Decentralization was key to the Internet early on: The motivation for the Internet was to have a network that could survive a nuclear attack. It was born out of the dangers of the Cold War. At the time there were data networks but they all ran through centralized switches
People forget that it was actually illegal to use the internet for commercial activity until 1993.
The first Internet store was a book store. It was not Amazon. It was a little tiny science fiction bookstore called Future Fantasy Books.
Future Fantasy Books did not own a computer. They had a fax machine. You would order the book online and the bookstore would get a fax. The guy in the store would package up the book and ship it. In the first two weeks the bookstore’s business doubled. It turns out there were science fiction readers all over the world that started ordering.
E-commerce was not obvious. It was not obvious that it was going to make sense to have these online businesses. It was not obvious that the use cases were going to have consumer demand. It was not obvious that you were going to be able to secure it. It was not obvious that there would ever be a business model behind it. All of that had to be invented.
The original sin of the Internet: If you are paying for the information you are getting then you know there is an alignment of interest between the person giving you the information and you. You might thing the logical thing to do is have a buy button in the browser. You would think it was the most obvious thing to do. That didn't happen. Because we were unable to build payments into the browser the Internet [in the West] is predominately based on advertising. Downstream from advertising is everything else that people are anxious and worked up about online: privacy, user data collection, user data targeting, 3rd party ad networks that harvest all this data etc. The misalignment of incentives. Does the news site you are reading have the incentive to actually tell you the truth? Or are they getting their money from the advertiser and so they are just trying to get you hyped up so you click on more stories and they generate more revenue?
If we would have had cryptocurrency [in the early 1990s] we would have been able to have a completely parallel payment system [for the Internet] that would not have been reliant on the centralized gatekeepers [Visa, MasterCard, Banks]. Had we done that 80% of what people hate about the Internet today would not have been problems.
Cryptocurrency is the chance to revisit the original sin: What if you could align economics with user behavior? This is how the real world works. How do I know something is valuable? Somebody is willing to pay for it. The big what if is what businesses models could have existed this entire time? The Internet generated a lot of economic growth with just the advertising model. What if you had had a real economic model based on money integrated into the Internet from the very beginning? What kinds of services would entrepreneurs come up with that we haven’t even thought of yet?
What if we could build a different system? A system were advertising wasn’t the central model. How might that be an improvement? Either an improvement on what we have or just something completely different, better, and potentially much bigger than we have today. This is what we are seeing at our firm: Entrepreneurs thinking in these terms.
Full podcast here: a16z Podcast: From the Internet's Past to the Future of Crypto
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