Category Archives: innovation

Carriers need to stop selling dumb pipes

I was not happy with my article Carrier Billing and Micropayments, when I first published it over a year ago. I did not feel that the ideas I was trying to communicate were distilled into a coherent formulation. What follows here is a second attempt at trying to convince Communications Service Providers (CSPs) to stop selling dumb pipes.


Most CSPs are old incumbent carriers with large loyal customer bases, established business models, and products that are substantially unchanged for decades. These enterprises are risk-averse. There is little tolerance for changes that would be disruptive to how business is run.

CSPs are in the business of selling dumb pipes (e.g., Internet access, mobile phones). The dumb pipe business is experiencing decreasing revenue per bit. CSPs know that this trend of diminishing profitability is unhealthy, and they are highly motivated to expand into new products (e.g., video).

Since the rise of the Internet, CSPs have seen Over The Top (OTT) services (Internet platformed services) thrive. OTT providers have even invaded the CSP’s spaces. While CSPs expanded into television and video services, OTT video services like Netflix and Hulu caused many customers to terminate their traditional television services. Customers prefer unbundled video streaming. This is especially true now that Disney Plus, ESPN+, HBO Max, and other premium video packages have become available à la carte (no longer exclusively bundled with television service). Unbundling of video services is once again relegating CSPs to selling dumb pipes, which undermines their efforts to expand revenues up the value chain.

CSPs have stodgy business models, because they are afraid of competition further eating into their revenue. CSPs suffer from their inability to formulate new product strategies to better monetize 5G investments. Technical features like network slicing, low latency, higher reliability, low power, high bandwidth, expanded radio spectrum offer possibilities for innovative applications, but carriers have struggled to translate such potential into desirable products beyond the standard offerings for the already saturated market for mobile phone service with mobile data.

From Tom Nolle:

Other articles:

Beyond 5G mobile and fixed wireless features, CSPs also have ambitions of expanding revenues through Edge Computing and “carrier cloud”. CSPs view the construction of their own cloud infrastructure in their own data centers as a core competency that is strategically important to the operation of the Network Functions that provide their communications services over their own network infrastructure.

Again, from Tom Nolle:

CSPs have ambitions to offer products to their customers based on carrier cloud, but they suffer from competition from hyperscalers (AWS, Microsoft Azure, Google Cloud Platform, Oracle, IBM). They aim to leverage their own data centers to provide cloud services for Edge Computing at the provider edge, believing that low latency in the last mile to the customer will offer performance advantages to certain types of services. Unfortunately, there is no evidence that such an advantage exists for CSPs. Performance sensitive components would likely need to be deployed at the customer edge in close proximity to the customer’s devices (such as for near real-time control of industrial processes). For all other types of services, it is difficult to see how regional CSPs can compete on price, scale, and reach against hyperscalers, who have global reach and performance characteristics that are not materially disadvantageous for those use cases. If customers need the performance, they will need computing at the customer edge. Otherwise, when their requirements are less stringent, public cloud infrastructure from hyperscalers is sufficient and economically advantageous.

CSPs must become more open to transforming their business models to find better revenue opportunities. They should look to Apple’s market success as one example of how to think differently. Apple forged a lucrative business model based on their iPhone and iOS ecosystem by taking a 30% cut of third party revenues earned by distributing applications through the Apple App Store. Because the potential for applications and in-app purchases is unbounded, the opportunities are enormous for Apple to earn revenues based on the innovations and work of innumerable third-parties using Apple’s platform. This is proven out by Apple’s incredible financial performance since launching this ecosystem.

CSPs should look to where their own businesses have strengths and advantages. CSPs have a large and established customer base, who entrusts the carrier to take automatic payments every month. That kind of trust relationship and reliable revenue stream is precious. Carriers have not learned to monetize that relationship with OTT service partners or extend such relationships to third parties, as Apple does. One of the biggest impediments to online businesses converting sales for digital subscriptions is the resistance among customers to trust the business enough to create an account and authorize their payment card for automatic recurring payments. That lack of trust is an enormous barrier for most businesses. CSPs can leverage their advantage in Carrier billing to enable micropayments and easier monetization of third party services through the carrier’s infrastructure, billing, and payment platforms. This would enable CSPs to apply Apple’s business model to charge third party services a percentage of subscription fees by owning the customer relationship and the monetization of those third party services.

Let’s explore a concrete scenario to illustrate this point. As a customer of online digital services, each of us has routinely been the victim of multiple unscrupulous vendors. One crooked technique these vendors employ is to be unresponsive to termination requests for subscriptions that have recurring monthly payments automatically charged to a payment card. Sometimes such paid subscriptions are opted in by misleading a customer to try a free introductory offer. Often, intervention from the bank or payment card company is required as a remedy. These kinds of costly and upsetting incidents ruin it for all online digital services, because customers become wary of authorizing payments for any business whose reputation is unknown. Every time a customer shares their payment card information with another vendor, it is a calculated risk that the vendor could be unscrupulous or that the payment card information can be stolen by a data breach (hacking). After being burned, most people would be extremely hesitant to subscribe to a dozen low cost ($0.99 per month) content providers (i.e., magazines, journals, newspapers, etc.), each taking payments separately.

However, for a customer already being charged $200 per month by a CSP for their family’s multiple mobile phone and data services, adding an extra twelve $0.99 charges to their bill (an increase of less than 6%) with the peace of mind knowing that the carrier’s billing dispute and adjustment processes are reputable, friendly, and reliable is a comfortable commitment to enroll in. Now, imagine every product company taking advantage of this easy entry into the market for digital subscriptions, where they would otherwise have found the barrier to entry too daunting. You will see connected running shoes, connected tennis rackets, connected exercise equipment, connected vehicle dash cameras, connected home security cameras, connected home appliances, connected irrigation systems, connected pool circulation systems, connected everything become viable market opportunities for the smallest (and most innovative and entrepreneurial) of vendors. If CSPs bundled monetization with access to their 5G capabilities and their Edge Computing resources for a cut of the third party service’s revenues, that arrangement becomes even more attractive to innovative and entrepreneurial startups who may build the next killer app that no CSP could dream of themselves—and that would be impossible to nurture into existence through partnerships.

For CSPs who envision that the Internet of Things (IoT) will provide new revenue streams in high volumes, they must realize that for things to be connected to the Internet in an economical way, the digital services associated with those things must be monetizable easily and with low barrier to entry. For there to be sufficient uptake, not only do ordinary physical things in everyone’s every day lives need to be connected, but it must be inexpensive and convenient. Technical capabilities, convenience, and low cost come about by leveraging the CSP’s infrastructure, services, monetization platform, and established relationship with the customer base.

As a stodgy incumbent, a CSP is resistant to revamping how they do business. Their belief in their products is entrenched. They believe their own role in the market is entrenched. Incumbency and entrenchment are impediments to transforming their business. So long as CSPs cling to the belief that they must defend their declining revenue-per-bit dumb pipe business against OTT services, CSPs will not be motivated to engage in transformation. They need to understand that their advantage is not in dumb pipes. Their advantage is in owning strong customer relationships that can be monetized on behalf of third party services that are unbounded in potential revenue opportunities. Digital services want to receive payments from subscribers, and CSPs can broker this through their own reputable, ethical, and trust-worthy billing and payments platform.

CSPs must move away from primarily selling dumb pipes. They should re-orient the business to enable an ecosystem that uses the CSP’s infrastructure and platform to sell digital services from all vendors to the installed base of loyal customers. This will open up unbounded opportunities for passive income as all the risk to develop innovative new products based on OTT services is borne by third party digital service providers, while the CSP reaps the rewards of their use of the CSP’s ecosystem.

Bus factor

Observation: management is obsessed with assessing all kinds of risk and their mitigations. This includes technical risk, financial risk, schedule risk, market risk, security risk, and others. This typically does not include bus factor.

One of the biggest risks is the concentration of knowledge and expertise in too few individuals. This is known as bus factor. How many teams measure and report on bus factor, and actively mitigate the risk of bus factor falling to 1?

Digital Economy of Social Cohesion

This Web2 era of the Internet has culminated in the concentration of economic power in a few of the largest corporations, a phenomenon that is termed Big Tech. Facebook (Meta), Amazon, Apple, Netflix, Google (Alphabet) are known as FAANG, the dominant Big Tech players. Centralization of control and concentration of power go hand in hand. This control is being used for social engineering, which is divisive, and it is destroying social cohesion.

Web2 is described by Britannica as:

the post-dotcom bubble World Wide Web with its emphasis on social networking, content generated by users, and cloud computing from that which came before.

https://www.britannica.com/topic/Web-20

Digital Economy

The digital economy that has emerged from Web2 is based on either extracting fees from users, as Netflix does with subscriptions and Amazon does with Prime, extracting profits from selling goods as Amazon and Apple do, or selling ads as Facebook and Google do. In each case, the business model relies on positioning the Big Tech company as the dominant supplier in the supply chain.

If you produce movies, you have to go through Netflix to reach your audience. Producers of goods have to go through Amazon to sell to your customers. If you produce iPhone apps, you have to go through Apple’s App Store to offer apps to users. If you want to advertise, you have to go through Facebook and Google to reach your audience. In every case, Big Tech is an intermediary that gets rich as the middleman.

Crypto Payments

One feature of Web3 is the incorporation of digital currencies (crypto). This would disintermediate payments by potentially eliminating banks, credit card companies, and payment processors. The payer and the payee would transfer funds directly with a transaction on a blockchain, which itself has no controlling entity and is therefore decentralized (assuming we are talking about Bitcoin, not some shitcoin). Financial transactions paid in crypto require no middlemen. Digital transactions have concentrated power into Big Tech because integration with the fiat financial system is expensive and subject to onerous regulation.

Integrating a crypto payment protocol natively into the Web is a game changer. Not only would it begin to decouple commerce from the fiat financial system, it should also begin to alter the relationship that users have with service providers and each other. Fiat payment processors impose an asymmetric relationship between participants: merchant and consumer. Crypto eliminates that asymmetry by enabling anyone to send funds to anyone with an address who can receive them.

Monetizing with ads destroys Social Cohesion

Google and Facebook have thrived on advertising dollars because of the asymmetrical relationship imposed by the fiat payment system. The Social Dilemma is a Netflix documentary that explains how the ad revenue model provides social media companies perverse incentives to design systems that encourage harmful behavior among the user base. Engagement becomes divisive. Information bubbles form. Users become addicted to dopamine hits. All to lure more eye balls and clicks so that advertisers can be charged for more impressions and conversions. Users hate seeing ads, but it is the price they pay to receive free services, as their engagement is monetized. The users become the product that is sold to advertisers.

Monetizing without ads brings Social Cohesion

How does eliminating fiat asymmetry fix this? Users on social media are content creators. Their opinions are an organic source of reviews, endorsements, and complaints. Every day the most compelling content goes viral because the audience is won over and engages enthusiastically.

What if a decentralized social media platform, instead of directing advertising dollars to Big Tech, rewarded users for content creation and promotion?

Users could be paid to post quality content with their compensation being proportional to the positive engagement they receive from others. This could be achieved through tips from the audience and from promotion fees charged for boosting content. The key is rewarding users for positive contributions. This institutes an incentive structure that increases personal fulfillment and social cohesion. This is what we want to enable with Web3.

Risk-Reward of Entrepreneurship

Entrepreneurship is characterized by willingness to take on higher-than-normal risk in pursuit of outsized reward. To achieve outsized rewards, one must be willing to accept higher risks, because risk and reward are proportional. Success comes from skilled assessment of what risks are worth taking for the rewards that can be earned with respect to capital accumulation (growing the business), production capacity, revenues, profits, market share, innovation (bringing superior products and services to the market), and customer satisfaction (making a positive difference to society).

Start-ups pursuing highly uncertain goals on the frontier of human innovation are at the extreme end of the risk-reward spectrum. Near-certain failure is assumed by outsiders. Most people believe the pursuit to be impossible. Only the entrepreneur has the vision and courage that are uniquely exceptional to overcome the status quo. The culture of a start-up is defiant, contrarian, and non-conformist.

A start-up’s market is initially non-existent because demand follows supply. Supply is zero until the product is produced and its value can be demonstrated to consumers. People could not have imagined the product until the invention brought it into reality. Invention creates a market, where none existed before. Before the automobile was invented, the market for transportation could only imagine a stronger, faster horse. Once an automobile could be supplied, consumers demanded it.

Contrast a start-up with an established corporation. An established corporation has mature processes, regimented procedures, and formalized governance. Standards, guidelines, and best practices are enforced through reviews and approvals for compliance. The intent is to reduce and mitigate risks: financial risk, schedule risk, technical risk, security risk, and market risk. Knowing what has proven to work, it is imperative to institutionalize delivering quality reliably and consistently to engender trust with customers and shareholders. The culture of an incumbent is compliant, conformist, and standard-bearing.

Entrepreneurship often involves recognizing that what has worked for the incumbents can be revolutionized. Processes can be more efficient. Labor can be automated. Products can be better designed or entirely obsoleted by the next generation of technology. Business models including the relationship with customers can be changed (i.e., a perpetual license can be replaced by a subscription). The goal is to win sales from customers by having a competitive advantage. Entrepreneurs seek to disrupt the market for existing incumbents.

Incumbents are intent on protecting their market position. Risk is ever-present that a competitor may win out. New up-starts entering the market are disruptive to the market. There is the risk that an established business can be made obsolete. Obsolescence is almost inevitable, as we are continually advancing to improve quality of life. Danger exists for incumbents who stubbornly cling to their established ways, eschewing novel innovations that are causing the industry to evolve. Incumbents may even resort to erecting barriers to entry through lobbying and regulatory capture. But the relentless march of progress never stops.

There is an uncomfortable tension between maturity (protecting what is proven to work) and novelty (inventing better ways of working). Culturally, it is very difficult for an incumbent to build disruptive technology that threatens its own business, even though it knows this kind of disruption is necessary to make a better future. This clash in cultures is usually overcome by entrepreneurs building start-ups, which are unencumbered by the status quo. The freedom to explore disruptive innovations allows a start-up to break all the old rules and ignore every self-imposed constraint that would hold back an incumbent from going against its established know-how. An incumbent’s financial strength allows it to forego risky experimentation, which is prone to failure, and watch the landscape for successful start-ups that can be acquired before they grow to become a competitive threat. In so doing, an incumbent gets the best of both worlds. It can protect its market position while also benefiting from risky bets taken by entrepreneurs that prove successful.

When an incumbent acquires a start-up to absorb successful innovations the clash in cultures becomes apparent. There is a desire to incorporate the smaller start-up into the larger incumbent’s organizations, and subject them to mature policies, processes, and procedures. Often, what is discarded are what made it possible for the start-up to be entrepreneurially successful: the freedom to be agile, rule-breaking, disruptive, and anti-establishment. The incumbent usually incorporates innovative technology but resists incorporating innovative culture and spirit, especially entrepreneurial risk-taking.

Web3 versus Web5 – the future Web

In December, Jack Dorsey (founder of Twitter) disparaged Web3, claiming that the technology is owned by venture capitalists like a16z, cofounded by Marc Andreessen. Jack is critical of the current crop of Web3 protocols and implementations being deficient in decentralization. Others like Moxie Marlinespike have also been critical of Web3. I have offered my own thoughts on this topic in Decentralization: Be Unstoppable and Ungovernable.

Jack is backing an alternative to the Web3 vision called Web5 (Web2 + Web3) through an organization named TBD with open source projects for decentralized identity and decentralized web nodes for personal data storage that work with distributed web apps. On the surface, as I have not had an opportunity to look deeper into this Web5 initiative, the overview seems closely aligned with what I independently have imagined. I feel the potential kinship to what this project is doing.

The Web5 project appears to be directionally attractive with regard to how the problem space is framed. However, we need to examine the solution approach to see if the protocols and architecture being proposed are also attractive. The Web3 approach is decidedly not attractive for the reasons that Jack has highlighted. I credit him for being a vocal dissenter, when honest dissent is warranted.

I will dig deeper into Web5 and offer some insights from my own perspective. If this turns out to be closely aligned to my own passions, I may volunteer to contribute.

Reputation – scoring digital identities

Is it possible to build tech to track reputation for a digital identity across services without having it gamed or turned into a social credit system of institutionalized cancel culture?

The topic of reputation came to mind was promoted by this tweet. Saifedean Ammous (The Bitcoin Standard) had this idea for how Twitter could be improved. It is about reputation. To determine whether someone should be distrusted, a person can look to their own social network to see how often the counterparty is distrusted. Apply the Web of Trust pattern toward distrust. The same system for tracking certification (a form of trust) can be leveraged to track distrust also. This would be a very valuable service for reputation tracking and analysis.

Web of Trust

Reputation may not be an absolute measure. Saifedean’s observation suggests to me that it should work more like Web of Trust, except in the case of blocking it would be a measure of distrust. Each block is an attestation of distrust of the blocked user. The users who Saifedean follows form his web of trust. To some lesser degree the connections to others through his follow list deserve some trust as a transitive relationship. Those blocked by these trusted users can each be assigned a distrust score based on the attestations from Saifedean’s web of trust.

From your perspective, the reputation of someone else would be based on your own web of trust. It is subjective, relative to your social network and the attestations of each member. Attestations of trust contribute to a score for how much a person deserves to be trusted. Attestations of distrust contribute to a score for how much a person deserves to be distrusted.

Calculating reputation scores based on attestations on social networks raises questions and concerns. Scoring can be gamed and abused. Bot nets can be deployed to skew scores by contributing many bogus attestations. This can be used to smear a hated enemy or to fraudulently raise someone’s public stature. We see such gaming in search engine optimization, in likes and dislikes of content on social networks, and in product rating and review sites. Personal and professional reputation is a high stakes affair.

Reputation is not Social Credit Score

Everyone is aware of China’s social credit system. It enables the government to track every citizen’s activities. Individuals are scored according to the government’s preferred behaviors. The government uses the scoring to punish citizens by denying low scoring individuals from participating in society (i.e., economic transactions, travel, etc.). If we introduce reputation scoring, such abuse cannot be permitted.

A reputation system exists to facilitate individuals to freely associate with others or to deny such associations. This system must forbid the government or other powerful entities from being able to coerce others into and out of associating with individuals these powerful entities target for punishment, which would be tyrannical.

Is it possible for such a reputation system to be deployed prolifically without enabling tyrannical regimes or angry mobs from exploiting it in violation of individual rights? Lives are destroyed in this way, as they are cast out of society. Ideally, the system’s protocols would make it impossible for such power to be abused. Reputation is tied to a person’s digital identity. If a person is shackled to a single identity, they are vulnerable to that identity being smeared and targeted for cancellation by adversaries.

There must be some recourse. If a person can change identities and recertify their verified credentials for their replacement identity, this could effectively renounce any references to the old identity. Attestations of distrust of the old identity would have no effect on the new identity. However, attestations of trust for the new identity would need to be earned and reestablished. This makes changing identity a costly migration, only worthwhile if shedding a highly disreputable identity to start fresh.

It is also important for the identity protocols to be decentralized. The system should be open to many providers with no coordination, shared storage, policy enforcement. There must not be an single source of truth for human identity tied to digital identities, otherwise a person can be cancelled by tyranny or abuse of power.

We want to enable Alice to assess Bob based on Bob’s positive and negative attestations among the people connected between them. That allows Alice and Bob to associate or not based on informed consent. We do NOT want voluntary associations to be interfered with by tyrannical powers. Tyrants wish to exert control over collectives to target individuals regardless of consent. Freedom of association must be protected.

Revisiting personal assistant

In 2017, I wrote:

I find myself being more diligent taking notes and then distilling knowledge from my notes into articles for others. I used to be able to complete tasks serially, more or less. Occasionally, I noticed that follow-on tasks were hard to accomplish, because I couldn’t remember what I was thinking originally. So I tended to capture essential (summary and instructional) information into README, comments in code, and docs. I never really took detailed notes to log my step-by-step activities until recently. I started doing this logging, because I find myself multi-tasking and distracted so much by so many concurrent activities, I can hardly focus on getting anything done. The context-switching was so frustrating, and I didn’t have enough stack space in my head to keep anything straight. So now I’m employing some rudimentary techniques to apply computer-assistance by just taking notes. That is why my mind wanders to the topic of personal assistants in the workplace as being the next frontier. Personal Assistants

The Loretta superbowl ad by Google was a very compelling story about the benefits of memory assistance if the human-computer interface is frictionless enough to integrate into normal experience.

Google’s commercial was extremely compelling, except that Google is failing to see how to apply its foresight into its products (Android, Keep) to enable quickly clipping ANY content while using ANY app to save as notes, and then applying machine intelligence and analytics to provide reminders and personal assistance based on computed insights.

The reason I was trying to recall the notes-related insight was actually because I’ve been finding myself buried in unrelated tasks and things to do coming from so many directions every day, it’s hard to keep track of what and when. The obvious solution is to use some kind of task reminder application. The problem with those is that I have to take time out of what I’m doing to go into such an app and create a task, which is distracting and time consuming in itself. What I really want is while I’m in any other application, whether I am reading email, reading Slack messages, attending a Zoom meeting, working a JIRA issue, responding to PagerDuty, writing on Confluence, reviewing code in GitLab, or literally anything, I want a one-click mechanism to “remember this”, so that an app will keep a note, maybe translate it into a task on my to-do list, remind me later if necessary, help me prioritize, and help me remember things. It is the one-click action in the context of the application that I’m already working in that is the key feature to interface to all these other personal assistance capabilities.

Android does support highlighting content and using Share to Keep Notes. However, this does prompt for additional information, and it creates a new Keep document. This is close, but not sufficient. From a user experience perspective, it is fine to highlight and share, but the aim should be to “remember this” without prompting for anything more so that focus is not taken away from the original context.

The app for keeping notes should be light weight. Notes should be more like items on a list, timestamped, and available for subsequent labelling, re-organization, searching, and use (integration with related apps like for task management). It needs to be a clipboard with unlimited history, so that snippets of information can be remembered on the fly for later review, classification, and movement to other applications. Life is a stream of notable events, many of which we want to queue for later recall in a different context, as we are preoccupied with what we are busy with in the moment.

The idea of a personal assistant is that without the user needing to click at each moment to clip something at each interesting moment, an agent can shadow the user’s activity and automatically track what is attracting the user’s attention. It can keep a history of bookmarks and actions across applications based on the user’s activity. Later, this record will help to answer questions about what the user had done earlier and what information was encountered. An assistant would ensure that everything is committed to memory continually without interrupting the user’s normal flow of work. When the user does highlight and share, it indicates something of particular interest that becomes a priority.

Having a recorded history of work can then be analyzed to document procedures, teach others the same workflow, and automate procedures for repeatability. Repetitive tasks are a machine’s specialty. Reducing tedium is what mechanization is meant for.

Decentralization: Be Unstoppable and Ungovernable

The trucker’s freedom convoy in Canada has revealed how individuals are vulnerable to tyrannical (rights violating) actions. Governments and corporations cooperated with authoritarian diktats across jurisdictional boundaries. Maajid Nawaz warns of totalitarian power over the populace using a social credit system imposed via central bank digital currency (CBDC) regimes being developed to eliminate cash. “Programmable” tokens will give the state power to control who may participate in financial transactions, with whom, when, for what, and how much. Such a regime would enable government tyranny to reign supreme over everyone and across everything within its reach. We need decentralization.

Centralized dictatorial power is countered by decentralization. Decentralization is especially effective when designed into technology to be immutable after the technology proliferates. The design principle is known as Code is law. The Proof of Work (PoW) consensus algorithm in Bitcoin is one such technology. CBDC is an attempt to prevent Bitcoin from becoming dominant. Criticism of PoW using too much electricity is another enemy tactic.

National and supranational powers (above nation states) are working against decentralization in order to preserve their dominance. The World Economic Forum (WEF) is installing its people into national legislatures and administrations to enact policies similar to those of the Chinese Communist Party (CCP). They seek to concentrate globalized power for greater centralization of control.

We look toward Web3 and beyond to enable decentralization of digital services. As we explore decentralized applications, we must consider the intent behind distributed architectures for decentralization. What do we want from Web3?

Unstoppable Availability

Traditionally, we think about availability with regard to failure modes in the infrastructure, platform services, and application components. Ordinarily, we do not design for resiliency to the total loss of infrastructure and platform, because we don’t consider our suppliers to be potentially hostile actors. However, multinational corporations are partnering with foreign governments to impose extrajudicial punishments on individuals. This allows governments to extend their reach to those who reside outside their jurisdictions. Global integration and the unholy nexus of governments with corporations put individuals everywhere within the reach of unjust laws and authoritarian diktats. It is clear now that this is one of the greatest threats that must be mitigated.

Web3 technologies, such as blockchain, grew out of recognition that fiat is the enemy of the people. We must decentralize by becoming trustless and disintermediated. Eliminate single points of failure everywhere. Run portably on compute, storage, and networking that are distributed across competitive providers. Choose a diversity of providers in adversarial jurisdictions across the globe. Choose providers that would be uncooperative with government authorities. When totalitarianism comes, Bitcoin is the countermove. Decouple from centralized financial systems, including central banking and fiat currencies. Become unstoppable and ungovernable, resistant to totalitarianism.

To become unstoppable, users need to gain immunity from de-platforming and supply chain disruption. Users need to be able to keep custody of their own data. Users need to self-host the application logic that operates on their data. Users need to compose other users’ data for collaboration without going through intermediaries (service providers who can block or limit access).

To achieve resiliency, users need to be able to migrate their software components to alternative infrastructure and platform providers, while maintaining custody of their data across providers. At a minimum, this migration must be doable by performing a human procedure with some acceptable interruption of service. Ideally, the possible deployment topologies would have been pre-configured to fail-over or switch-over automatically as needed with minimal service disruption. Orchestrating the name resolution, deployment, and configuration of services across multiple heterogeneous (competitive) clouds is a key ingredient.

Custody of data means that the owner must maintain administrative control over its storage and access. The owner must have the option of keeping a copy of it on physical hardware that the owner controls. Self-hosting means that the owner must maintain administrative control over the resources and access for serving the application functions to its owner. That hosting must be unencumbered and technically practical to migrate to alternative resources (computing, financial, and human).

If Venezuela can be blocked from “some Ethereum services”, that is a huge red flag. Service providers should be free to block undesirable users. But if the protocol and platform enables authorities to block users from hosting and accessing their own services, then the technology is worthless for decentralization. Decentralization must enable users to take their business elsewhere.

Ungovernable Privacy

Privacy is a conundrum. Users need a way to identify themselves and authenticate themselves to exert ownership over their data and resources. Simultaneously, a user may have good reason to keep their identity hidden, presenting only a pseudonym or remaining cloaked in anonymity in public, where appropriate. Meanwhile, governments are becoming increasingly overbearing in their imposition of “Know Your Customer” (KYC) regulations on businesses ostensibly to combat money laundering. This is at odds with the people’s right to privacy and being free from unreasonable searches and surveillance. Moreover, recruiting private citizens to spy on and enforce policy over others is commandeering, which is also problematic.

State actors have opposed strong encryption. They have sought to undermine cryptography by demanding government access to backdoors. Such misguided, technologically ignorant, and morally bankrupt motivations disqualify them from being taken seriously, when it comes to designing our future platforms and the policies that should be applied.

Rights are natural (a.k.a. “God-given” or inalienable). They (including privacy) are not subject to anyone’s opinion regardless of their authority or stature. Cryptographic technology should disregard any influence such authorities want to exert. We must design for maximum protection of confidentiality, integrity, and availability. Do not comply. Become ungovernable.

Composability

While the capabilities and qualities of the platform are important, we should also reconsider the paradigm for how we interact with applications. Web2 brought us social applications for human networking (messaging, connecting), media (news, video, music, podcasts), and knowledge (wikis). With anything social, group dynamics invariably also expose us to disharmony. Web2 concentrated power into a few Big Tech platforms; the acronym FAANG was coined to represent Facebook (now Meta), Amazon, Apple, Netflix, and Google (now Alphabet).

With centralized control comes disagreement over how such power should be wielded as well as corruption and abuse of power. It also creates a system that is vulnerable to indirect aggression, where state actors can interfere or collude with private actors to side-step Constitutional protections that prohibit governments from certain behaviors.

David Sacks speaks with Bari Weiss about Big Tech’s assault on free speech and the hazard of financial technologies being used to deny service to individuals, as was done to the political opponents of Justin Trudeau in Canada in response to the freedom convoy protests.

Our lesson, after enduring years of rising tension in the social arena and culminating in outright tyranny, is that centralized control must disappear. Social interactions and all forms of transactions must be disintermediated (Big Tech must be removed as the middlemen). The article Mozilla unveils vision for web evolution shows Mozilla’s commitment to an improved experience from a browser perspective. However, we also need a broader vision from an application (hosted services) perspective.

The intent behind my thoughts on Future Distributed Applications and Browser based capabilities is composability. The article Ceramic’s Web3 Composability Resurrects Web 2.0 Mashups talks about how Web2 composability of components enabled mashups, and it talks about Web3 enabling composability of data. The focus is shifting from the ease of developing applications from reusable components to satisfying the growing needs of end users.

Composability is how users with custody of their own data can collaborate among each other in a peer-to-peer manner to become social, replacing centralized services with disintermediated transactions among self-hosted services. The next best alternative to self-hosting is enabling users to choose between an unlimited supply of community-led hosted services that can be shared by like-minded mutually supportive users. The key is to disintermediate users from controlling entities run by people who hate them.

State of Technology

The article My First Web3 Webpage is a good introduction to Web3 technologies. This example illustrates some very basic elements, including name resolution, content storage and distribution, and the use of cryptocurrency to pay for resources. It is also revealing of how rudimentary this stuff is relative to the maturity of today’s Web apps. Web3 and distributed apps (dApps) are extremely green. Here is a more complicated example. Everyone is struggling to understand what Web3 is. Even search is something that needs to be rethought.

The article Why decentralization isn’t the ultimate goal of Web3 should give us pause. Moxie Marlinespike, Jack Dorsey, Mark Andreeson, and other industry veterans are warning us about the current crop of Web3 technologies being fraudulent and conflicted. Vitalik Buterin’s own views confess that the technology may not be going in the right direction. Ethereum’s deficiencies are becoming evident. This demands great caution and high suspicion.

Here is a great analysis of the critiques against today’s Web3 technologies. It is very clarifying. One important point is the ‘mountain man fantasy’ of self-hosting; no one wants to run their own servers. The cost and burden of hosting and operating services today is certainly prohibitive.

Even if the mountain man fantasy is an unrealistic expectation for the vast majority, so long as the threat of deplatforming and unpersoning is real, people will have a critical need for options to be available. When Big Tech censors and bans, when the mob mobilizes to ruin businesses and careers, when tyrannical governments freeze bank accounts and confiscate funds, it is essential for those targeted to have a safe haven that is unassailable. Someone living in the comfort of normal life doesn’t need a cabin in the woods, off-grid power, and a buried arsenal. But when you need to do it, living as a mountain man won’t be fantastic. Prepping for that fall back is what decentralization makes possible.

In the long term, self-hosting should be as easy, effortless, and affordable as installing desktop apps and mobile apps. We definitely need to innovate to make running our apps as cloud services cheap, one-click, and autonomous, before decentralization with self-hosting can become ubiquitous. Until then, our short-term goal should be to at least make decentralization practical, even if it is only accessible initially to highly motivated, technologically savvy early adopters. We need pioneers to blaze the trail in any new endeavor.

As I dive deeper into Web3, it is becoming clear the technology choices lean toward Ethereum blockchain to the exclusion of all else. Is Ethereum really the best blockchain to form a DAO? In Ethereum, writing application logic is expected to be smart contracts. Look at the programming languages available for smart contracts. Even without examining any of these languages, my immediate reaction is revulsion. Who would want to abandon popular general purpose programming languages and their enormous ecosystems? GTFO.

We need a general purpose Web architecture for dApps that are not confined to a niche. I imagine container images served by IPFS as a registry, and having a next-gen Kubernetes-like platform to orchestrate container execution across multicloud infrastructures and consuming other decentralized platform services (storage, load balancing, access control, auto-scaling, etc.). If the technology doesn’t provide a natural evolution for existing applications and libraries of software capabilities, there isn’t a path for broad adoption.

We are early in the start of a new journey in redesigning the Web. There is so much more to understand and invent, before we have something usable for developing real-world distributed apps on a decentralized platform. The technology may not exist yet to do so, despite the many claims to the contrary. This will certainly be more of a marathon, rather than a sprint.

What do we want from Web3?

In the journey to developing Web3, we must understand what is motivating decentralization. We are attempting to reinvent the Web to address deficiencies. These deficiencies put individuals in jeopardy of censorship, cancellation, and political persecution. They are vulnerable at the hands of Big Tech platforms, state actors, and adversarial groups intent on harm. Historical ideals to preserve the “free and open Internet” have been abandoned. If a “free and open Internet” is to be preserved, it cannot rely on the honor and voluntary cooperation of humans. Technologies must become permissionless, trustless, and unassailable, so that dishonorable and uncooperative humans can coexist.

  1. Protect a user’s right to free speech by having the user take custody of their own data. Ensure that the user’s data cannot be made inaccessible.
  2. Protect a user’s right to free association. Ensure that the data in the user’s custody can be published to whatever audience the owner wishes to reach.
  3. Protect an audience’s right to free association. Ensure access to data published by others. Ensure that applications can compose that data for the intended use, including for social collaboration.
  4. Protect a user’s access to platform capabilities for providing the application services that process that data.
  5. Protect a user’s ability to transact business with others without being subject to third party intermediaries cancelling them.
  6. Protecting a user’s privacy. Ensure the user can share their data only with others who are granted authorization. In some circumstances, a user may want to remain anonymous, so that their real-world identity cannot be exposed for doxxing. Hostile detractors often try to cancel people by targeting their business, sources of income, reputation, relationships, sensitive information, even their personal safety.

Let’s keep these requirements in mind as we explore technologies that can help realize Web. Restore the ideal of a free and open Internet in the face of large factions of society who are hostile to (or wobbly on) freedom and openness.

Carrier Billing and Micropayments

According to Diffusion of Innovations theory, crypto-currencies like Bitcoin are in the early adopter phase. How might we develop technologies to bring crypto-currencies into the early majority phase, where its use becomes mainstream? Micropayments through carrier billing might be the answer.

The obvious place to start is digital services, since crypto-currency transactions are necessarily digital. Digital services will begin accepting Bitcoin or other popular crypto-currencies as payment, as acceptance grows among the general population. Most services rely on payment gateways to interface to the payment card industry, but this assumes that payment transactions are denominated in fiat currencies.

We must consider whether adoption of crypto-currency will be advanced by the payment card industry (Visa, MasterCard, American Express, Discover). PCI is extremely stodgy, being in bed with central banking and the financial services sector. This sector has their crony ties to the political establishment through regulatory agencies and the Federal Reserve. You can pretty much count them out as a trustworthy partner in any radical anti-establishment endeavor.

PayPal, Square, Stripe, and other more progressive payment processors may come around, but their ties to fiat currency and PCI may hinder them. The obvious place to begin is with crypto-currency exchanges, which can already provide conversion services between fiat and crypto. The problem with crypto has been high transaction fees, slow transaction settlement, opposition from the regulatory establishment, and lack of integration with payment systems for retail transactions.

Loyalty Networks

An unexplored opportunity is to enable digital service providers to use other forms of pseudo-currency that have low transaction fees. Whereas Bitcoin remains obscure for conducting business between ordinary people, consumers are already quite comfortable with vouchers, coupons, rewards, loyalty points, or gift cards. Pseudo-currencies suffer from a closed network of vendors (limited fungibility) and non-convertibility, but the end user doesn’t incur transaction fees, because the vendors eat the cost of operating the network to benefit from the cross-selling opportunities generated within the network. Perhaps this vector for adoption can provide crypto an acceptable way of infiltrating the mainstream economy without raising regulatory ire, since loyalty reward programs are already well-established. Adding convertibility between a loyalty pseudo-currency and crypto would provide backdoor access into retail transactions within closed loyalty networks. It’s a beach head.

The value proposition is that service providers can be given the option to join a network of vendors who accept the same pseudo-currency (as a proxy to crypto).  This allows customers who earn loyalty rewards from one vendor to spend them at another within the network. This is the same concept as how airlines, hotels, and rental car companies can join in alliances, like Star Alliance, Oneworld, or SkyTeam. The difference a pseudo-currency system would make is that it would provide the infrastructure that would allow merchants throughout the world to join together into alliances, and to create such alliances arbitrarily between themselves. This opens up this valuable capability to small and medium sized businesses, who would otherwise not be able to afford the global infrastructure such a loyalty reward system would require.

Telecom carriers are in a good position to provide a loyalty reward system for partners, who offer digital services using the carrier’s network and infrastructure.

Micro-payments

Today, content publishing platforms, such as Substack, Locals, and traditional corporate media sites, offer subscription services. The subscriber is charged on a monthly recurring basis to gain access to paywalled content. Users who follow a link to read an article must sign up for a subscription even when they only want to read a single article without being obliged to a long-term commitment.

Moreover, users are loathe to authorize many online services to take automatic payments from their payment cards, especially less well-known brands of unknown reputation and with no established relationship. Naturally, users are reluctant to provide their payment card information indiscriminately. Fraud and hacking are legitimate concerns. All of these concerns, which are critical barriers to converting clicks into revenue for content creators, can be ameliorated by offering digital services as partners with a trusted telecom carrier who can charge the subscriber through carrier billing. This would provide a better user experience to access content, and this would improve conversions to generate revenue by removing friction.

One of my friends on Facebook had this thought.

Magazines and newspapers: You know we’d be happy to pay you by the article, right? That if you offered that option instead of slamming a monthly-subscription paywall in front of us, we’d pay for a few articles a month and our micropayments would add up to the equivalent of many monthly subscribers. Maybe more than you’d lose, since those who subscribe are happy to do that and the rest of us would be posting and linking, bringing you micropayers who just navigate away from your paywall now? Yeah, just saying.

I’m guessing micro-payments are not offered today in part because payment processors charge transaction fees with some minimum that make this unprofitable, and also inputting payment card information from a customer to make a one-off micro-payment would seem like way too much work to collect a few pennies.

If we could solve the micro-payments problem for cloud services, that would open up huge opportunities throughout the digital economy. We do see hints of technology emerging to enable this, such as “super chats” in YouTube, where viewers of a live video stream can tip small amounts of money to support the presenter. But the real need is for this capability to be generalized to enable arbitrary micro-payment transactions in every context on the Internet, and for this to become prolific everywhere. The revenue opportunity is enormous — equal or larger in scale to Google’s ad revenues, as this change in paradigm is precisely the replacement for ad-based revenues. The ad model supports “free” content, but it relies on users to tolerate the clutter of ads, while also luring some users to convert ad impressions into clicks and purchases. The ad model is known to create perverse incentives for Big Tech platforms to implement algorithms that place users into information bubbles, manufacture outrage to increase engagement, and keep users occupied on the platform for longer durations (promoting addiction). Micro-payments supported content would ameliorate the harms of an ad-supported model.

Ad monetization is like a micro-payments platform. Each click is charged a few cents, and these charges are accumulated over a billing period at which point the bill is settled. Because of the threat to ad revenues, you will not see Google blaze the trail for micro-payments.

We should look to carrier billing to take advantage by solving this problem through aggregation of charges, as carriers normally do for service usage. The connection between how customers are billed and invoiced and how money flows decouples the payment flow from the buying flow. This means that the carrier acts somewhat like a “bank”, of sorts. That is, postpaid purchases are aggregated into itemized charges on a bill. The bill collects all the charges together for settlement on a monthly basis.

Unbanking

Then, look at how African carriers enable unbanking for poorer people by leveraging the subscriber’s account balance to become positive or negative (like a bank account), and to enable money transfers between subscriber accounts to facilitate financial transactions. This exact paradigm should be seen as an opportunity to expand the two features (carrier billing with account balances that work like bank accounts) to innovate in the area of enabling a micro-payments platform that revolutionizes both the online world and commerce between individuals.

What I envision is the following. What Zelle is to banking — an integration between banks to do money transfers between users via email or other methods of communicating a transaction between users — the Internet needs a general purpose “money flow” protocol that facilitates integration between web sites and entities that can facilitate money flow — be they carriers or other commercial entities that can handle the charging, billing, invoicing, and settlement functions. The key is to enable arbitrary web sites to integrate to participate in money flow (easy setup like Zelle), and for the end user interaction with these web sites to enable one-click confirmation of a micro-payment (“do you want to pay 5c to read this article?”). And of course, for these integrations to fall outside of PCI-DSS compliance; otherwise, it is not viable from an ease-of-integration and cost perspective.

Opportunity for Carriers

Whereas the imaginary killer apps for 5G (augmented reality, IoT) still have no concrete implementations yet that are compelling in the market, the revenue opportunity for carrier billing, micro-payments, and unbanking are more immediate, realistic, and obviously under-served.

This strategy is synergistic with the roll out and adoption of 5G capabilities to develop killer apps of the future. Carriers can offer to partners to host their digital services without charging for utilization of the carrier’s network and infrastructure resources. Instead, use Apple’s successful revenue model of taking a fixed percentage of the partner’s revenue from selling their digital services. With carrier billing, the carrier handles the revenue sharing and settlement, as they are adept at doing today for roaming.

Then, a network of digital service vendors would join this micropayment ecosystem. As these purchasing transactions are performed by users, the carrier records these charges. On a monthly basis, each vendor gets paid an aggregate amount from all users. It’s equivalent to an ad network micro-payment platform, except products are paid for directly, and there are no ads. People hate ads.

Using this strategy, carriers can package together their network infrastructure, their platform services, their monetization system, and their loyal customer base to offer digital (over-the-top) service providers privileged access as revenue sharing partners. By doing so, a carrier would then be able to hitch their wagon to high margin revenue opportunities created by innovative new digital services, instead of being relegated to the ever-decreasing profit-per-bit dumb pipes business.