The world of cryptocurrency is weird and complicated.
In this four-part series, Information Age looks at the history of crypto, how you can get your hands on some, what you can do with it, and the ramifications of this emerging technology.
In Part I of this series looked at the history of the first cryptocurrency, Bitcoin, and the socio-political milieu from which its mysterious inventor Satoshi Nakamoto wanted to break free.
Now we will finish the series with a glance at the ways cryptocurrency and bitcoin developers are looking to fundamentally change the structure of digital technologies to decentralise the internet and empower users.
The ongoing mass migration to cloud services has consolidated internet infrastructure into the hands of tech giants like Amazon and Microsoft which together have an estimated 52 per cent share in the global cloud market.
For Amazon, it’s a powerful market force – Amazon Web Services (AWS) earned more profit than Amazon’s North American retail arm last year – so the company can use it to subsidise other aspects of the business, like pushing prices down to out-compete online retailers.
Amazon’s dominance is especially visible when an outage causes entire chunks of the internet to go offline.
But the backbone of the internet doesn’t have to be decided by a handful of Silicon Valley tech companies.
In the same way Bitcoin let average computer enthusiasts mine their own currency, projects like Filecoin and Siacoin have found a way to cryptographically distribute digital assets across thousands of hard drives around the world.
Miners of these coins offer drive space on their computers which are used to run secured peer-to-peer storage networks that can be used for running both decentralised and centralised applications.
For putting up some hard drive space and supporting the network’s diversity, you get rewarded with cryptocurrency.
By spreading the files out across machines these networks have, in principle, a high failure redundancy while helping dilute the corporate power of data storage and internet infrastructure.
The Internet Computer
One of the latest projects hoping to redefine the internet through blockchain is the Internet Computer from Swiss non-profit the Dvinity Foundation.
Dvinity claims the Internet Computer is “the third great innovation in blockchain”, following the footsteps of bitcoin as digital gold; and ethereum which enabled decentralised finance (DeFi), because it enables smart contracts to let developers build scalable, fast, and secure web services.
“There are lots of entrepreneurs and investors that want to build interesting new services,” said Dvinity CEO Dominic Williams said.
“The problem is that oftentimes those interesting new internet services would depend upon content, functionality, and user data that exist inside proprietary services owned and controlled by big tech.”
Internet Computer is built on independent data centres which are monitored and controlled by an overarching decentralised governance structure, the Network Nervous System (NNS).
Each data centre will host a series of node machines that are tied together into subnets. The subnets host software canisters which are where developer and user interaction happens.
Subnets make sure canister data remains copied across all network nodes, keeping the network consistent and updated.
Changes to the network will need to be voted on and agreed to by people staking Internet Computer Protocol (ICP) tokens to the NNS, thus spreading the decision-making further out than a single corporate boardroom.
Dvinity claims the Internet Computer will be all the best parts of blockchain technology – distributed resources, decentralised governance, tamperproof, cryptographically secure – but with the network speed and ease-of-use that end users have come to expect from web services.
It’s an ambitious project that seeks to both displace cloud computing tech giants and replace many of the existing parts that play a crucial rule in keeping the internet running – no more DNS, web servers, or the occasional CDN outage.
Last month, the Internet Computer’s source code was publicly released, along with the Internet Computer Protocol (ICP) token that helps manage the network’s governance.
When it hit cryptocurrency exchanges, ICP’s price took off, reaching over $600 within two days of its launch.
Since then, appetite for ICP has cooled considerably with its token price and market capitalisation continuing to slide – ICP is worth about $75 at time of writing – despite the crypto market trending being back up overall.
Owning digital assets
Regardless of whether the Internet Computer takes off or fizzles out, it marks another step toward a blockchain future that seeks to spread out control of digital infrastructure and assets.
Artists and celebrities have seen non-fungible tokens (NFTs) as a means of selling their art in a way that supposedly ensures value for buyers.
Similarly, video game developers are using blockchain and cryptocurrency as a way of securing funding while adding a new dimension of gameplay for players.
In Australia, Immutable has built an NFT solution for Ethereum on which it has already released Gods Unchained – a card game similar to Magic the Gathering and Hearthstone that uses NFTs to give players the ability to own and trade cards in a way that mimics real world trading card games.
These NFTs represent in-game assets and the business model is like micro-transactions common in many games.
The key difference with NFTs in blockchain games is how they can be traded on secondary marketplaces, giving players the chance to earn real-world money through their gaming.
Guild of Guardians’ game director Derek Lau calls it “play and earn”.
“You’re playing the game, you’re having fun, you’re strategising with friends – there’s all these different elements of it – but you’re also earning money as well,” he said.
“That’s where we think the industry is heading and we’re big believers in the potential for disruption.”
The key difference with blockchain gaming will be the ability for gamers to convert in-game assets and currency back into real-world money via cryptocurrency.
It opens the gaming world up for less one-sided transactions, meaning players won’t just give money directly to developers for the privilege of playing with certain items or characters, and instead will take full ownership of the asset itself.
Blockchain gaming and distributed cloud infrastructure are extensions of Satoshi Nakamoto’s initial vision for a global decentralised currency where more control is laid in the hands of the many, not the few.
Cryptocurrency and blockchain technology may take cyberspace closer to the vision of techno-utopians like John Perry Barlow who, in his Declaration of the Independence of Cyberspace claimed the internet was “a world that all may enter without privilege or prejudice accorded by race, economic power, military force, or station of birth”.