Decentralized discovery is the missing piece in the blockchain economy

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There are many reasons why decentralized is better than centralized. However there is one reason why centralized still wins – discovery. There is no value being on the decentralized platform that is perfectly open, public, neutral, borderless & censorship resistant if few people find you there. That is why decentralized discovery is the missing piece at the infrastructure level that we explore in this chapter.

This is Part 1/chapter 18 in The Blockchain Economy book. This serialised book is a practical guidebook for investors, entrepreneurs and employees who want to learn how to prosper during the transition to an economy where value exchange is permissionless and disintermediated. For the index please go here.

YouTube crypto content ban illustrates the problem

When YouTube banned many crypto content creators in December 2019, many people suggested that the crypto content creators abandon the evil centralised YouTube/Google in favour of one of the many decentralized alternatives to YouTube. This is where two worlds clashed. The crypto content creators believe that decentralized alternatives to YouTube that are open, public, neutral, borderless & censorship resistant are a good thing. But their site requires enough people people to view their content to keep sponsors/advertisers happy. They need to be discovered.

Centralized discovery is a solved problem. All the Big Tech companies do this well. However, decentralized discovery is a tough problem.

Why decentralized discovery is so hard

Think about what has to happen for decentralized discovery to work. Somebody who never thinks for a moment about the difference between centralized and decentralized has to find something that is stored on a decentralized service.

The first problem to solve is technical.

Microservices Swarm meet Blockchain

Microservices – also known as the microservice architecture – is an architectural style that structures an application as a collection of services that are:

  • Highly maintainable and testable
  • Loosely coupled
  • Independently deployable
  • Organized around business capabilities
  • Owned by a small team

The microservice architecture enables the rapid, frequent and reliable delivery of large, complex applications. It also enables an organization to evolve its technology stack.

For more on Microservices please go here.

To understand swarming, think of a flock of geese or other natural adaptive systems – where nobody is in charge. Adaptive systems are naturally decentralized and resilient and antifragile.

Many developers think Blockchain is just marketing hype, a slow distributed database at best. You hear that opinion a lot on sites such as Hacker News where developers hang out online. Much of the criticism is valid – the Blockchain space has more than its fair share of hype masters.  Yet Bitcoin is a great example of an adaptive system that is naturally resilient and antifragile and that already works at scale. 

Technically, swarming uses techniques such as message queues that anybody who has worked on high speed trading systems will be familiar with. For a deeper dive, please go to this hour long video on YouTube.

Once there is a technical way of doing decentralized discovery, the user access problem needs to be solved. For that we need a Duck.

Duck Duck Go could solve the user access problem

I switched to Duck Duck Go a few years ago. It took a few seconds to change my default search engine in my browser and the results have been good enough. That combination of low friction and good enough plus a firm commitment to privacy has got Duck Duck Go a lot of traction. That matters because Google lives off advertising and tracking us, so although they can solve decentralized discovery at a technical level, they are not motivated to do so.

Watch this space, it could get interesting. If you are working on a solution to the decentralized discovery problem please get in touch with us.

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Market based interest rates on DeFi during the days of negative interest rates – a fun topic for Thanksgiving 

Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is CEO of Daily Fintech and author of The Blockchain Economy. The path to mainstream adoption of Bitcoin is through people living with failing currencies & hyperfinflation They see Bitcoin as a way to put food on the table. That does not help you […]

The post Market based interest rates on DeFi during the days of negative interest rates – a fun topic for Thanksgiving  appeared first on Daily Fintech.

The PewDiePie deal with Dlive is a big move forward for decentralized Blockchain media

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TLDR. Centralized media (Facebook, Twitter, Google/You Tube etc) is in a perfect storm of privacy concerns/regulation, censorship/deplatforming and the resistance to advertising due to adblockers and runaway bots. The idea of decentralized media via immutable permissionless Blockchain networks is appealing as a solution. Yet the status quo seems to prevail and radical decentralzsed alternatives such as Diaspora have failed dismally in the past. It is possible that a hugely popular gamer, PewDiePie, and his deal with Dlive could be an imperfect bridge to that decentralized world.

This update to The Blockchain Economy digital book covers:

  • What is DLive?
  • My censorship is good, your censorship is bad
  • The PewDiePie deals shows that DLive understands the real world
  • When will Fortnite use BTC for in-game purchases?
  • Context & References

What is DLive?

DLive calls itself a “disruptive live streaming platform”. It was built using Lino, a decentralized blockchain that was founded in 2017, funded with $20 million and launched in September 2018. It has about 30 employees.

DLive reports 3 million monthly active users and 35,000 active streamers. This is not a science experiment.

Dlive uses Lino Points to pay content creators. Each Lino Point is worth $0.012, and can be acquired through using PayPal, Xsolla, or cryptocurrencies. Content creators receive up to 90% of the Lino Points they earn (ie Dlive takes 10%, which is a lot more transparent than YouTube).

My censorship is good, your censorship is bad

What speech should the media owners censor in a polarised world?

Social media is now so mainstream that media owners have to face the awful choice of which extreme views they should censor in our totally polarized world. It is a lose/lose proposition; they will alienate one side and then to compensate for bias will alienate the other side.

Your vile content is my free expression and vice versa.

But who cannot love PewDiePie?  Not being of the gaming generation I sought an opinion on PewDiePie from that generation and got two thumbs up.

Payment in BTC not BAT or Steem Or LINO

An early attempt at decentralized media via immutable permissionless Blockchain networks is Steem. While I love the mission, I am a sceptic/bear on Steem for reasons I outlined in this post. The TLDR summary, the flaw is funding via a SpeculationCoin (aka Tokenomics). Another Tokenomics approach is Brave (with their BAT token) and they are hitting issues as Gab is forking Brave.

Dlive may suffer from the same problem. Creators get paid in LINO points. If this is an ERC 20 Token that is easily convertible to BTC or whatever cryptocurrency you think has value, then cool. In short, fungibility matters.

The PewDiePie deals shows that DLive understands the real world

Here is the news about PewDiePie and DLive,

PewDiePie, the Swedish gamer  whose real name is Felix Kjellberg, has nearly 94 million YouTube subscribers. He is a star, perched atop the digital power law. PewDiePie has been critical of YouTube. So it was a smart move for DLive to do a deal to bring PewDiePie to this decentralized Blockchain based competitor to YouTube.

This is not the sort of move that Diaspora made and that is one reason why Diaspora never made it outside the techie visionaries/early adopters.

When will Fortnite use BTC for in-game purchases?

Fortnite is getting massive traction in the gaming world. If you love PewDiePie you probably love Fortnite.

If Fortnite use BTC for in-game purchases (rather than a proprietary token), then decentralized  media will go mainstream. Dlive could be an imperfect bridge to that world.

Context & References

Blocks of disruption hit the media business as privacy finally hits the front page

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Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is CEO of Daily Fintech and author of The Blockchain Economy.

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I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

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Ready for a dynamic, digital, and unstable world, like in nature?

Last week Christine Lagarde moderated a panel with two Central bankers (European Central Bank and CB of Kenya), an incumbent (JPMorgan) and a disruptor (crypto fintech company Circle). The topic was “Money and Payments in the Digital Age.”

CCN covered the panel discussion with a narrative of `In crypto we trust`. Coindesk covered it with a rhetorical question narrative of `In Math we Trust?`.

It is already six months since I covered Blockchain from a policy angle in `In the EU Blockchain Resolution we Trust`. Building Trust through disintermediation is the line of thinking behind the Blockchain Resolution which is still a work in progress. Europe continues to be the thought leader at the policy level with this initiative which has immense potential. During the same period, I had the privilege of attending the talk of Dr. Zhang on the topic “In Math we Trust” and moderating a session with him at the LCX Blockchain Series, in Vaduz, Liechtenstein. Dr. Zhang, was a renowned Chinese American scientist, a physics professor at Stanford and I remain inspired by his narrative.[1]

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The powerful origin of the narrative `In Math we could Trust`

Let’s go back to the Greeks where thought leadership of all theoretical and foundational concepts started. Dr. Zhang spoke about Archimedes, his Eureka moment which permitted gold to become a medium of exchange. He spoke about the 2nd law of thermodynamics which states that the natural world is mostly in disorder and rarely in order (consensus state). In nature, order and consensus can only exist in subsystems. And when this happens it happens at a cost. In physics parlance, in order to reach order and consensus in nature, there needs to be some entropy (disorder) produced and dumped outside the subsystem for it to reach consensus.

Let’s tie this to the computing world. In distributed computing, the Fischer-Lynch-Patterson theorem is the analog of the 2nd law of thermodynamics and proves that there is No deterministic algorithm that can be a master algorithm for the system to reach consensus. So, once again science like in nature, proves that to reach consensus we need to pay a cost. This is where the Proof of Work, an old cryptographic concept, comes into play.

One way we can reach consensus regarding transactions is by using Proof of work. This is a way, to reach consensus on the Temporal Order of transactional data. The cost we pay is the amount of electricity we burn to solve the puzzle (which is on the other hand easily verifiable). Consensus on time-stamped verification of transactional data, can be reached through this process that dumps entropy (electricity in the case Bitcoin Blockchain) outside the system.

Our world historically has been oscillating between centralization and decentralization.

big bangLooking back in history for more evidence: The circuit switch technology created the then seemingly indestructible monopoly of ATT. This monopoly was only destroyed form the decentralized TCP/IP protocol that gave birth to the internet and to the gradual adoption of VOIP. As the internet became the dominant technology, several other monopolies grew out of the content generated on it; e.g. Google and Facebook. And now, we are in the beginnings of what Paul Nunes coins as the next Big Bang disruptionBlockchain is threatening the powerful giants built on the first open source protocol, the internet, with a wave of data decentralization.

The internet has evidently increased connectedness. However, its design is not a collaborative one. The world that is built on top of this open protocol, the internet, is not a world that is more fair and that builds trust. The “trading” or any exchange of information on the web, is not collaborative. The central entities, the Googles and Facebooks, are the ones that are organizing the information and the data on the web. The first, step in the process of decentralizing the web, is to break these data monopolies.

Blockchain is a decentralized mechanism in which trust is built-in with mathematical formulas. As Plato preached, mathematics is the ONLY internally consistent language. As Nick Szabo preached, in his God protocols, mathematics is the language of God. God in this context is the entity that acts in the interest of everybody.

Blockchain protocols are presenting us with an opportunity to build on protocols with built-in consensus mechanism governed by math. Mathematics governance guarantees fairness and trust.

Dr. Zhang argued in this speech that we humans have developed languages and law in our attempts to organize and collaborate in societies and reach consensus on various issues. He now believes that we are stepping into the most advanced era in which Mathematics will be trusted in order to reach consensus. Admittedly from all the sciences (social, political, physics etc.) mathematics is the branch of knowledge with the highest level of consensus and in which we trust.

Dr. Zhang emphasized that we live in a world that is based on theoretical mathematics that were developed with no real-world application in mind and are now being used in all sorts of experimentations as we are in the early stages of the blockchain development. From hash functions to more such `abstract first` math concepts.

  • Public/private key based on elliptic curve
  • Cryptographic hash function
  • Zero-knowledge proof. Zk-snark and Zk-stark
  • Secure multi-party computation, differential privacy
  • Formal verification
  • Homomorphic encryption
  • Dag, directed acyclic graph: money grows on trees!

Source: from Dr. Zhang`s talk; see full video here.

The choice we have is to `Trust in Math`

 Look at the 2nd law of thermodynamics, nature, and the lessons from the earlier tech disruption waves. Once we embrace the dynamic, digital, and unstable world we live in; we will realize that we have a great opportunity to embrace theoretical mathematics in designing governance and the Internet of value.

It will be a trustworthy design with inherent instabilities as in nature and as outlined in the 2nd law of thermodynamics. We have to move away from the belief that forced consensus mechanisms like regulations can provide stability.

[1] I delayed this post because of the unfortunate and sudden passing away of Dr. Zhang late last year.

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

Subscribe by email to join the 25,000 other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).