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Beyond the bitcoin bubble

Steven Johnson
The New York Times
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Although Ethereum is mainly associated with money, the platform is much more than that – in addition to having its own currency, Ether, we can think of it as possessing elements of a bank account, an email address, and a Social Security number.

How Does it Work?

  • The blockchain platform uses private key cryptography.
  • Transactions are registered in a sequence of “blocks” of data and are completed without any traditional institutions or intermediaries. This is possible because no one owns Ethereum – the platform is far closer to a democracy than a private corporation.

Blockchain is the Future

Some claim that the real promise of these new technologies lies in replacing much of what we now think of as the Internet – by turning the online sphere into a more decentralized system.

The Structure of the Internet

  • InternetOne (developed in the 1970s and 1980s) – was founded on open protocols maintained by academic researchers and international bodies, owned by no one. They can be used by anyone, free of charge. Examples include:
    • Email (based on open protocols POP, SMTP, IMAP)
    • Websites (HTTP)
    • GPS: initially developed by the United States military and now available in the public domain
  • InternetTwo (developed in the 2000s) – because inventors of the open sector failed to create a secure open standard that established human identity on the network, questions of identity, community, and payment mechanisms were left to the private sector. Examples include:
    • Facebook
    • Google
    • Amazon

InternetTwo Social Implications

Although no single corporation owned the protocols that defined GPS or the open web, Facebook, one private company, owns the data that defines 2 billion people today. Other dangers include: - Hate speech - Misinformation campaigns designed to feed our biases - Hurtful online advertising - Russian bots destroying the democratic system with fake news on Facebook

How to Fix the Web?

  • Although restoring the architecture of InternetOne is not possible, the solution to fix the online sphere includes its elements – open-source technology standards.
  • Blockchain evangelists believe that advances in software, cryptography, and distributed systems will be able to solve today’s digital problems.
  • They even claim to offer an alternative to the model of capitalism that has driven wealth inequality.

The Rise of Bitcoin

  • The closed-protocol era was first challenged in 2008 when Satoshi Nakamoto designed Bitcoin. The key features include:
    • A secure database with no authority controlling and verifying the authenticity of the data.
    • The work of maintaining that distributed ledger is itself rewarded with Bitcoin payments.
  • Although Bitcoin is a largely unstable payment mechanism, the ideas that define the platform might prove revolutionary in challenging the hegemony of giants like Facebook.

How Can Blockchain Platforms Challenge Tech Giants?

  • It can be done through the distributed ledger and token economy.
  • Once the platform takes off, speculators put a monetary price on tokens and attract more interest in the protocol by inflating its value – this, in turn, attracts even more developers and customers.
  • This creates a more competitive and equitable marketplace, as the economic value is distributed across a much wider group.

Possible Results of Adopting Blockchain Platforms as a Fundamental Part of Our Digital Infrastructure

  • News platforms would be less vulnerable to manipulation.
  • Identity theft would be less common.
  • Additional security would come from the decentralized nature of the new identity protocols.
  • The web would not be dominated by a few information-age giants.
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