A new model for the internet

Ownership at internet level

One could think of blockchain as the economic operating system for the new internet that we call web3. Blockchain governs digital identity, digital ownership of the representation of tradable items of value and truly digital money. This ownership is at the level of the internet. This new internet is about decentralised control of all that digital footprint in this new data economy. That word control is about governance of data by both the data owner and the community of stakeholders with a stake in the trading of that data. Two key pain points of the internet today is the need to establish your identity for every website whose services you use, and that website is the gatekeeper of the digital representation of things you own on that website. It is not a great experience if you lose your LinkedIn or Twitter identity if you are censored.??In this new internet, your ownership of both your identity and ownership of the digital representation of things you own and can therefore trade, is established once, and is governed by the community to be both censorship resistant to any one gatekeeper and to be interoperable across the different communities of stakeholders that make up this new internet.????

“Data is the new oil” [20] so data owners will no longer be willing to pass valuable data to these gatekeeper intermediaries for business-to-business (B2B) shared process optimisation and reconciliation, let alone to create new business models and new markets driven by ecosystem collaboration. Oftentimes this data is held by the little guy, the small business, or the individual consumer. Data owners need to keep control their data, for sure, to make sure that others don’t encroach on their business. If I share my customer base and orders with a central database what stops those who control that central database from expanding their business to put me out of business??

Only blockchain allows ecosystem collaboration where members retain governance of their data. The market potential for platforms to support this marketplace is huge as buyers and sellers of data collaborate to create insights to drive the next generation of innovation in data driven services.

Internet transaction superhighway

It's not a bad thing to mentally go back to 1989-95 period. This was the first implementation of the internet, or web1. This gave us a read only "internet of information." It gave us an "information superhighway." Then from 1997 or so onwards, adding read and write capability along with cookie type tracking, gave us the advertising monetisation model of social media or web2.?Now dial forward to 2008 and we now have a re-implementation of the economics of the internet to give us a "web3 - Transaction superhighway." In the words of Ginni Rometty, "What the internet did for communications …blockchain will do for trusted transactions." [21] The problem which we're now fixing is, how can I transfer value, in a transaction, from peer to peer, without anybody in the middle, to make sure that value has been transferred and that there is no double spend.

Now this is hugely transformative for markets because we have decentralized power. Information is power, so there's no central party that is holding information about that whole marketplace. Now the asset that we're trading, could be a digitally native asset or it could be something physically moving up or down a supply chain. If we're going to have this transaction superhighway what are the components that we need to make this transaction superhighway work? Well, the first thing is we're going to need to know is certainty of identity. "Who am I dealing with?" This could be permissionless - e.g., an understanding based on reputation, or this could be permissioned by way of "know your customer" and "anti-money laundering." `This is an internet of public and private blockchains in a hybrid. Next, I'm going to need to know, certainty of what I'm buying – the provenance of what I'm buying -be this a bag of cobalt or be this a part of an aircraft engine. I'm going to need "certainty of execution" - "if I do this then I will get paid."

Put these three things together and we have the basis now for a marketplace -where I can trade secure in the knowledge of who I'm dealing with, secure in the knowledge of what I'm buying and able to transfer value and ownership at the same time. Now if I tokenize that asset this will potentially bring a whole load of new liquidity to the marketplace as I can tokenise illiquid assets. Now we can clear and settle at the same time if I use maybe a stable coin for settlement. I can start to drive new types of secondary markets and I can fractionalize, as you "break up" the primary issuance up into little bits. So, this gives me far greater liquidity. But maybe it's the last box on this chart which is the most important. Which is the incentive model? We need to design an economic incentive model where it is in everybody's interests - (all the stakeholders in the marketplace)- to collaborate to come into agreement and consensus as to what are good transactions that can be added to this transaction superhighway.

Business model first principles

At the heart of our new internet, web3, is a governance that makes fair rules and a fair economic model for collaboration. In business we need to define our market ambition for collaboration - is the market is open to all? Or is this a more private market? And in that market each trading business will need to define the digital products and services and critically how to monetise data and how to tokenise data to increase market liquidity.

As a community the members will need to agree an incentive mechanism to encourage members to join the marketplace.??As members we need not only buyers and sellers of data but also innovators to build new apps using this data and service providers who will provide the needed infrastructure.

And finally, we will need the ledger technology, to support public and private data, public and private business logic, and interoperability across ledgers.

Layers of sedimentary rock

Blockchain is interoperable as the universal base layer upon which we build economic utilities. I think of web3 like layers of sedimentary rock. We will build on top of each layer until it becomes infrastructure that we simply take for granted in the digital economy. ?The fuel for our new economy is data and we need to digitise the data that already exists in the enterprise today and add it to the new data of the new economy. Here is the real world / crypto bridge or Oracles and private permissioned chains like LANs to the internet WAN.

Then we need to collaborate on the internet to bring together new data combinations that were not possible in a pre-digital era. What matters is “who is in the room and what data do they bring?”?This is the rocket fuel for a new generation of apps to solve problems that could not be solved before.

The user experiences could be as simple as a new password manager or wallet to handle keys to their tokens.?It is these tokens, access to which are held in the wallet and whose record of ownership is held in that base layer ledger that are the tools of the Token Economy. These tokens and credentials govern identity which may be needed for KYC. These tokens handle ownership which may be accessed by NFT being a gateway to share say your medical records to drive apps. These tokens handle your digital money, the value layer of crypto bound to fiat, whose provenance can comply with AML regulation.?????

We are building new layers of UI, Apps. and infrastructure on top of layers rock and resting on foundations or piles. In time we will only see and maybe only know that which is directly under our feet and only that rare geologist will understand the rock formations below

This is an extract from my new book coming out in 2023