The web has taken over our lives, and with that, online enterprises have grown into huge monoliths of power.
Yet, while tech giants give us access to the stuff we like – music, movies, shopping – blockchain enthusiasts think an individual’s web experience could be greatly improved by decentralization.
If the web’s giants decentralize, the web itself will become a wildly different place – it’s hard to even wrap your head around, just like it would have been impossible to imagine meme culture in 1999.
Today, a site and its database are one entity. In the decentralized version, the database doesn’t belong to its creators; it belongs to its community, and that community can build lots of different business models on top of the database.
Think of it like this: if the web had been decentralized from the beginning, you could have made your first social media profile on Friendster in 2003. Then, when MySpace came along, you wouldn’t need to create a new profile, you’d just give MySpace permission to access the one you had already made for Friendster. Same thing for Facebook.
Obviously, each new site would add new features and ways of interacting, but users would have never needed to start over, lose friends from other sites or the content they’d created on prior platforms.
Are those advantages strong enough to upend the Dot-Com era’s familiar incumbents?
Entrepreneurs and the various investors who have committed capital – whether that be in the form of traditional venture capital, or perhaps more common in the space today, through initial coin offerings (ICOs) – have made their bets that it is.
And with ICOs providing not only a new fundraising mechanism for these blockchain startups, but also a tool for users to interact with these new distributed networks, the underlying infrastructure for a new internet – a “web 3.0” – is growing.
Below are three verticals on the web that blockchain startups are aiming to take market share from through the use of crypto tokens.
While eBay is an internet O.G., in the early days of the web, there were also other sites built around specific products, such as comic books, where sellers sold directly to buyers.
One might imagine that focused marketplaces would naturally provide a better customer experience, but eBay, which offered an array of different products, proved that wrong. It turned out that it was better to sell comic books on the site that also sold bicycle parts, because someone might come looking for one and end up buying both. On top of that, it was just easier to remember one site for buying used stuff, rather than many.
While there’s nothing stopping a seller from offering one product on both a specialized site and a general site, such as eBay, it would take sophisticated software to make sure the same item didn’t get sold twice, and eBay doesn’t want to make that kind of thing easy.
But what if consumers could have both? What if the comic books, for example, lived in the same database as the all the other products, but different websites could be built around that data? In that way, a listing could show up in a variety of marketplaces, but if one listing sold on any one marketplace, it would show as sold on all of them.
That’s possible, according to Gee Chuang, the CEO of Listia, an existing marketplace that’s developing a decentralized version of eBay called Ink Protocol:
“Ink Protocol’s vision is to decentralize peer-to-peer marketplaces, taking the power away from the companies that run them and giving it back to the buyers and sellers. As a result, more value is distributed back to the actual user.”
In an effort to create this system, Listia plans to sell $15 million worth of crypto tokens, starting on Jan. 29. Listia will also seed early users of its existing marketplace, where people already earn Listia credits for trading items peer-to-peer, with the token. Listia credits will convert into the crypto tokens as the blockchain network launches.
It’s a similar goal to OB1’s OpenBazaar, one of the longest-running and most popular decentralized marketplaces, except that OB1 is also focused on making it easier for users to transact anonymously, and has only used bitcoin for transacting. Yet, that could soon change, as OB1’s CEO Brian Hoffman announced at Token Summit II recently that that company would be pursuing a token offering in response to increased congestion on the bitcoin network.
Speaking to the benefits of a decentralized marketplace, Listia’s Chuang said, “Sellers in decentralized marketplaces have the freedom to use any platform they like at any time, while bringing that hard-earned reputation with them everywhere they go.”
Move over YouTube
YouTube is the number one place in the world to share and search for video.
While the site has created a new career path for content creators, the tensions between those creators and its central administrators have become heated.
Content creators suffer as YouTube decreases its revenue share with video makers and uses automation to pull advertisements from their videos if they suspect the video displays offensive or inappropriate behavior, catching some suitable videos in its wide net. Consumers, meanwhile, complain that advertisements are becoming too prevalent on the site in general.
A new generation of startups believes decentralizing their platforms will allow content creators to interact directly with their audiences with the use of a crypto token. At the same time, users will get more choice in how their attention can be monetized – they can view ads, release personal information or even contribute part of their computing power to the operation of the system.
“Bittorrent — with more than 250 million users worldwide — has been already proven to be capable of delivering good quality content in a decentralized and compelling manner,” said Adrian Garelik, CEO of Flixxo, a decentralized video sharing platform that closed its token sale in November.
Released in 2001, Bittorrent works by connecting users to copies of content held on other people’s devices, rather than a centralized server system. And Garelik envisions making the torrent network more robust by giving people more incentive to host content by earning cryptocurrency.
“By creating this incentivized network, any kind of content could be distributed in a peer-to-peer fashion, with a lot of monetization possibilities,” Garelik said.
According to Flixxo creators, users of peer-to-peer file sharing platforms have been in need of an effective peer-to-peer payment system to make the platforms more useful. And that seems to be a thought shared by a number of blockchain-based startups looking to decentralize file sharing, including Stream, Theta and Livepeer, each that has its own token.
And that’s not all of them. In fact, there are handfuls of players at each level of the online video stack.
As explained by another decentralized video company Paratii in a blog post:
“What we see forming is not a single pyramidal stack, where the choice of one piece of tech inevitably ‘disables’ another. Rather, what we have are protocol silos, with more or less interoperable layers.”
Disrupting Apple Music
It’s possibly taken years to purchase and download all that music that gets your heart racing when you’re at the gym or mellows you out after a long day of work – the perfect soundtrack to your life.
And just as special as all that is to you, those tastes are just as important to the companies that control the online music marketplaces where you get that music. That’s because, as users participate in marketplaces like Apple Music, they build up their own intellectual property by creating playlists, following artists and flagging their favorite songs.
And that data is lucrative for the marketplaces to track and control, so much so that they make it difficult to move those preferences to another service.
According to Jesse Grushack from Consensys’s Ujo, a blockchain-based music supply chain provider:
“We are being locked into these systems controlled by corporate giants.”
And many startups, not just Ujo, agree. A handful of blockchain-based companies have started up looking to disrupt various layers of the music industry, including Viberate, which looks to eliminate the need for musicians’ rent-seeking agents with smart contracts.
Even more mainstream names are seeing potential benefits in adopting blockchain and cryptocurrency in the music biz. Icelandic singer Bjork announced in November that she’d be accepting four different cryptocurrencies for her forthcoming album, and a former Universal Music Group executive raised $1.2 million in October for a music-rights management platform called Blokur that uses the ethereum blockchain.
While many of these platforms haven’t announced crypto token sales, Grushack admitted that Ujo might issue a token down the road.
Currently, though, the company is focused on the concept of a “portable fan badge” – a token-like instrument that ties identity and data together – so that as a fan, you could port what musicians, songs and genres you like across all different kinds of music marketplaces. In this way, Grushack said, the musician would really know a person is a fan, and could then market them new content directly.
And not only that, but the portal is designed to make it easier for any number of parties to share rights, for example of one song, where each musician that participated gets paid out based on the work they put in. While this is technically possible today, the process would require a significant number of intermediaries who would all want to take a cut, making it worthless for artists today.
“Right now Apple is in the process of phasing out purchases for music, so that leaves us in a scenario where everything we consume is in a rental model,” Grushack said, adding:
“If we did transition back into a system in which we bought music, being able to own that music and relationship regardless of the platform is something blockchain enables.”
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Blokur, Livepeer and OB1.
Fiber optics image via Shutterstock
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.