(That Frees Our Commons)

It is a hub and spoke world. We just live in it.

For now.

The token wire cutters are coming. Commonists will wield them. They will use them to free the commons.

Commonists will return the commons’ scarce resources, not to their rightful owners, but to their users. This is like cutting the barbed wire around rolling green pastures, and waiting for the bison and the wildflowers and the wolves to return.

Return isn’t the best word. Tokens don’t take us backward. They take us forward. They will make Web 2.0 look like a brief interlude, a roughly 25-year period between the invention of the Internet commons and the invention of commons nested within the Internet.

In between, during that quarter century of Web 2.0, hub and spoke ruled, just as sponges or trilobites had their period of dominion.

Hub and spoke implies centralization. Feedback flows through the hub before going out to network nodes arrayed in a “star” pattern. The hub, naturally, can control that flow. Therein lies a fundamental contradiction: the decentralized Internet commons was, shortly after forming, populated with centralized networks owned by private firms. How did this happen?

To see why a species dominates an ecosystem, we look to its unique adaptation. In this case, the adaptation was not great UX, first-mover status or superior data mining. Instead, it was camouflage. Hub-and-spoke networks have the uncanny ability to buzz out a hologram when one passes by. It makes them appear decentralized. This, more than anything else, was responsible for their success.

Facebook is perhaps the best example. If one draws a network “graph” — a connection diagram — of Facebook social interaction, it looks lumpy and unorganized (scale-free, in network terms). Basically, any user can form connections with any other user, seemingly independent of a “hub”. Network scientists study networks like Facebook and conclude they have scale-free properties: i.e., they are “small world” (six degrees of Kevin Bacon), and they are dominated by super-connectors (hence the lumpiness). Also, because the scale-free social network is free for anyone to access, it looks a lot like a commons.

Behind the camouflage, though, we see a different network structure. Facebook is not decentralized at all. The firm’s true strategy is to track data about our activities that it routes through their private servers, the “hub”. There, Facebook mines the data to create predictive models about our behavior, and it rents these algorithms to advertisers that want to influence us. Rather than being free, access to these algorithms costs a fair bit of money: enough to earn the company $30-odd billion in annual revenue.

Facebook is not the only Web 2.0 firm to pull off this camouflage.

Ebay appears like a marketplace where anyone can transact with anyone else. A network graph of these transactions shows all manner of connections: super-sellers with lots of connected nodes; buyers who are sellers themselves with yet more nodes connected. This sounds a lot like scale-free. What isn’t decentralized is storage of our reputations, the thing that makes Ebay possible: these are held in a central server. They have value, yet they are not ours. We cannot take them to other marketplaces. The company monetizes them. Ebay is an identity and reputation “hub”.

Uber, as we noted previously, seems scale-free in that drivers and passengers can connect with each other on a decentralized basis. Uber does not own or control them. What is centralized by Uber, though, is an algorithm that matches drivers with passengers based on location and traffic pattern (itself a derivative of location) data. Uber is a GPS location data “hub”.

In each of those cases, a hub-and-spoke, centralized network camouflages itself as a scale-free, decentralized one. To find out why each firm is truly successful, we have to peer behind the illusion. We find there a scarce resource that the central authority has captured and monetized. Monetizing it, in turn, allows the central authority to “give away” the “product” to the user, which energizes the hologram that looks like a commons. The more people show up to that illusory commons, the more monetization happens, the better the commons hologram looks. This is Web 2.0’s killer adaptation.

The danger to Uber, Facebook or Ebay is not that a new company will make a better-looking fake commons. This long ago stopped being about who can build the best product or user experience.

No, the threat they face stems from tokens, but not because token-based, decentralized platforms are better. Instead, it’s because tokens expose the camouflage. They break up the hologram, so it sputters and flickers out.

Tokens will attack Web 2.0 in part by allowing users to monetize the algorithms that emerge from their networked interaction. All this requires is for token-based blockchain platforms to incentivize users to track and store their data, and permission others to see it when they want to. This simple act of returning both the data and control over it to the user creates the basis for monetizing algorithms. Platform after platform will have this architecture: enterprises paying tokens to users that will agree to share their data; and then using that data to add value to the user. We will see it in healthcare, insurance, IoT devices.

The pushback against blockchain giving us back the value of our data is that it’s not worth much. Facebook has about 2b users and $30-odd billion in revenue. That works out to only $15 per user per year. Now, 20% of users are responsible for 80% of content. Assume a token that gets paid out more to higher-weighted users. Even then, the 20% would only command about $60 p.a. So, what is the big deal about a Commonist approach?

The Commonist wire cutters are not just there to hand back users their money (although it helps). They are also there to make the data work for the network. What if we could use that data for causes other than Facebook’s profit? For instance, to help us band together to improve our health, or generate more meaningful social connections?

This is the point at which traditional economics fails us. It wants to measure everything in terms of utility, and, in turn, measure utility in terms of money. It uses “opportunity cost” as the measuring stick, i.e. the value we lose by going with a hub and spoke network and not a decentralized scale free one. “Just tell me what that value is in money,” and economist would say, “and we’ll throw it in with the $15.”

Except, economics says little about how scale free networks behave differently than hub and spoke ones. Sure, economics mentions “network effects”, but micro textbooks barely touch on it. Luckily, we can turn to network-based sciences like evolution and complex systems for answers.

Scale free networks are different. They feature many more degrees of freedom of interaction and connection. That unconstrained interaction produces co-evolution, the simultaneous adaptation of network nodes responding to network feedback. That co-evolution produces novelty: in the case of biology, the emergence of new species doing different types of work: flying, tunneling, thinking. Emergence is central to networks. It essentially results from decentralized computation (in the case of life, of evolutionary fitness algorithms). Sound familiar? It should. This is what blockchain offers us on a societal level.

Let’s say we have a platform to share lifetime health data of all types (full disclosure: I’m building a version of this at ConsenSys). The user can permission anyone to see it. On this platform, users can band together in communities, and they can invite any enterprise to view their data and help them, but on their own terms. What kinds of interactions could result? We could imagine biking groups competing to raise their VO2 max and cities to lower their aggregate blood sugar; or a big Web 2.0 firm promising to help people outperform the predictive model of their health. The point is, there would be no central authority to guide the interaction, and the users would benefit from emergent novelty that we can’t even imagine. Some of this we can assign a dollar value to; but others are, as the ad says, priceless.

Hub and spoke networks are, by comparison, one trick ponies. Uber’s sparks a virtuous circle of more drivers and more passengers. The circle drives down wait times for both. This is “work” that creates “value”. Similarly, the interaction of buyers and sellers in Ebay generates robust reputations that enable yet more interaction of that type.

Don’t get me wrong, all that hub and spoke work seems like a “nice to have”. However, Web 2.0 hasn’t exactly led to barn-burner economic growth. This may well result from hub and spoke’s “poverty of emergence”. We would get much more decentralized computation and “work” done with unconstrained scale-free networks. What is happening is hub-and-spoke is like an invasive species. Its camouflage adaptation is allowing it to actually constrain our economy. This is not disruption. It should be called constriction.

Commonism is about freeing the data commons, making it, again, the fountain of unconstrained emergence that fuels novelty, innovation and growth: work, on a massive scale. The token wire cutters are coming. They can re-energize our economy, and that statement is not based on idealism or wishful thinking, but on a clear view of the role that network structure plays in driving network behavior. Commonism is fairer, more ethical, more egalitarian; it is also more rigorous than economics when it comes to understanding the possible network futures we face, and the network path we should take.

Commonism is the antidote to Late Capitalism. Join it. Wield the token wirecutters. It’s a hub and spoke world: for now, but not for much longer.

This is the third article in a series on blockchain tokens and their meaning: