Fintech

Can blockchain help build a non-toxic version of Facebook?

“This is about saving democracy,” billionaire Frank McCourt and Ethereum co-founder Gavin Wood told Protocol.

Ethereum co-founder Gavin Wood and billionaire Frank McCourt

"We have to get through the early innings where it kind of overcompensates for the get-rich-quick schemes and the gold rush mentality. This too shall pass."

Photo: Web3 Foundation

Billionaire mogul Frank McCourt and Ethereum co-founder Gavin Wood witnessed the rise of the web — and they both grew disillusioned with the way technology, particularly social media, has shaped the world.

When they met for the first time late last year, they agreed to collaborate on a solution: to use blockchain and Web3 tools to build the infrastructure they hope can support a decentralized, non-toxic version of Facebook — or several of them.

McCourt’s Project Liberty announced last week that it will work with Wood’s Web3 Foundation and its Polkadot project to create a foundation for alternative social networking sites by using blockchain and Web3 technology so users have greater control over their data.

“Tech is a tool,” McCourt told Protocol. “You can go build a house with a hammer or you can go kill someone with a hammer. Let's go build things with technology, instead of killing people and destroying democracy.”

McCourt and Wood explained to Protocol what this new approach to social networking would look like and how it could operate. They also discussed their concerns about regulation and the need for a deeper conversation about the role of technology in society.

This interview was edited for clarity and brevity.

Can you talk about the first time you met?

Frank McCourt: I think it was in New York last September. Gavin was our guest at [Project Liberty conference] Unfinished Live in September. He and I had a chance to converse on several occasions during the two or three days. And I think it's pretty clear that we had a very strong values alignment, obviously coming at things from a different place. But we very much shared similar concerns about the state of democracy.

How did the idea of building a social network on Web3 come up?

Gavin Wood: It's an interesting sort of proposition. Blockchain forms a part of Project Liberty, but it's not quite a blockchain project.

There is this protocol, DSNP. It's like a social networking core protocol that isn't really tied to blockchain. [But] it makes sense to use blockchain in building it out, because blockchain provides a few things that happen to be very useful for making this happen. Like you've got the ability to have permissioning where authorizations are recorded and can't be tampered with.

For me, it was particularly interesting because it's not purely blockchain. In its truest sense, Web3 doesn't mean “built on blockchain.” Web3 means: “less trust, more truth.” We're using technologies that mean that we don't have servers. We don't have arbitrary authorities controlling things, dictating things, sometimes without even our knowledge.

Can you lay out some of those shared values you were talking about? What are you trying to solve here?

McCourt: From my perspective, I was getting super interested in this subject because of a real grave concern about the state of democracy and the fact that things are extremely unstable right now. Nobody knows for sure where we are on the curve, but it just feels like this accelerating pace of deterioration.

Democracy is not something you break and then you just sort of decide the next day, “Let's go ahead and fix it,” and it's all better again. It's one of those things that if you break it, it may never come back. Technology is a big part of the problem. I'm talking about the extraction and the exploitation of people's data. I'm talking about the completely toxic effect of social media, the ability to flood the zone with massive disinformation.

The aha moment for me, well, prior to meeting Gavin, was focusing on the social graph and thinking about it differently.

Gavin, what are you seeing as a technologist is the link between these concerns and the infrastructure as it currently exists?

Wood: The infrastructure is quite fundamentally architected from the perspective of a centralized world. When I went to university in the ’90s, we, as computer scientists, were really just taught one model for systems distributed over multiple computers … One of them controls; the others trust the instructions. I didn't think twice about this. It's also known as a server-client model.

When we go to a website, we go to a computer, we ask, “Hey, please send us some information.” It sends some data back and we just accept it for being true. Like, we accept that that is the webpage.

The problem is that this model is susceptible to corruption. If individuals trust a particular authority blindly, the individual [in authority] may initially be benevolent. But there's really no great reason to believe that an individual will continue being benevolent over years and potentially generations.

We've sort of arrived at a few means of managing this process. Eventually, someone or some set of people generally have to be in control. We kind of arrive at this problem that social scientists have faced for centuries on how we manage power. The technological solution to this is similar to the social set of solutions, which is decentralization. Democracy is, in some sense, decentralization of decision-making.

It's the same in technology. This is really what we mean to decentralize the social graph, the social network.

Can you paint a picture of how it’s going to work and maybe compare it to the way Facebook works, where users sign up and then Facebook collects and stores and processes their information?

Wood: Let's take a very simple example. I want to message my friend and if I do this over Facebook, then what happens is I type in a message on my computer — the Facebook website or the Facebook app. I push send and the message will be sent to Facebook servers which means somewhere, a system administrator, who is in the direct pay of Facebook, which is essentially controlled by Mark Zuckerberg.

These people will, in principle, have administrative privileges to look at that message. So that message hasn't made it to my friend yet. At some point later, the Facebook machinery will take that message and will send it onwards to my friend's mobile computer or mobile phone or whatever.

This is really me messaging with Facebook and then Facebook relaying it to my friend. When I say Facebook, I don't mean a single entity. I mean one of many entities, many people I'm messaging because they can all see the message together with anyone else who may possibly have access to Facebook servers. As we know from the Snowden revelations, that can mean quite a lot of people.

The very simple solution that we're coming up with for this particular use case is that I encrypt my message not with Facebook's keys, but rather with my friend’s keys. Then I basically just publish the encrypted message because I know from mathematics that nobody can read that encrypted message.

To make this work, you need to attract a lot of people and to come up with a popular service. Can you talk about how you're thinking about attracting people and trying to foster something that can really be lightning in a bottle?

McCourt: The key here is adoption. But I don't really think about it as adoption. I think about it as migration. Project Liberty is about putting forward a solution and a place for people to migrate to.

There are two requirements for migration. One is people finding the place they're living as totally intolerable. They're going to give up a lot when they move. They're going to maybe leave their family. There's oftentimes hardship.

The second thing that's required is a place to go. Very few people migrate to just go wander, right? They have something in mind.

This whole American project was built around that premise: people getting fed up with living in a monarchy, a feudal system, saying, “We're gonna go somewhere else and create a new country, a new governance, a new world. It's going to work differently.”

Once that ecosystem is created, I think people will happily migrate. Remember this new ecosystem that gets created, it's going to be just as polished as Web 2.0. You're gonna have everything that you have on Web 2.0. But it's going to be healthier. You'll control your data and you won't be in a situation that's undermining democracy.

What do you guys see as the timeline of getting this to be a major player in social networking?

McCourt: I think it's a really important question. Project Liberty is more than a tech project. I actually say it is not a tech project; it's a project to save democracy. Fixing tech is critical to saving democracy. But to do this, and to have that mass migration we're referring to, I think people need to be aware of what's at stake.

We do not have to live in this kind of imprisoned state that we're in now. Thankfully, Web3 is here. Thankfully, knowing what the internet is capable of and how powerful it is, we can actually get it to work the way it should, and it could have, but doesn't because of centralization.

I remember, Gavin, when we had lunch in Malta, we sat for three hours and we didn't talk a lot about tech, right? I mean, we talked a lot about democracy. We talked a lot about governance. We talked a lot about how this could be fixed.

This has got to be a broad conversation and one where experts, technologists, computer scientists and social scientists get together and sort out the governance issues. I'm not talking about token governance, I'm talking about societal governance. We need to discuss and debate the ideas about how we want democracy to work in a digital world.

We've been living with democracy in an analog world and institutions that were architected to support that analog world. We now need a civic architecture for a digital world.

This is about saving democracy. It isn't about pitching a product.

Wood: When I conceived Polkadot back in 2016, the main thing that people were talking about was scalability. To some degree, it still is. That was one of the key elements that Polkadot was designed to solve and Polkadot Version 1, as we've launched now, is pretty decently scalable.

We're sort of looking at maybe 100,000 transactions per second across the network. When it's fully rolled out this is likely to be plenty sufficient for the project. But this isn't where it ends.

The bit inside me wants it to be done in 12 months and thinks it can be done in 12 months. But you know, the wise old man inside me also says we’ll multiply that number by three. Let's say three years, time horizon, but at that point, you know, we're looking to sort of multiply that figure by about another 50,000x.

We're sort of looking towards many, many millions of transactions per second. When these research-level technologies come into production, that's more than enough to power.

Can you elaborate on how data is going to be collected, stored and processed?

Wood: Broadly speaking, blockchain itself is used primarily for storing and querying the permissions concerning data, concerning the relations between individuals within the network graph.

There is data associated with individuals. There is data associated with connections between individuals and groups of individuals, and this data is generally encrypted. It floats around the network, but in an encrypted fashion. The ones that can decrypt it will be the ones that actually exist within the group, or, in the case of a point-to-point data, by the opposite side of the connection.

The means of encrypting it are most likely something similar to the things that are already used in applications like Signal.

What it boils down to is that the data won't sit on-chain. The data will be off-chain. It will be encrypted. Those who are creating the data will pre-encrypt it with the keys of those that are allowed to receive the data by creating the sort of authorizations that exist on the chain itself.

McCourt: There's lots of work going on. Ultimately, when people migrate, they'll be migrating to lots of different use cases. Think of this future not as one big Goliath that is an alternative to a current Goliath. Think of it as an ecosystem of a thousand Davids, 10,000 Davids.

It's a much healthier ecosystem where lots of innovation is occurring.

The timeframe Gavin's talking about, one to three years, is a good timeframe, because we need to get the governance right. We need people to understand what's at stake, because we screwed that up last time.

Very few people knew what the internet was truly capable of. It just happened. What was the mantra? “Move fast and break things.” That's not the loftiest goal in the world, I don't think. When you move fast and break things, you break things. That's what we're seeing right now.

Let's move fast and fix things. But during this one-to-three-year period, let's have a conversation at a societal level, about governance. What do we want this technology to achieve? What is the purpose of it?

It was a step that was skipped last time around. It's a mistake for us as citizens to put the onus on the technologists only and say, “Hey, this thing is all screwed up. Go fix it.” Technology alone is not going to fix it. We have to have conversations about what we want the tech to do. Tech is a tool. So as a hammer, you can go build a house with a hammer or you can go kill someone. Let's go build things with technology, instead of killing people and destroying democracy.

Frank, you've talked a little bit about regulation. What is the biggest thing regulators in the U.S. or in Europe could do, from your point of view, for this vision?

McCourt: To separate what I call crypto crap from real technology, and then understand that technology and what it's capable of, and not pass regulations that prevent that technology to flourish.

Wood: I would largely echo Frank’s sentiment there. If you're looking towards Europe, the regulations that are currently semi-decided essentially have taken the most extreme interpretation. They will essentially remove crypto from the world of legal technology. They aim to essentially put everything on centralized registered licensed entities. So if you want to interact with a blockchain at all, then you will need a license.

This is hugely shortsighted. It will potentially remove Europe from the world of advanced trust-free technology, essentially removing it from Web3.

This is not the first time that someone's going to try to build an alternative to Facebook. On the crypto side, some of the problems you mentioned are because of how crypto evolved, as a get-rich-quick type of technology that people are excited about. What are the things that have happened over the last 30 years that are top of mind for you in terms of saying, “Okay, we're not going to do that because that led to problems?”

McCourt: When Web 2.0 came on the scene, it was a very similar dynamic. There was a kind of a gold rush. It was buzzy. People were interested and capital moved towards it. A lot of silly things were built or were promoted. And money was raised for them and so forth.

People get caught up in the gold rush mentality. I guess it’s human nature. It's too bad. But Web 2.0 worked through it. The technology continued to evolve. Companies were built, including Facebook.

We have to get through the early innings where it kind of overcompensates for the get-rich-quick schemes and the gold rush mentality. This too shall pass.

Wood: I lived through the Microsoft hegemony in the mid-to-late ’90s. I lived through the dot-com bubble. I see a pattern arising. I see it happening again here. I can only put it down to human nature.

At the beginning of these broader techno-social trends, a lot of money floods in hoping to back the new giant. It was going to be the new Microsoft. People were looking for another Bill Gates. It inevitably goes basically to people that can talk the talk. They go into the VC outfits. The VCs like them. They get a bit of a rapport going. VC buys in. Hedge funds buy in after the VC. And we end up with incredibly expensive stuff, like Super Bowl ads. Will they exist in five, 10 years’ time? The reflection on history seems to suggest probably many of them will not.

Whereas, in the background, there is a lot of building happening. There was a lot of technology actually, being researched, being developed, and a lot of experiments being tried. And when the time is right, I would guess, let's say within the next three, four or five years, we will see something that everyone can agree legitimately adds value to its users’ lives.

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