What Is the Decentralized Internet?

The Current State of the Internet Today

As of December of 2018, there were over 4.1 billion internet users and 342 million registered domain names. While this may seem like a lot, the internet we know today is far from decentralized. Several giant internet companies (like Facebook, Netflix, Google, Amazon) control over 90% of internet traffic and store massive amounts of user data on private servers. This allows them to control things such as:

  1. Who has access to the services and to what extent
  2. Rules of engagement on their platform
  3. Collection and sale of user data

Every view, click and micro-moment is analyzed, optimized and then either sold off to advertisers. Typically, this data collection tends to result in better products and more relevant ads for things people actually want or need. Yet as the more recent US election would show, the loopholes of such a system could easily be manipulated by bad actors to alter the direction of an entire country. Furthermore, centralized applications are prime targets for hacks and server issues. Some most prominent hacks include:

T-Mobile: In 2018, over 2 million T-Mobile customer, had their personal data stolen by hackers. However, the company claimed that no financial data or passwords were compromised.

Yahoo: In September of 2016, over 500 million Yahoo user accounts were compromised. For Yahoo, this was not an isolated incident as it followed a 3 billion account hack in 2013.

Ebay: Over 145 million user accounts were compromised in 2014 as crooks had utilized employee credentials for their own purposes. Hackers had plenty of time to move as much data as they needed before anyone realized something was wrong.

What is a Decentralized Web?

Instead of using centralized servers for data storage, a decentralized internet would utilize a network of computers. Each computer would act as a node in an interlinked chain. The elimination of a single storage location would get rid of a central point of failure and the possibility of a concentrated hack or shutdown. Furthermore, there would be no single entity or group that could impose a monopoly or control over such a system.

How Do Decentralized Internet Applications Work

When you type anything on a Google Doc or store a photo, song or file on the cloud, you are trusting that the company offering such services will protect your data from hacks and maintain your privacy. Every bit of data you put into such systems gets sent to and stored centralized servers. Your data is only as secure as this server.

When using decentralized internet applications, your work gets backed up locally on your device. It also becomes available on a decentralized network which allows you to share and collaborate. However, since the network is decentralized, the data is encrypted and can only be read if someone has the associated encryption key. The encryption is similar to the mnemonic multi-word phrases that have been used for cryptocurrency wallet security for years. They ensure that private data stays private. Since there is no central server, multiple parts of a given network can fail without compromising the integrity of the decentralized internet as a whole.

Venture Capital is ALL IN on the Decentralized Internet

Venture Capital investment in blockchain and cryptocurrency related companies is up 280% with over $1.3 billion invested just in the top ten deals. Prominent names such as Andreessen Horowitz, Barry Silbert and Tim Draper have all bought into the blockchain revolution becoming proud and vocal advocates for the space. With companies like Blockstack, a decentralized application hosting platform, and Filecoin, a decentralized storage network for data competing with current cloud storage solutions, achieving multi-million dollar valuations, it seems venture capital funding has definitely gone all in. Ironically, the same funds that were invested in the early Google’s of the world are now betting big on their competitors.

Challenges of a Decentralized Internet

Despite growing venture capital interest and backing, the decentralized internet is still a very niche island in a world of billion dollar centralized giants. This is because companies like Google have managed to create attractive products, overcome technical difficulties and attract billions of users all over the world. While these internet giants have had a 20+ year head start to get it right, it is exactly what the decentralized companies of the future will need to overcome in order to have the slightest hope of being viewed as real “competitors.”

Adoption Challenges

The success of blockchains like Ethereum and traditional platforms like the Apple App Store can largely be attributed to the fact that they succeeded in finding two types of people:

  1. Developers to build applications on top of them
  2. Users and customers for those applications

Any platform that is unable to create this dual-sided marketplace cannot survive. Without dedicated developers, truly robust and useful applications cannot exist. Without the ability to gain users, any application, no matter how great, will not withstand the test of time.

For example, various projects are working on creating decentralized cloud services to compete with Amazon Web Services. However, unless these applications are truly superior and have stellar marketing teams, they may never even capture 1% of the market share.

Currently, most decentralized internet applications position themselves as “private alternatives” to existing products. For example, DTUBE is a decentralized YouTube that allows users to post and stream videos. Instead of utilizing the ad model for revenue, users can “tip” creators they like with STEEM tokens. DTUBE uses an IPFS (interplanetary file system) to store the content and does not use centralized servers. This blockchain powered solution is supposed to be self-regulating, with users deciding what content they like and what content needs to be taken off by either upvoting or downvoting it. However, DTUBE looks almost completely identical to its centralized twin, Youtube. It seems that until new services and behaviors are built on top of such platforms, they can only hope to be second best.

Interoperability Issues

Aside from the challenge of market adoption, there are certain technical challenges as well. This is particularly true when it comes to interoperability. Interoperability allows for different blockchains to communicate and share information and is similar to the way our current internet functions. While our existing internet network requires all computers to be able to communicate, this communication is only necessary within one network. Solving interoperability would require different networks made up of interlinked systems to be able to communicate with one another.

Scalability Problems

You may remember when a popular game known as CryptoKitties crashed the Ethereum network back in 2017. This occurred because the Ethereum network could not process the volume of transactions of this one collectible game. Networks that will power an internet need to be able to handle millions of such transactions and applications a second in order to be viable. In a world where “buffering and loading ” are perhaps the most hated words on the internet, is it plausible to expect people to deal with snaillike speeds all in the name of decentralization?

Whether or not a decentralized internet is a digital Garden of Eden is yet to be seen. The only thing we know for sure is that, just like in the centralized world, there cannot be one winner. As we mature, an ecosystem will develop composed of various blockchain networks and layers that will all collaborate. Before making any judgments about the future, we must also acknowledge that we are still very much in the early stages of what is possible. Even the internet as we know it today was out for quite a few years before gaining much adoption. Yet, little by little, questions such as “Why would I ever text?” or “Why not just send regular mail?” were not questions at all, but simply the new norm.

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