The Future of the Internet

December 3, 2018

What’s going to be the next big thing in tech? There’s a lot of hype around different technologies that all promise to be the next “big thing” but to understand what could come next, it’s important to look at the cycles that have come before. A number of commentators have recently suggested that there are major technological revolutions every 14 years (Mainframe [1945], Microchip [1968], PC [1982], Internet [1996], MobileNet [2010], Blockchain [2024]) or every 20 years (PC Era [1975], Internet Era [1995], Blockchain Era [2015]). I propose it could be broken up into different categories (Operating systems, Internet Protocols, Web Browsers, Search Engines, and Social Media Platforms). Then when we investigate the circumstances surrounding each evolution and the issues with each of the “revolutions”, the next iteration in the software/internet space will become apparent.

The protocols that some of the crypto currencies are incentivizing could change the way that society interacts on the internet. It’s important to understand the issues with the protocols that were developed. The protocols that the internet was built on were largely created in academic institutions in the 1970s and 80s. There were few large winners from the development of operating systems and browsers in the 1980s and 1990s. The same can be said for the search engines and social media platforms that now hold an almost omnipotent power over how users interact through the internet.

Looking at where the gains were concentrated and how power has gone from being in the hands of hobbyists to a powerful few, one can speculate that the next iteration of the internet will put the power and pecuniary gain back in the hands of the developers while at the same time reinventing some of the protocols that were developed at the birth of the internet and may no longer represent best practice. By and large the protocols that can be developed through the cryptocurrency revolution, hold a lot of the answers to the issues that have been created through the previous evolutions.

WHAT HAS HAPPENED?

Operating systems — Giving people the ability to use computers

As computers were developed, people needed an interface to use them. The infrastructure was largely developed by hobbyists but was later synthesized by Microsoft who had initially built the Altair BASIC. The other major operating system, Linux, remained open source and is now the main operating system for servers and super computers. Obviously, the winners were the developers of the main operating system that was commercialized (Windows). The issue here is that, even though Linux proved to be the basis for the Android and Apple operating systems, leading it to become one of the most popular operating systems worldwide, there wasn’t the same incentive for developers to work on it as there was for developers to work on Windows, where they were paid handsomely for their efforts.

If there was a method that allowed developers to be rewarded to spend time working on the system that they perceived to have the most promise, then history could have played out differently.

Internet Protocols — Allowing people to communicate across the internet

There were a range of protocols that were developed in the 70s and 80s. The protocols are effectively the rules of the internet that allow computers to interact with one another. They are acronyms that you might have heard from time to time (DNS, FTP, HTTP, IMAP, SSH, SMTP, TLS/SSL, HTTPS) that form the foundation of the internet as we know it. They were developed in academic and non-profit institutions and not commercialized at inception.

A fascinating part of the development of the internet is that there were no real winners here as the protocols weren’t commercialized. Further, there was no rewards for developers to continue to work on or develop further protocols because of the lack of incentive structure.

Despite this it seems intuitively more likely that the next phase of the internet will be able to build in incentive structures that will allow developers to be rewarded for their efforts as they create new protocols that are able to change the way that we interact on the internet.

Web Browsers — Allowing people to access the information on the internet in a visual manner

Building on the work that other academic institutions had created, the National Center for Supercomputing Applications (NCSA) was largely responsible for creating the first browser that allowed a more functional graphic interface to interact with the information on the internet. The winner here was a developer, Marc Andreessen, who managed to break away from NCSA and commercialise Netscape as one of the first mass market browsers before selling it to AOL in 1999 for $4.2 Billion.

Subsequently, there were a handful of other browsers built that are in use today (Internet Explorer, Chrome, Safari, and Firefox amongst others). These were either developed by the corporations that wanted to be able to bundle the browsers in with other software they were selling or by hobbyists who were working on something that they enjoyed (in the case of Firefox).

The issue with this specific evolution of the internet was that the power and profit was concentrated in the hands of few relatively early on. There wasn’t much of an opportunity for developers to cash in by working on something that they felt passionate about or for them to try create a product that to compete with an increasingly centralized, and dominant power structure in the software ecosystem.

The next iteration of the internet will allow developers to work on things they feel passionately about and likely cause a shift in the power structure which has become much more concentrated since the late 1990s, as we will touch on next.

Search Engines — Allowing people to sort through information on the internet

The proliferation of the internet with millions of websites, documents, images, and content created a new problem for users. People needed a way to aggregate all of the content that was available. As people sought more and more information, they needed better tools to be able to sort through the detritus to get to the good stuff, like pictures of the world grumpiest cat.

Search engines started to take the crown that landing pages once held. There would be little disagreement that the power and profits that came from developing a way of sorting through the quagmire was concentrated in one entity, Google. Once its supremacy was established, it was able to spread its reach into other internet applications that are used on a daily basis (Gmail, G-suite, Maps, Youtube, Chrome, Calendar, Drive etc). It made these applications available to everyone for what appears to be a low price of having access to all of your personal information, allowing them to efficiently target advertising towards you.

The primary issue with this development is that the power concentration became more centralized. Now search engines and subsequently social networks largely control our online identities and are able to unilaterally change the way we interact on the internet through a simple change in their algorithms.

Therefore, it’s likely that the power that has been built up into relatively few silos on the internet will be redistributed, putting the power back into the hands of the people that are using the systems.

Social Media Platforms — Allowing people to express their identity online

As mentioned above, after the search engines categorized and sorted information for us, social media platforms began to emerge as people wanted to create an online identity for themselves. There’s little argument that Facebook has emerged as the winner in a majority of the developed markets around the world. Again, the users of the social media platforms didn’t have any pecuniary gain from using them. The benefits came from being able to connect with friends around the world more easily (again for the low price of giving up access to your deepest darkest secrets so the platform is better able to target advertising towards you).

It’s important to understand that with search engines and social media platforms, the users of the services didn’t receive any additional benefits other than potentially receiving more relevant advertisements. The next iteration of the internet could enable us to have some portability of our identities. If we don’t like a system, then we should be able to take our online identity to another system and plug it in.

Further, the next phase of the internet will likely begin to transfer the value creation that the social media networks and search engines have accrued into the hands of the users as opposed to being controlled by a few centralized corporations as it is presently.

WHAT COMES NEXT?

Cryptocurrencies and protocols (Web 3.0) — Giving users control over their online identities and how they interact with information on the internet

Now that we can understand how the internet as we know it has evolved. We can see where the value was accrued and who the winners were. We can see where the issues are and begin to propose some solutions.

Operating systems were largely developed by the hobbyists and commercialized in part by Microsoft. Internet protocols were developed in academic and non-profit institutions, they went on to form the foundation of the internet and few of the original inventors were able to commercialize their concepts. Web browsers gave people the ability to access the information on the internet and while their commercialization phase was relatively quick, there were few beneficiaries in this phase of the development of the internet. Search engines and social media platforms gave us better ways to interact with the information and people on the internet at the cost of giving away personal information.

People are locked in to the current establishments that govern the internet (Google, Facebook, etc), which allows control over what people can see and do. It doesn’t give the users any control over who is able to access their data and they don’t receive any pecuniary benefit from the platforms. Decentralised platforms that could be developed and function with the benefit changes in cryptocurrencies could mark the next step in the evolution of the internet.

Chris Dixon has written at length about the benefits of decentralized software applications (you can read a few of the articles here and here). The emergence of crypto-currencies means that developers are able to take the perspective of hobbyists from the internet 1.0 and work on projects that they’re interested in and be rewarded for the time and effort that they spend on them.

The financial incentive that’s created by having the token structures associated with the applications is necessary because it creates a financial utility on top of the applications. The financial utility creates an incentive for developers to work on the project and for users to become attracted to the project (see the image below). At the same time, ideas are able to grow organically without venture capitalist funding or restrictions to reach scale. As more people use an application and the corresponding tokens, the value of the tokens will continue to increase.

Previously, the development of the protocols that the internet operates on weren’t able to be commercialized. Presently, the way that we interact on the internet is concentrated in the power of a few corporates who can largely control the way we interact online simply by unilaterally changing their algorithms. Initially, the development of protocols didn’t attract the same super profits that the applications that were built on top of the protocols garnered. However, with the advent of cryptocurrencies, it looks like the people that develop will be developing the protocols and acting as early adopters of the networks will be the ones that will benefit from the next stage in the development of the internet.

This might sound very abstract, so let’s look at a more concrete example, Filecoin and the Interplanetary File System (IPFS). Filecoin is the overarching organization that is trying to create the new protocol. IPFS is the new protocol. Presently, when people want to store personal data, they might consider using Dropbox, Google’s Drive or Microsoft’s OneDrive. Imagine if people could rent spare space from other people’s personal computers. The people who provided the space for storage would be paid a rental fee and the developers that are working on the solution would also be able to be incentivized without needing to be organized by a centralized company as is presently done. Filecoin was able to raise $257m through an Initial Coin Offering (ICO). This capital can be used to incentivize developers to work on creating the initial protocol. If people want to use storage space on the network, they need to procure Filecoins to be able to pay for that storage space. The more people that buy into the system, the more it should support the price of Filecoins, to the point that it could become beneficial for people to go out and purchase additional hardware to be able to store data for the IPFS network.

Conclusion

There is a lot of hype about a range of technologies that are being developed from drones and self-driving vehicles to virtual reality and artificial intelligence. There is little doubt that each of these inventions will have a meaningful impact on society in some way. However, if by looking at how the internet has developed and its current issues, it appears that the area that will most benefit from the next wave of innovation will be the creation of crypto-currencies that are used to build protocols to drive the next phase of the internet. I’m betting on cryptocurrencies and I’m not just talking about alt-coins but the cryptocurrencies that could make a meaningful difference in the way that we interact online.