by Darryl Neudorf
The Early Days of the Decentralization Dream
Back in the late 90’s I read a book by Canadian musician and academic Paul Hoffert called: “The Bagel Effect: A Compass to Navigate our Wired World.” The book described a concept which proposed that the interconnected technologies represented by the then burgeoning World Wide Web would lead to a “shift of power away from central administrations to individuals at system edges.”
This vision was shared by many of us in the tech and media world during the 90’s. We saw a sea of profound potential for a liberating movement towards the dis-intermediating power of a global network of computers connected to each other, defying borders and cultures and centralized power.
Yet our ambitious ideals clouded the reality of what was to come: the disturbingly centralized silos of Web2.
The lead up to Web2
During the 90’s, the explosion of the web brought about an explosion of irrational exuberance among investors who saw the dollar signs around anything with a name followed by a “.com”. Investors knew that massive potential existed around the web, despite no workable monetization model to be found.
At the time, there was a prevailing attitude amongst the techno elites from silicon valley that “information wants to be free”. This quote arose from a conversation between Stewart Brand and Steve Wozniak back in 1984.
The idea is that information access equals freedom, and as networking technology becomes cheaper and cheaper, it becomes freer and freer. Extending on the impacts of Gutenberg’s printing press, the idea was that the expansion of easily distributed information equals freedom for humanity.
Many believed that Tim Berners Lee’s invention of the World Wide Web won out against competing technologies at the time because there were no transaction costs applied to the protocol. If you had access to an internet connection, you could use the World Wide Web, free of charge. As a result, the prevailing wisdom stated that charging fees for access to websites was not the right thing to do.
So there was a puzzle to be solved. Hundreds of millions of dollars were being invested in companies with no solid business models. This irrational exuberance led to the famous dot com bubble of the 90’s that burst in 2000.
The term “Web 2.0” was first coined by Darcy DiNucci in 1999 in an article called “Fragmented Future” but didn’t hit the mainstream as an idea until 2004. The idea of Web 2.0 is that where Web 1.0 was comprised of static web pages with no interactivity, Web 2.0 allowed for interactivity and interoperability. Social networks, like MySpace, followed by Facebook and Twitter rose up during this time, as well as the growth of blogging, peer to peer technology like Napster and Limewire, and collaborative repositories like Wikipedia.
But all this data exchange had to be paid for somehow and since silicon valley dictated that information wants to be free, it had to be paid for without directly charging for it.
It was at this point that companies rose like a phoenix from the ashes of the dot com bust of the early 2000’s around advertising models.
Ads had been around on the web since 1994, but over a decade, the advent of cookies and other tracking tools allowed for web companies to offer more targeted ads. Leading up to 2000, search engines started offering paid placement on search results, which led to pay-per click, where companies would bid on search result placement on a per click basis. Of course this affected the quality of the search.
Then in 2000 Google introduced “AdWords”, a paid search experience that was designed to generate revenue without affecting the quality of search.
It was around this time when social media companies started to rise up. By 2006, Facebook started working with advertisers. It started with a sponsored approach, but eventually grew to a more targeted approach. The use of web tracking tools has led to a very centralized World Wide Web.
Prior to the growth of Web 2.0 mega companies, the biggest companies in the world revolved around the plundering of a resource: oil. Now, the biggest companies in the world have surpassed oil companies by plundering a different resource: our personal data.
The advent of companies asking users to give up their personal data in order to provide “free” social networking, search and content delivery services has fuelled unsurpassed profits for some of the biggest companies in the world.
So what happened to the Bagel Effect that so many of us dreamed about back in the end of the previous millennium?
What the Bagel Effect referred to was “decentralization.” The idea that, as technology provides freer information distribution, centralized power begins to wane.
By the end of the 2010’s this was looking like a foolishly idealistic belief to many, but a new generation of “decentralists” has shown up, who are seeing a convergence of new technologies that could bring the dream of individual empowerment back to the web.
Like so many historical times of profound change, seemingly unrelated forces converge to produce a new explosion of innovation and social expansion.
Many who talk about the potential of Web3 are focused on the convergence of different technologies: IoT (the internet of Things), the metaverse, augmented and virtual reality, cryptocurrency and blockchain, distributed computing, artificial intelligence, and DAOs (Decentralized Autonomous Organizations) are some of the technologies that are widely discussed when describing Web3. The idea is that these technologies will bring about a more decentralized way of doing things.
The “Why” of Web3
But there is more to the growth of Web3 than the convergence of technologies. Web3’s promise of decentralization will be fuelled around a “why”. There are societal convergences happening today that will fuel the growth of technological innovations, and these societal convergences are what brings forth hope for the Bagel Effect to actually arrive this time.
At the forefront is climate change. According to Thomas Stocker , professor and head of the department of Climate and Environmental Physics at the University of Bern, we have entered the Fourth Industrial Revolution, and it can be described in one word: Decarbonization. If you follow where the money is going, it would appear that he is right.
Humanity is facing a challenge that we have never fully had to confront before, and today’s corporate and governmental institutions will not be enough to carry us through this unprecedented challenge. We have never had to fully face a species wide problem that must involve complete global coordination like this. We are at war, but this time the war isn’t built around an enemy involving other fellow humans, the war is against our collective past selves! The advent of Web3 decentralization based technologies will provide the tools for global coordination that humanity requires.
Another part of the societal convergence is demographics. Generation Z is coming of age and will be affecting the workforce and other institutions profoundly in the coming years. This generational shift will start to have influence that isn’t being felt yet and will be the primary driver of use cases for these technologies.
Yet another part of the societal convergence is the erosion of democratic institutions. “Trustless” blockchain based self-sovereign ID tools will be vital to restoring faith in democracy and improving it through collective intelligence techniques found in burgeoning new decentralized social networks that provide an antidote to the engineered behaviour modification techniques so pervasive in surveillance capitalism.
Another part of the convergence is the “glocalization” movement. As climate disasters continue to affect supply chain and population displacement, new local farming technologies combined with decentralized global supply chain distribution systems will be required. This will require trustless decentralized blockchain technologies to provide efficient distribution and communication solutions.
So here we are, at a time where things appear to have come full circle and we have fresh new ideals around the hopes and dreams of decentralized power. We have been given another opportunity and this time it is the “why” of decentralization that gives me hope that we’ll actually employ some of the vision that Paul Hoffert described in his book almost 25 years ago.