Archive for decentralisation tag

How The Blockchain Turns Content Micropayments Into Microinvestments.

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Why Speculation Can Be a Foundation of Decentralised Media Business Models.

In my previous post, I introduced a metaphor of the blockchain as the ‘persistent social graph’ (or the persistent link-graph). The main argument was that the chain of transactions on the blockchain creates a persistent, immutable graph of connections between addresses. Once we assign an identity to the address on the blockchain, the transaction graph becomes a public social graph of financial transactions.

For the pure currency applications, this is actually a very undesirable feature. The chain of transactions has to be obfuscated, meaning that you actually don’t want anyone to be able to understand who is transacting with whom. Therefore, in the case of Bitcoin, you should use a new address for every transaction, to maintain your transaction privacy.

But this quality of the public ledger is a feature when you want to design a social graph where money is used as one of discovery signals.

In this category of applications, you actually want to get discovered and having an identity tied to a public address is the first step.

Owning your social graph is MUCH more valuable than owning your content. In fact, in the networked attention economy, you cannot separate content from its link structure. And by the link structure, I mean all the inbound and outbound likes, hyperlinks, stars, hearts, tweets, friends, followers, fans etc.

These links affect your discoverability and ranking in the context of a particular social platform.

But what advantages the blockchain social graphs (and apps built on top of them) could offer when compared to the traditional centralised social networks?

Turning Cryptocurrency Speculation into Content Speculation

Speculation is one of the leading use cases of cryptocurrencies. When I’m writing these words there are 674(!) various cryptocurrencies being listed on Most of them have no other use than speculation and won’t survive till the next month.

Speculation has a lot of negative connotations but the reality of life is that people are natural born speculators.

 What blogs did for journalism & publishing, the blockchain does for speculation and trading. By allowing everyone to create and trade digital assets, it has created a new breed speculators trading with cryptocurrencies. Activities that were reserved for professionals and heavily regulated before are becoming available to everyone (at with all positive and negative consequences).

Services like will open up possibilities for speculation even further. With its prediction market, it will allow everyone to bet on the outcome of future events.

But this is just the tip of an iceberg. What I’m excited about is the possibility of creating new user experiences based on speculation but in the context of content discovery.

The critical feature of the blockchain, that’s going to unlock a multitude of new, speculation based applications is called ‘timestamping’. Time stamping allows you to prove that a particular statement was made at a specific moment in time (measured by the block number).

So why is it relevant to our blockchain-based social graphs?

Because it introduces a whole lot of possibilities for content speculation — who was the first to link or like a particular ‘person’ or a ‘piece’ of content. 

Combine it with the monetary value that can be attached to ‘likes’ or ‘links’ and suddenly you have two extra dimensions (time and value) embedded directly in your social graph. 

Let’s make it more tangible with an example.

Look at the one of the most successful YouTube videos ever — the Gangnam Style. It has accrued billions of views over the years and became one of the greatest hits in the history of YouTube. But what I’d like to know is who was the person that was the 1st , 10th or a 100th to share or like this video. Before it actually went viral.

Today, it’s impossible to determine that without digging deep into YouTube’s or FB’s databases. And even if it was possible you couldn’t tell whether their administrator didn’t quietly change the records. You don’t have the ‘objective’ timeline.

The blockchain gives us the objective reference for time-based events and applying it to linking in all kinds of social graphs has a massive potential.

Imagine the alternative reality where ‘Gangnam Style’ went viral on the blockchain-based social network. Where all the links are time-stamped and carry a monetary value. As the ‘Gangnam Style’ video is getting more popular, this popularity is automatically transferred to the nodes in the social graph that were first to connect (‘like/link’) to it.

How does this popularity get ‘transferred’ though? Because in this alternative reality, it makes sense to create a discovery system that ranks people who were first to recognise the future popularity of content. And it makes even more sense to connect to these people/nodes earlier that later.

How Would You Invest Your ‘Likes’?

Timestamping of links in the social graph creates a new dimension of ‘time-scarcity’ and in this dimension, it matters when you ‘liked’ or ‘linked’ something.

At any given block, you can only link to a limited number of other nodes so your timestamped linking pattern becomes your immutable and public footprint on the ledger. It is your link equity to use the terminology from the Google SEO world.

Various ranking algorithms can be used to analyse this graphs of individual footprints but the objective timestamp and attached value will be always there.

Wouldn’t you be interested who was the first person to link to the Bitcoin whitepaper? And how much monetary value they invested in it?

With Timestamping, Micropayments Become Microinvestments.

If we recognise the importance of timestamping and persistent linking on the blockchain then micropayments cease to be just the simple transfers of value. They become microinvestments in building one’s social graph and the mental models of users change completely in this scenario.

In the traditional micropayment or tipping model, my motivation to initiate a micropayment is altruistic. I enjoyed what you’ve created so I’ll send you some small amounts of Bitcoin or some other currency. If you put up a paywall and request me to pay, I’ll probably go elsewhere because I have the abundance of other options. In both cases, the mental model I have is the ‘payment’ model. Value is deducted from my account and added to yours.

But if we recognise the timestamp and the persistent link that is created in the blockchain social graph with a transaction, the micropayment automatically becomes a ‘microinvestment’. I’m not paying you anymore.

I’m publicly voting/investing/creating a connection between our nodes. My motivation is selfish now — I’m ‘investing’ in my social graph and I want to invest in the most valuable connections AND do it as early as possible. Because with each passing block, the value of my potential ‘timestamp’ decreases by one. I’m no longer in the ‘customer’ mode, I’m in the ‘speculator’ mode. 

Is this content/person worth linking to NOW? How does this link reflect on me? How does this affect my future chances of getting visibility and being linked to? How much should I invest? etc.

In both scenarios, the actual transaction will look exactly the same on the blockchain (not counting the metadata). But its meaning to a user will be totally different.

In the first case, a user is paying someone small amounts of money in exchange for access to content, a classic ‘buy/sell’ transaction.

In the second case, the user is investing in their own social graph and speculates how valuable this link might be in the future. Consequently, they might ‘invest’ much more than they would ‘pay’ in the first scenario.

Attention and Discoverability Is Where It’s At

You might have noticed there’s no ‘content monetization’ embedded in that model. Attention is the value that the nodes compete for. Transactions between nodes are the primary way of competing for attention and building a persistent reputation on the network.

If I want to get noticed by the ‘Kim Kardashian’ node I have to either send a high value transaction today or send a lower value transaction back in the day when the ‘Kim Kardashian’ node didn’t have so many incoming connections.

It doesn’t matter whether the Kim Kardashian node produces high quality content or is a creator of any sort. What does matter is that nodes the ‘Kim Kardashian’ node links to, become valuable due to the link equity that Kim Kardashian has.

It’s like the Web where all the links are on the public ledger but anyone can apply their own Google PageRank on top of it. The only difference is you don’t have to crawl the entire web to understand the link structure. It’s right there- on the blockchain.

But What About The Scalability?

Obviously, the blockchain tech today is not ready for mainstream deployments of the on-chain micropayment schemes. However, we can already experiment with with on-chain economies at the ‘Harvard scale’ equivalents of the future social networks.

Right now, we don’t even know what economic models for content monetization will gain traction. Bitcoin tipping or microtransaction paywalls are the first step but they still follow the classic ‘buy/sell’ paradigm and don’t take full advantage of the blockchain’s potential.

Product and UX will be key

To create successful ‘open social graph’ models we’ll need new UX metaphors.

  • Web 1.0 came with pages & links metaphors — ‘the web of static documents’
  • the social Web 2.0 came with feeds & likes metaphors and was shaped around ‘people and profiles’.
  • what metaphors will be appropriate for the blockchain-based Web 3.0 where time and value become the first class citizens?

The key to creating successful ‘open social graph’ models will be discovering new UX metaphors that make sense in this new contexts.

Decentralising Facebook with Blockchains and Userfeeds.

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Part 1. The Problem.

Almost two years ago I wrote a blog post ‘Why the next Facebook will be owned by you’. It became clear to me at the time that the core invention behind Bitcoin, the blockchain, is much bigger than just sending money online. I argued that the concept of decentralised digital ownership, which Bitcoin applied to money, can be extended to other forms of value.

What I realised at the time was that owning bitcoins meant owning a stake in the underlying network. Holders of bitcoin not only owned a particular number of currency units. These units, apart from being a unit of exchange, were ‘shares’ in the future success of the entire network.

For the first time in history, millions of people around the globe could align their economic incentives by downloading and using the same software. This realisation blew my mind.

What if we could use the same technology to align our incentives in other forms of digital value exchange?

To illustrate the point, I let’s use the example of Facebook. Facebook as a company is a hybrid entity.

It uses a 21st-century technological stack that allows a decentralised creation of value — people create value for each other on Facebook by uploading millions of posts, photos and videos. If you want to access this content — you have to join Facebook.

But economically Facebook operates on the 17th century ‘legal stack’ of a joint stock company. It has to generate returns for its shareholders and legally that’s the primary purpose of its existence.

So value created by millions of users is extracted and converted into capital returns for a small group of FB shareholders. The mechanism used to achieve that is simple — sell users’ attention to advertisers.

I use Facebook as an example here but what I described is a general economic model of the Web 2.0. Leverage technology and free communications to aggregate users attention (forums, social networks, apps) and then convert it to capital via ads, to generate returns for a few shareholders.

But there’s a growing misalignment between the interests of users and companies operating the Web 2.0 platforms. It’s caused by the exponential growth of information while our attention stays limited. Getting attention and converting it to capital (by making people click on ads) becomes also exponentially harder.

To counter this, publishers and platforms respond with more clickbait, sensational headlines and intrusive advertising.

If users then start blocking ads, advertisers move away from banners into the ‘native ads’. So the game never ends.

To address this problem, we would have to reimagine the economic foundations of the Web 2.0 and design proper technologies around them.

Such reinvention was technically impossible even a few years ago. But today with the evolution of the Bitcoin ecosystem and new technologies such as the Ethereum blockchain & IPFS decentralised storage we can start seriously experimenting with alternative models.

There’s a lot of questions that come to mind when you start exploring this topic.

  • How to build a system where various centralised components of Google or Facebook can be ‘uberized’?
  • Is it possible to design incentives in decentralised social networks to achieve similar alignment that Bitcoin did with digital money?
  • How to reward contributors with a stake in the network that’s proportional to their contributions?
  • Authorship, content monetization & advertising — what is their meaning in this new context? Do old definitions still apply?
  • How to address the issue of subjectivity in the evaluation of users contributions.
  • How to combine technology, economics, UX to create experiences that are easy to understand and feel natural to the end users.
  • What metaphors should be best suited to define and explain this new techno-economic model? Decentralised apps, decentralised websites? Or maybe something else.

Together with Kuba Kucharski, one of the most talented developers I know with experience in Bitcoin and Ethereum, we spent many hours discussing these topics and we came up with the concept of ‘userfeeds’ that might form the basis of decentralised social networks.

While we’re still prototyping the PoC we thought we’d share our thoughts with the wider community.

While it’s not a technical whitepaper (we’re working on that), but we believe it should be still valuable to share it at this point.

Part 2. Decentralised Userfeeds — the architecture for a decentralised ‘Facebook’ (and much more)

The web experience today is organised around streams.

Your Facebook wall, Twitter stream, Instagram feed, Reddit’s subreddit or even a notification center on your smartphone are all streams.

Essentially, these streams or data feeds are all series of time stamped events, recorded in platform’s databases, assigned to authors and content.

If you create new content on any of these platforms it’s saved to your personal feed and then depending on the indexing and ranking rules of a given platform, it becomes visible to other users.

The issue is that your data is locked up in the platform silo and can’t be ported elsewhere. Only the platform operator has full access to your data and can offer indexing, filtering and UIs that can’t be offered by third parties. Third parties are only allowed to access data via APIs which are limited to secure the operators monopoly.

So even though you create your own data feed and store it on Facebook, you can’t use this data outside of Facebook.

The emergence of Artificial Intelligence and machine learning exacerbates this imbalance even further. Platform operators can gain competitive advantage by training their AI models on huge datasets created by their users.

In the case of advertising platforms such as Google and Facebook, users effectively train the platforms to serve them more customised advertising.

Because it’s impossible for competitors to access the raw data layer and create alternatives, we’re stuck with the systems that will always direct our attention to content that’s ‘monetizable’ for the platforms.

Is there a solution then?

The Bitcoin experiment proved that it’s possible to create open data platforms which are not controlled by any single party. So in the case of Bitcoin, the blockchain contains the persistent, immutable ledger of transactions. Users can only add new transactions to the ledger but the history cannot be changed. The blockchain is public, readable by anyone and contains the objective version of what transactions took place and in what order.

The idea of Userfeeds is to run a similar ledger, on top of existing blockchains, but instead of time stamping transactions users would timestamp links to content stored on the IPFS storage layer.

The main difference with the financial transactions on the blockchain, is that the blockchain wouldn’t verify the content of these links. The blockchain layer is ‘dumb’ — for it just proves that a particular user time stamped a set of actions at a particular time.

The ‘meaning’ of this actions would be interpreted on the layer above.

By announcing their actions on the blockchain each user over time accumulates a unique footprint of behaviours. All their actions are persistently stored on the blockchain and visible to the indexing bots.

This is what we call a Userfeed. A unique history of actions such as content uploads, likes, votes etc, recorded on the blockchain and controlled by a particular identity.

As thousands of Userfeeds run in parallel on the network, adding new content and actions to their history, a new type of the social open data layer is created.

How we then evaluate these actions and present them to the end users?

This happens on the layers above the blockchain with decentralised indexes and interfaces.

Similarly to how Google indexes the web and offers a search engine UI to the end users, multiple parties could run their own equivalent of ‘Google bots’. These bots would scan, index and filter the public userfeed layer.

The same mechanism would work with UIs. A marketplace of UIs could emerge offering users competing views into the open userfeed layer.

The key difference though is that the ‘transaction data’ would be owned by the users at all times.

Users could switch to a different UI at any time and maintain their reputation and history. Because switching costs would be negligible indexes and interfaces would have to provide the best possible ‘return-on-attention’ for their users.

Why this model aligns user incentives better than the existing one?

By contributing to the underlying open data platform, users build their reputation stake in the entire system. If the platform grows and and receives more attention, the early joiners have the the longest ‘reputation chains’ and therefore will be more visible than the new joiners.

Attention is valuable so users with a lot of attention (high visibility) will be able to monetize this attention directly. Right now, Google and Facebook have monopoly on monetizing attention that’s aggregated by their platforms by inserting advertising into interfaces and indexes they control.

Users don’t participate in proceedings generated from the attention that they attracted with their content. With Userfeeds monetization is built directly into the protocol.

How users can monetize their userfeeds?

Userfeeds can incentivize each other to include certain actions using simple smart contracts and underlying value token of the blockchain (most likely Bitcoin or Ether).

So let’s imagine you are Kim Kardashian and you’re popular on the userfeeds based version of Instagram. Today, if a brand wants to promote their products in your Instagram feed they have to approach you directly or through a middleman and arrange a deal.

With Userfeeds they can directly send a bid offering money for being included in your feed. This way your Kim Kardashian persona can directly monetize their attention and fame in context of a decentralised Instagram.

How would this work? (the bitcoin token is used only as an example — depending on the chain used this would be Ether or other token)

  1. User controlling the userfeed #1 sends a bid to the user controlling the feed #4

2. In this example, user #4 performs a moderator role and user #1 wants to incentivize the moderator to review their submission earlier.

3. Smart contract escrows the money and checks whether the content hash specified by the user #1 appeared in the user #4’s feed.

4. User #4 reviews the content, posts its content hash into their own feed and pings the smart contract.

5. Smart contract verifies that content hash in moderator’s feed matches the one that was submitted by user #1. It releases money from escrow to the moderator.

Wrapping up.

This article is just an introduction to a much larger set of challenges related to building decentralised social networks.

In the following posts, we’ll look into possible applications and dive deeper into the economics of attention that the concept of Userfeeds is based on.

We’re aware that this outline is missing many technical details. These will be published soon in a more technical whitepaper.

Our goal at this stage is to get feedback from the community and possibly secure funding for further research and validation.

Let us know what you think and stay tuned for more.