May 30, 2019
The Death of Walled Gardens
With the rise of the Internet, people have been afforded an incredible amount of optionality in how they elect to spend their money and who they decide to do business with. Recognizing this fact, businesses have responded by creating proprietary systems that capture user data and make it nigh impossible for them to migrate to a competitor.
With businesses focused on locking in users to their service(s) so that they can continue billing them (or selling their data) despite the relative quality of what it is that they are providing, there is oftentimes much to be desired beyond the onboarding experience. So, what can we do to improve upon this?
Changing the Paradigm
In order to prevent lock-in of customers, there are two key changes which must occur:
- Sovereignty of data - people must be granted the right to own their own data and be free to take it wherever they please.
- The standardization of user data within industries and strict adherence to it by businesses.
Until recently, many businesses had no interest in entertaining either of these two ideas. But as traditional companies continue to find themselves pinned against a wall with the onslaught of new players in the market armed with better quality products, better customer service, etc… they recognize that it is in their best interest to coalesce to slow their collective loss of market share.
And this is exactly where the narrative dovetails with decentralized systems - which provide these businesses with a common way to interface between each other and allow them to be some of the first to the table with this new technology that many are heralding as the next version of the web. Now, while that analogy might seem a bit grandiose, there is no doubt that the combination of user-sovereignty of data and data standardization within industries has the ability to completely reshape the existing landscape of how businesses operate.
Sovereignty of Data
If you are an avid user of the Internet like most people, you likely have a number of different identities scattered across the web in something that looks a bit like the following.
At a high-level, there are a few core businesses with a corpus of user-data which make up their users’ identity as well as a plethora of other businesses (unlabeled) with very little user data. And given that the data is held within these businesses and not owned by the user themselves, it is continuously replicated across businesses in the form of disparate and unlinked identities.
To address this, a number of protocols and standards (OpenID, OAuth, OpenID Connect, etc...) have been developed over the past ~15 years to allow users to use their data and credentials from one business with another. And while these new technologies (e.g. “Login with Facebook”) are a marked improvement for user identity management, there is still one big elephant in the room.
While this is definitely an improvement over the previous diagram, you’ll notice that we still have a number of bifurcated and separate identities scattered amongst these various organizations. And this is exactly what the people working on decentralized identity are working on - the ability for users to own their own data and share / unshare it with whomever they please.
In this model, there’s a standard dataset for a user’s identity which can be augmented through various ‘claims’ which have been certified by various entities (businesses, individuals, governments, etc…). Such data is encrypted with user-specific information (e.g. biometric information, known password, social verification, etc…) to ensure that users are in control of their own data and can grant and revoke access to it by others as they please.
Such versatility and flexibility allows users to easily discontinue usage of services without fear of losing all of the data that they had offered in the process of using them. The difficulty here now lies in the question as to where such data would be stored - seems a bit strange for someone to say they own their data if it’s still all stored in AWS or Google, right?
So, where can someone store their data without having to worry about it being owned by a single entity or worry about not being able to access it at some point in the future? You guessed it - the blockchain.
But aren’t blockchains slow and unable to handle that much data? Well, any truly decentralized system is going to be quite sluggish in comparison to its centralized predecessor. But, we can scale their throughput and computational ability through localization of transactions via SKALE Chains or things like sharding.
Note: For those not familiar with SKALE Chains, please check out this article before proceeding.
With SKALE Chains, users are able to keep the majority of their monetary value in the Ethereum mainnet (only transferring what they need to their SKALE Chain) while outsourcing all execution to their own SKALE Chain. While SKALE Chains are chiefly intended for entire businesses to run their decentralized applications, they can be configured for individuals who are interested in having their decentralized application be an interface to their identity. In this fashion, SKALE Chains allow for the scaling of not only businesses in a decentralized manner, but individuals, as well!
And this is the future we believe in - one in which you are in control of your own data and can freely move between and amongst businesses based upon who is providing you the most value without worry of losing a portion of your identity. Which brings us to our next topic - the fact that keeping the data doesn’t necessarily mean that it is still valuable.
Data Standardization within Industry
If you were to export your Amazon profile and import it into Twitter, what would that look like? It’s likely that there wouldn’t be a whole lot aside from some basic profile information which could be transferred between the two. But that’s to be expected - Amazon and Twitter are in two completely different markets with little overlap in their goals.
And yet, you can take your Electronic Healthcare Record stored in Epic and fail trying to import it into Cerner! The fact of the matter is that many industries do not strictly enforce user data standards (aside from security) - reducing the chances for interoperability between systems. And again, many of these businesses choose not to pursue these standards so as to ensure that their users are locked in (it’s unlikely that a hospital would pay hundreds of millions of dollars to install Epic’s EHR system if standards were enforced and adhered to).
While some businesses will take longer to change, there are ones which are already feeling the pressure from new competitors and are furthering their efforts in cooperation to prevent their potential obsolescence. For instance, in the past few years we’ve seen a number of businesses contributing to industry standards through engagement with consortiums (ex: UPS joining the Blockchain in Trucking Alliance).
Once these consortiums have been established and standards have been set and enforced, businesses will depend chiefly on the quality of service that they offer their customers as a means of retaining them. Those customers who feel as though another service would serve them better will be able to easily migrate from one business to their competitor with ease.
And that’s how we see it playing out. Users having sovereignty of their data and being free to grant access to it for businesses best serving them and revoking access to businesses failing them. Which might sound a bit dreamy given the current business landscape, but as the world continues to get flatter and flatter, we see it as inevitable.
If this article resonated with you and you’d like to check out these ‘SKALE Chain’ we mentioned, make sure to join the SKALE community on Discord and check out the Developer Documentation! Also, feel free to also check out SKALE’s Technical Overview and Consensus Overview for a deeper dive into how SKALE works and is able to provide 20,000 TPS.
SKALE’s mission is to make it quick and easy to set up a cost-effective, high-performance SKALE Chain that runs full-state smart contracts. We aim to deliver a performant experience to developers that offers speed and functionality without giving up security or decentralization. Follow us here on Telegram, Twitter, Discord, and sign up for updates via this form on the SKALE website.