Ali and Shea wanted to address the problem at a more fundamental level by developing a new secure protocol layer for the Internet by which the identification, money, power, and property could stay with their owner rather than be sucked up to the apps at the top. “I was impressed with Peter Thiel’s perspective,” says Shea. “Why would you want to compete with some existing company, be incrementally more efficient, and make the world only a slightly better place?”
In 2014, they took a $250,000 investment and moved out to Y-Combinator in Mountain View, California, for a stint and demo. Started by the entrepreneur Paul Graham, YC was a kind of reverse Hotel California for nerds—hard to get into and easy to leave. Thiel told the Y-Combinator in 2015 to seek “apparently bad ideas” that “were actually good,” like Dropbox (cloud-based storage) and Airbnb (cloud-based lodgings). Both began nebulously at YC and now have a total market cap of many billions of dollars.
On July 27, 2017, I traveled west to see how the Blockstack people were doing and perhaps help them with a speech. Although still based in New York, Blockstack chose the Computer Museum in Mountain View, minutes from the Google campus, for its coming-out party: the Blockstack Summit 2017. Its marketing chief, Patrick Stanley, asked me to speak on “Life after Google.”
A little more than two weeks before, Ali’s doctoral committee at Princeton had finally approved his dissertation, “Trust-to-Trust Design of a New Internet.” Composed with Shea’s help, it was comparable in its scope and ambition to Larry Page’s “PageRank” thesis at Stanford.
Ali makes the case for a new Internet architecture and then declares that, in prototype, it has already been in place for three years, requiring only 44,344 lines of Python software language code. Google’s famously elegant Chrome browser, by comparison, took up 4,490,488 lines of mostly C++ language code.
The chief technical officer of Blockstack, Ali has created a new parallel peer-to-peer Internet. You can go to its site and download its browser and experience the benefits of a secure Internet where you control your own information.
A leaner and more constrained approach distinguishes Blockstack from Ethereum. Ryan Shea, the CEO, sums it up: “We are going for a much simpler system than Ethereum. With a larger attack surface, more things can go wrong. We are using blockchain and software for the core functions of naming, discovery of routing information, and payments. . . . [C]ore components like identity and discovery should not be done in a way that exposes a large attack surface.”
While Blockstack minimizes the use of blockchain for storage and complex computation, Ethereum burdens its chain with both storage and software loops and recursions. Thus it may become less efficient and less scalable and more complex and vulnerable. While Blockstack focuses on the infrastructural foundation of the network—naming, identity, and pointers to storage—Ethereum has become “a token factory,” in Nelson’s phrase. It provides a broad computational Turing machine for smart contracts and tokens that exposes a large attack surface to external hacks and internal bugs.
While Blockstack is a low-entropy carrier of identity, naming, routing discovery, and property rights, Ethereum is a high-entropy platform for Internet money-making, fundraising, and ingenious programming.
As the Blockstack people readily acknowledge, all these Ethereum “faults” are strengths today. It is Ethereum that has accomplished a spectacular breakthrough, overcoming the fundraising freeze for high-tech startups and fin-tech innovators. But Ali and his team were determined to restore a distributed Internet first and develop financial devices only after trust was restored.
In this campaign, Ali and Shea and their software chief Nelson are part of a throng of hundreds of new companies raising billions of dollars to launch new capabilities for a reformed Internet based on the blockchain-distributed ledger innovations of Satoshi. Ethereum, its ether valued at $60 billion as I write, is obviously the current leader in providing a global distributed platform for new Internet-like functionality. But Blockstack enjoys strategic advantages.
The Blockstack movement is founded on seven key principles:
Distributed cadastre: It assures security through logical centralization (maintaining only a single transparent and immutable view of its “state” of time-stamped records) while being organizationally decentralized (distributing control and replicating ledger accounts across all the nodes of the network). Satoshi’s blockchain is the first embodiment of these two apparently contradictory concepts, which evoke the medieval concept of the cadastre, a public record of all real property in a jurisdiction.
Maximum scalability: It assures performance and scalability by separating the control plane (insulated in the blockchain) from the data plane, which can be dispersed across the network. This principle saves the blockchain for critical path functions of identity, payments, security, and discovery, while relegating bulk data storage and complex processing to any number of diverse cloud and edge facilities.
Single prototype: It establishes property rights by upholding the principle and precedence of singular documents, time-stamped, recorded, and algorithmically allocated. Because each item—even copies—always bears different immutable time-stamps, property claims can always be differentiated.
Parallel complement: Its expansion confers benefits of privacy and property on its participants without directly threatening incumbents, whose facilities are used by the system as a utility. As the Blockstack realm grows, its influence and power will rise, and incumbents will be motivated to accommodate it.
Low-entropy carrier: It provides a stable, predictable, and monolithic foundation for the high-entropy metaverse on the edge. It avoids capricious changes of law and structure that confuse entrepreneurial planning on the edges and cause security problems.
Free migration: It allows unobstructed passage from one blockchain or network to another without locking in users. This crucial feature is enabled by Jude Nelson’s coding for virtual chains, which run on top of the fundamental blockchain as Java Virtual Machines run on top of many operating systems.
End-to-end, trust-to-trust: All nodes rest on roots of trust that are not heavily dependent on outside authorities.
Blockstack’s initial goal was a domain name service (DNS) installed in a blockchain. Translating natural language names and site titles into Internet address numbers, a DNS participates in your every move on the Net. A DNS constitutes a Trusted Third Party such as Verisign or GoDaddy or, increasingly, Google’s own free public DNS. It has become another case of segmentation of the Net and a point of vulnerability for phishing to usurp names and identities.
Moving the DNS to the blockchain, Blockstack eliminates an important point of vulnerability on the Internet. Names are time-stamped, immutably stored, and distributed to all the nodes on the Net through the blockchain ledger. At first, Blockstack chose to use the Namecoin blockchain, one of the first bitcoin rivals, optimized for storing immutable names. But by 2016, Ali and Shea noticed that Namecoin was increasingly vulnerable to attack by an increasingly concentrated group of miners. Scrutinizing data on all the available blockchains, including Ethereum, they discovered that by far the most robust, secure, and reliable blockchain was Satoshi’s bitcoin blockchain. Blockstack now faced a critical test, having to move some eighty thousand subscribers from one blockchain to another. Fortunately, the team had already anticipated this kind of challenge with Jude Nelson’s virtual chains in the code.2
Nelson recalls, “Soon we intend to give each application the ability to form its own blockchain securely. I’d argue that this makes it easier for average people to reap the business successes of blockchain-powered companies, since (1) there are more of them now, and (2) they all have tokens whose value may appreciate. Ethereum sort of does this with ERC20, but it doesn’t work at scale. Plus, each ERC20 application is tied to the fate of Ethereum, which may make them less likely to survive in the long run.” Unlike Ethereum with its esoteric Solidity, Blockstack makes its platform programmable in Brendan Eich’s JavaScript
, the world’s most widespread computer language.
At the end of 2017, Blockstack launched a token sale to finance the system of distributed names. Raising $50 million, it was on its way, building a new trust, ID, and transactions layer for the Internet. Better than cash, it offers exchanges that conceal personal information but also allow complete proof of compliance where necessary. Not only can you exchange anonymously, you can also prove your record of behavior if a government makes untrue charges or a business makes spurious claims. This combination of security and attestation makes cryptocurrencies a fundamental improvement on existing moneys—a remedy for the monetary turbulence of our time.
CHAPTER 16
Brave Return of Brendan Eich
“Hello. I’m to blame for JavaScript.” A slightly pudgy, affable, fifty-five-year-old American computer programmer stands on stage in the gilded Vienna Volkstheater. This is Brendan Eich, the co-founder of Mozilla and the inventor of the Firefox browser, starting his 2016 TEDx talk “How to Fix the Web.” He bows, with his hands on his head miming his embarrassment.
The young Eich wrote JavaScript in ten days in 1995 as a prototype for Netscape; its name reflected the fame of the better-known Java, developed earlier at Sun by James Gosling and promoted into an industry standard by Eric Schmidt. Eich’s JavaScript soon eclipsed Sun’s Java as the most widely used computer language in the world.
For years, Eich, like his programming language, went from strength to strength. By 2014, he had risen to be CEO of the Mozilla Foundation, with an office next to the Googleplex in Mountain View. Eich had turned fifty by then and already seemed to view his career as wrapping up. With characteristic self-depreciation, he had written in his blog the previous year, “Mozilla is 15. JavaScript is nearly 18. I am old. Lately I mostly just make rain and name things. . . . Doesn’t make up for not getting to name JavaScript.”
But it would not be an easy glide into retirement. The discovery that back in 2008 Eich had donated a thousand dollars to the California Proposition 8 campaign for traditional marriage caused an uproar, despite his having been described even by people who disagreed with him on the issue as “a thoughtful, nerdy, humble guy—the kind of guy you want to corner at a party and talk about Web technologies with for an hour.” Eich became an unlikely scapegoat, and his time at Mozilla was suddenly over.
By this point, the powerful programming language with the second-hand name had revealed its own secret side. By providing a way for webpages to set cookies, JavaScript had become a crucial component in targeted ads and invasive tracking of Web users. Cookies are a memory element on your computer that a website can control. They can be sweet when they remember you after you leave a site and allow you to toggle back to it without reentering your user name and password. They are a menace when they are used by rogue websites to insert malware on your machine.
After his sudden ouster from Mozilla, Eich seemed renewed. Returning to programming, he launched the revolutionary new Brave Browser that remedies the bad effects of cookies and turns the tables on every top-down Internet empire. He financed Brave with one of the first, most lucrative, and most strategic of crypto-token sales. In this sale, Brave raised some $36 million in a couple hours—which then multiplied when the price of Ethereum’s coin soared.
These crypto-token sales, known as “initial coin offerings” (ICOs) are a type of cryptocurrency crowdfunding. In generating these tokens, entrepreneurs have tapped as much as $7 billion in new capital by essentially pre-selling unbundled components of equity in the guise of products to be developed. Ethereum, as an open-source “virtual machine,” allows end-users to construct specific binding programs, scrupulously assuring compliance with regulations. Thus it has become the preferred token engine.
The first such token sale happened in 2013, after President Obama signed the Jumpstart Our Business Startups (“JOBS”) Act, which seemed to bless this kind of expansion of startup money from non-credentialed investors. Tokens represent not ownership shares of a company but rather various goods, services, gift cards, and other elements of a company’s value proposition. Often issued by the millions or more and initially selling for millicents, they create a community of interest for a project without precisely defining the purchasers’ rights. Although 46 percent of the tokens issued as of this writing have already failed, becoming worthless, all tokens are not alike. Those that work offer participation in a new architecture for an afflicted world economy and dysfunctional financial system. Token sales have clearly replaced IPOs and other equity issues as a fundraising device for tech startups.
Now in 2018, however, everyone involved in the field is nervously watching the Securities and Exchange Commission. Having suppressed IPOs so thoroughly, the SEC has turned its sights on ICOs as well. The leading lawyers in this field believe that such presales of goods and services—to be supplied or even defined, for the most part, later—skirt the mandate of the SEC and even its jurisdiction. After all, companies sell goods and services all the time in a variety of ways without any thought of the SEC. But the commission begs to differ. Deciding that virtually all tokens are securities and thus indeed under its jurisdiction, the SEC threatens drastically to increase the legal cost of cryptographic innovation in the United States. The danger is that it will extend the doldrums into which it has led the entrepreneurial economy and drive the industry out of the country.
Having already had a fabulously successful token sale, Brendan Eich speaks from the other side of the looking glass. He is one of the few people in the field who seem totally unruffled. And his aim is high. He conceived these “Basic Attention Tokens” to bring down Google. Or at least send Page and Brin back to the drawing board for a new strategy. The mild-mannered Eich will hit them with a billion BATs.
When I wrote Life after Television, I expected that the efficiencies of an interactive Internet would lead to a more targeted and effective advertising system that would deliver only the ads the viewer wanted. I thought the balance of power would shift from advertisers to customers. As Eich observes, “That didn’t happen. Instead, the ad-tech ecosystem became a bewildering variety of middlemen and complexity. . . . ”
“Worse,” says Eich, “users have lost their privacy; they face increasing malware, pay high charges to download ads they don’t want, and suffer slow speeds. Publishers have lost billions in revenue while fraud has skyrocketed. And advertisers face poor reporting and targeting.”
Brave’s compendiously cogent and scrupulously documented white paper from March 2017 details this crisis of Internet advertising. The situation is winner-take-all. Ninety-nine percent of the growth goes to Google and Facebook. Publishers—whether of websites, books, games, or music—are left with the final 1 percent. It is fraught with fraud. In 2016, fake ad demand generated by Internet bots cost advertisers some $7.2 billion, with ad malware to trick users rising 132 percent since 2015.
The advertising catastrophe is most acute in the fastest-growing and most inviting market in the industry—smartphones. Customers increasingly are paying their bandwidth suppliers not for the content they seek but for the noise of ad delivery overhead. At popular publishers’ sites, as much as 79 percent of the mobile data are ads. On average, smartphone users pay twenty-three dollars per month for ads, trackers, scripts, and other diversionary chaff that bears malware, slows load-times, piles on data-plan costs, depletes battery life, and tramples privacy and property rights.
Brave’s Basic Attention Token white paper drills in on Google, which “is at the center of the existing digital advertising ecosystem. They benefit from the complexity and opacity that defines it. BAT intends to empower the very users and publishers that are receiving less than they should.”
Regardless of what Google does, says Eich, the current system is unsustainable. It frustrates users with slow loads, wastes bandwidth on unwanted ads, and wipes out publishers’ profits—and it’s not even secure. As Jonathan Taplan documents relentlessly in Move Fast and Break Things, the Google regime of
aggregate and advertise is drastically reducing the income of musicians, journalists, and other producers of the content that Google seeks to monetize with ads and search.
The torrent of advertising has provoked some 87.5 million Americans to resort to ad-blockers, which may ultimately bring down the whole kit and caboodle, including Google. The most avid ad-blockers are millennials, whose typically limited bandwidth and high-cost data connections leave their smartphones clogged and jammed by advertising and its overhead.
Google, seeing the writing on the wall, now provides its own blocker for “unacceptable ads.” But traditional push-advertising is a failed technology, regardless of “acceptability.” No one wants to sit through an ad, however cleverly or deceptively presented, before watching a YouTube video. As the ad-free subscription service YouTube Red grows more popular, Google is discovering that no one really wants any gratuitous ads. They are value-subtracted, minuses, or even mines—as Google itself acknowledges when it lets customers pay for their removal by subscribing to ad-free services.
Identifying the forces at the heart of this situation, Eich quotes Herbert Simon, the Carnegie Mellon information theorist: “What information consumes is the attention of the recipients. A wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information sources that might consume it.”
When information becomes abundant, time remains scarce. What Herbert Simon, Esther Dyson, Tim Wu, and their many disciples call attention is essentially just another word for time. As I explain in The Scandal of Money, time translates into the economy as money.
Life After Google Page 18