I wonder if Al Gore ever looks down at us peons, crawling around the internet like eight-legged leeches:
I invented that. I took the initiative in creating the Internet. Now all these freeloaders are using MY internet protocol to drive billions of dollars worth of value. For FREE.
Damn, I should have done an ICO.
Even though Al Gore neglected to tokenize his internet protocol*, someone else came along with the next-best thing.
In 1999, a clever company called Enron invented something called a bandwidth contract.
The internet is just a bunch of routers and cables, sending and receiving data all day long. Most internet providers have peering agreements, where they carry each other’s traffic for free. Sharing is mutually beneficial, and their customers pay a fixed monthly rate regardless of use.
That’s all well and good when capacity is plentiful, but what happens if half the country wants to stream Sunday Night Football while I’m trying to sync my Bitcoin node? Whose data gets to go first?
Enron’s bandwidth contracts were designed to solve this potential queueing problem. By forcing internet users to bid for bandwidth by the minute, the free market would decide the optimal allocation of resources .
Sadly, Enron imploded before it could fully realize its bandwidth trading dream. Still, the idea of turning every network into a market was pretty hot in the dot-com days . To see how things might have turned out, we can look at a company called Mojo Nation.
A MASSIVE AMOUNT OF STORAGE SITS UNUSED IN DATA CENTERS AND HARD DRIVES AROUND THE WORLD. Let your hard drive shit out money by fulfilling storage requests on the open market!
Such is the marketing pitch of services like Filecoin, Sia, Storj, MaidSafe, and all those other decentralized file storage tokens. Seventeen years ago, their founders were still in diapers when Mojo Nation launched to address the problem of Pareto-inefficient data storage.
Mojo Nation created a digital payment system to buy and sell computational resources. Participants could earn Mojo tokens by contributing things like disk space, bandwidth, CPU cycles. Those who wanted resources offered bids in outgoing requests. Mojo tokens relied on a centralized mint because blockchains weren’t around yet, but centralization was the least of its problems: Tokens were a huge distraction from what users really wanted to do, which was share files .
A bidding market is an awfully complicated thing. Take Bitcoin, for instance. Each block has a finite capacity, so participants submit transaction fees to incentivize miners to include their transactions. It’s a simple concept, but transaction fees are the most aggravating part of Bitcoin. There are people like Roger Ver who have been using Bitcoin since 2011 and STILL can’t figure out how transaction fees work.
— Roger Ver (@rogerkver) January 5, 2017
I’m not trying to pick on Roger here; this is not a user-friendly experience. Those who want to tokenize all the protocols are effectively shoehorning the same shitty experience into every aspect of the internet. My mother can’t even update her Facebook picture without backup assist; how on earth will she manage five-dozen protocol tokens to navigate the web?
ICOs are funding development of the next generation of open Internet protocols. They might create more good for humanity than venture.
— Naval Ravikant (@naval) October 12, 2017
Many dot-com era platforms tried to create bandwidth exchanges, but none found willing participants. Enron and Blockbuster temporarily joined forces to create on-demand streaming video, in hopes that they could clog up so much bandwidth that internet providers would start a bandwidth bidding war. No such luck. As it turns out, bandwidth — and most computational resources — are simply too cheap to meter.
After Mojo Nation’s demise, a former employee stripped the token incentives out of the protocol and created a simple tit-for-tat filesharing system. The software client uploads files to peers that provide downloads . Users can’t accumulate credits, and sometimes freeloaders go unpunished, but people don’t care about perfect resource allocation — they just want convenient file access. By 2004, BitTorrent was responsible for a quarter of all the traffic on the internet.
And everyone lived Pareto sub-Optimally ever after.
* Kidding. The Internet Protocol was created by Vint Cerf and Bob Kahn. The only thing Al Gore invented was global warming.
1. Enron’s Bandwidth Trading patent, 2001.
2. Mark Miller and K. Eric Drexler. The Agoric Papers, 2000.
3. A conversation about Mojo Nation on Unenumerated, ca. 2007.
4. Bram Cohen. Incentives Build Robustness in BitTorrent, 2003.
5. Bryce Wilcox-O’Hearn, who now goes by Zooko, CEO of ZCash. Mojo Nation: Experiences Deploying a Large-Scale Emergent Network, IPTPS 2002.