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22 March 2023

Despite the high risk, crypto offers a vision of a more open, creative and free internet

The industry is preoccupied with money-making, but the potential of shared computing could go far beyond finance.

By Saffron Huang

Giant technology companies have now effectively monopolised the digital world. Historically, monopolisation often happens to information technologies. The legal scholar Tim Wu has shown in his book The Master Switch how, through the histories of the telephone, radio, film and TV in the US, a new, open medium of communication can become a controlled, closed system dominated by a few corporations.

Yet there has also been resistance to the commercialisation of cyberspace. A recent example of this can be seen in parts of the blockchain or crypto industry. At its best, crypto has both the potential and desire to reopen the internet.

This may sound counterintuitive, since crypto appears to be one of the most commercialised online developments of recent times. Yet within the industry there is a growing interest in putting crypto-related innovations to use beyond currencies and profit-making.

Using the blockchain – a public digital ledger of transactions – people are starting to build shared virtual realms and games that are not owned by any one corporation (unlike the Meta-controlled “Metaverse”), distribute grants for scientific research in collectively governed ways, and challenge the gated academic publishing industry. They’re creating collectively owned “hard drives” to store data without having to maintain servers, and designing alternative currencies to implement universal basic income without waiting for state intervention.

How could the blockchain – with its reputation for fraud, debacle and predatory pyramid schemes – enable dreams of a freer, more open and decentralised internet?

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A blockchain is essentially a computer, which can store data and execute programs. It is not a single physical computer, but a shared virtual computer that is duplicated across many physical computers that run it. To ensure that the different copies of the blockchain are synchronised, it has a “consensus algorithm”. Anything that has been verified and added to the blockchain will be there for as long as the blockchain is maintained and secured.

[See also: Britcoin is a weird and dangerous idea]

Anyone can upload or execute a program on the blockchain if they’re willing to pay a “gas fee” for the computation required. If you’re playing a chess game app on the blockchain Ethereum, for example, you would have to pay some amount of Ether to run the program that moves your knight from F3 to G5. If you want to upload a cat picture to the blockchain, you have to pay Ether for the cost of storing the image. Outside of this fee, there is no other condition of entry to this virtual computer.

This open access explains the proliferation of cryptocurrencies, from Dogecoin to USDC, that people have created and traded. On the blockchain, anyone is allowed to make their own currency without central bank approval or stock exchange listing. A shared computer also means that you can build on the programs that others write. If someone has created a currency token, I can see their code and then design a way to earn interest from it. Crypto, then, is like a shared sandbox, where everyone’s creation is connected and existing in the same space.

The technical term for this is “composability”, which is the ability to build from and reuse the work of others instead of starting from scratch. This approach has accelerated technical innovation, and is the reason why decentralised finance has taken off in just a few years. But it also enables innovations beyond finance.

This technology is still in development and cannot yet compete with consumer software, but a shared blockchain computer could challenge the consolidated power of the big platforms that control public life – where one engineer can rewrite some code and lose a small business thousands in ad revenue, or a few data scientists choose the ranking algorithm for a billion newsfeeds. Instead of submitting to such opaque power, blockchain might make it possible to have multiple local centres of control.

The possibilities of blockchain technology are greater still. Through Ethereum, organisations such as VitaDAO are experimenting with the community funding of biomedical advances including drug development. Arweave is leveraging the permanence of blockchain to create a way to store data permanently, as a bulwark against abandoned websites and censorship.

Crypto’s bypassing of traditional mediators creates a minefield of unsolved problems. There are risks of scams, speculation, privacy issues, poorly written code, and people being exposed to hacks with few protections. If anyone loses or leaks their private access key to the blockchain, they can bid goodbye to their crypto portfolio. All this needs considered regulation, education and digital literacy. The release of crypto upon the world will remove certain constraints, while requiring different ones to be constructed.

The present crypto industry remains primarily concerned with money-making. But steering it beyond finance, in directions that harness the full potential of shared computing, would constitute a revolutionary act; one that uses technology to realise those early dreams of an open, creative internet in the service of the common good.

[See also: The amateur sleuths who helped to bring down Sam Bankman-Fried]

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This article appears in the 22 Mar 2023 issue of the New Statesman, Banks on the brink