Is the Internet of Value the new Internet?
What is the internet of value?
The Internet of Value is an overlay to the Internet of Information that allows moving value over the internet in real-time between peers and without the need for intermediaries and related incurred costs. Just like the users of the Internet exchange information in real-time without the need of third party authorisation but only with the use of the infrastructure, likewise on the Internet of Value peers will exchange value over the internet in terms of money, assets, property rights, vote, financial instruments, etc without a central authority validating transactions and only with the use of blockchain technology. As digital visionary Don Tapscott stated in 2016, the internet’s weak point is when you send information to someone over the internet you don’t actually send the information itself, but just a copy of this information allowing you to keep the original one (MacIver 2016). The underlying technology of the IoV that is blockchain solves this problem by eliminating double-spending and removing any incumbent company that used to validate authenticity in the past due to its decentralised nature. Hence, you don’t need any more to send a copy of the information but the original and pass ownership to the other party involved in the transaction. This allows for low entry barriers and a global economy with no borders.
The IoV will transform the way people perform financial transactions by becoming their own bank. Blockchain technology allows this by owning a crypto wallet, whilst validation of transactions is managed by the network itself. Also, the IoV will lead to the full tokenisation of everything in the future that will make non-liquid assets high liquid with low transaction costs. For instance, the demand and supply of land property will be easily met on the blockchain making the asset easily liquid and accelerate transferring ownership at low cost through smart contracts.
Similarities and Differences
Both concepts of the Internet of Information and Internet of Value use open network protocols TCP/IP and Blockchain accordingly, for peers to exchange information and value. Additionally, this exchange happens instantly for both Internet and IoV, whilst distributed networks and distributed ledgers allow for decentralization of information and value respectively. In their nascent form, the internet was only available through dial-up modem connections with scalability issues that incurred high call charges. Likewise, current mainstream blockchain solutions as Bitcoin and Ethereum are difficult to scale due to low transaction throughput and high network fees to maintain security.
However, there are distinctive differences between them at the very early stage. The timeframe that the Internet became available to the public from its inception lasted almost 3 decades, while for blockchain this happened almost immediately, in three years with Mt.Gox for trading and the technology itself from the very beginning. The internet was an interconnection of proprietary networks from government, academia and industry, whereas blockchain was a libertarian movement based on the 2008 global crisis that gave birth to a solution needed to tackle the market power of intermediaries and democratise the payment system. Furthermore, fundraising to accelerate the development of the internet was very slow at the early stage due to solely governmental funding from specific countries like the USA, UK and France. In contrast, ICOs’ crowdfunding method assisted the rapid development of blockchain by the involvement of international and non-traditional investors.
History repeats itself
In February 1995, Newsweek published an article by Clifford Stoll titled “Why the web won’t be Nirvana.” He was one of the many during that period criticising this new technology and its potential just as there are many critics for cryptocurrencies nowadays, like Economist Nouriel Roubini, professor of economics at New York University’s Stern School of Business that was an early critic of Bitcoin.
“I’m uneasy about this most trendy and oversold community. Visionaries see a future of telecommuting workers, interactive libraries, and multimedia classrooms. They speak of electronic town meetings and virtual communities. Commerce and business will shift from offices and malls to networks and modems. Baloney. Do our computer pundits lack all common sense? The truth is no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works.” (Stoll 1995)
In that same article, Stoll noted that “Yet Nicholas Negroponte, director of the MIT Media Lab, predicts that we’ll soon buy books and newspapers straight over the Internet. Uh, sure.”
In analogy to the views expressed by Stoll and Negroponte for the evolution of the internet and its impact on society, Negroponte’s prediction for the Internet of Value may be more possible to happen. Stoll seemed completely tied to the time he was writing this article in 1995 where the internet was a dial-up modem connection with limited capabilities and people’s habits were led by the previous century. He failed to see that most of the daily human activities remain the same but the medium they take place changes historically. This is what Negroponte comprehended that the medium of information is usually a socio-economic construct just like money. The exchange of information will always be happening between humans in history as well as the exchange of value, but the way this occurs may be a cave painting in prehistoric times for information or a stoned ledger in ancient Mesopotamia representing value transfer or the Intenet and the IoV nowadays.
Similar to Stoll, many tech giants at the advent of the Internet like Microsoft and Comcast failed to see that computers will be the Information SuperHighway and not "smart" TVs due to computers' low adoption rate (Gai 2019). Conclusively, the majority of people even experts in their field evaluate innovation by the current surrounding technology and how people address to new trends at the time. Although this is not completely untrue since only the advent of smartphones would allow the proliferation of moving daily activities to the internet, the current pandemic forced the rapid digitalization of the modern world proving that unforeseen circumstances can alter things drastically.
However, many challenges must be addressed effectively for the widespread adoption of the IoV. Except for the issues of scalability, security, privacy, interoperability and governance that are mainly technical, regulation and conflicts of interest may hinder IoV’s fast adoption. Financial activities are historically regulated unlike information and the internet, while traditional financial institutions have a stake in the payment system for centuries and will probably impede the realisation of IoV if they don’t get there first. Hence, the future of the IoV depends closely on the way that governments will act on public policy and how incumbents will deal with competition or potential loss of their current privileges. Added to this, due to the IoV’s current unregulated form through cryptocurrencies and since it is a private initiative from newcomers to the market it is rife with fraud, scams and speculation which make public opinion cautious to its adoption in comparison to the internet that had the credibility of the state. Another aspect also that raises concerns is that the decentralisation of information and value inherited in both concepts although pure to its nature is debatable. Due to current cloud services, the information is concentrated on the servers of specific big tech companies likewise, cryptocurrencies are concentrated mostly in the custody of centralised exchange platforms and not on personal wallets.
The near future of the IoV seems to entail many forms of currencies and assets such as Cryptocurrencies, CBDCs, fiat currencies, private companies’ tokens (MacIver 2016) and many ways to have a peer-to-peer exchange with or without undercovered intermediaries.
Gai, Remi. Internet vs Blockchain Revolution: Early Successful Products (Part 1). March 11, 2019. https://medium.com/hackernoon/internet-vs-blockchain-revolution-early-successful-products-part-1-2207f1ccd716 (accessed April 12, 2021).
MacIver, Kenny. From the internet of information to the internet of value. July 2016. https://www.i-cio.com/big-thinkers/don-tapscott/item/from-the-internet-of-information-to-the-internet-of-value (accessed April 13, 2021).
Stoll, Clifford. “Why the Web Won’t Be Nirvana.” Newsweek. February 26, 1995. https://www.newsweek.com/clifford-stoll-why-web-wont-be-nirvana-185306.
* Originally posted on Medium by Konstantinos Karagiannis. Article republished with author's permission. https://kk-63384.medium.com/internet-of-value-vs-internet-of-information-two-stories-with-the-same-ending-b991035e4184