking to incorporate DLT.
NEO has launched an initiative to incentivize developers to create games on their ledger
Line has established a partnership with South Korea’s Icon to create the infrastructure needed to transition from a corporation to a community-owned social media platform.
And in the years ahead, we’re bound to see new popular crypto projects making even more dramatic major forays into social media.
Stay tuned. This is going to be exciting for both users and investors alike.