Home / Digital Bank / Decentralisation demands data safes

Decentralisation demands data safes

I keep thinking about the future internet and the ideal of creating a network where no one controls anything. It may sound silly, but it is developing already. In fact, in HBO’s excellent series Silicon Valley, the guys at Pied Piper recently did a pivot to try to create exactly this. The start-up gang are trying to create a new internet that cuts out intermediaries like Facebook and Google, by using a peer-to-peer network built on top of every smartphone on the planet, effectively rendering huge data centres full of servers unnecessary.

“If we could do it, we could build a completely decentralized version of our current internet, with no firewalls, no tolls, no government regulation, no spying. Information would be totally free in every sense of the word”, says the leader of Pied Piper, Richard Hendricks, on the show.

Utopian dream or dystopian nightmare?

Regardless of what you think, it’s going to happen anyway as people like Sir Tim Berners-Lee work hard on creating a decentralised network.

On the better web Berners-Lee envisions, users control where their data is stored and how it’s accessed. For example, social networks would still run in the cloud. But you could store your data locally. Alternately, you could choose a different cloud server run by a company or community you trust. You might have different servers for different types of information—for health and fitness data, say—that is completely separate from the one you use for financial records.

This gets interesting as it does start to play to the data vault idea I’ve been floating for a while. In a future decentralised internet, the cloud server you trust may well be the bank’s server.
Why? Because the bank has a licence to guarantee your data is stored and never lost. That licence is currently for your money but, as data is money, it is now for your data.

What would I store there?

Photos, memories, documents, cryptocurrencies, wire transfers, digital assets.

In fact, it is interesting when I think about digital asserts and realise that I have a lot of them today. A decade’s worth of memories on Facebook and Twitter; $1000’s in crypto; emails documenting contracts and investments; a lengthy track record of buying rubbish on Amazon and eBay; and so on. Sure, I have the physical manifestation of these investments and purchases, but the actual transaction of buying something, at a certain price on a certain day, is important to me too. How much did you spend on that Captain Scarlett collection in 2005? What is the value today of the comic you bought ten years ago for $5? Is it worth selling your car and how much has it devalued?

Right now, I have no safe store for this data. Equally, where I do use a safe store – Facebook and Gmail – there is no guarantee they will store it. Even if they do, there’s no safety around that data, which is why it gets abused by these companies with rigged search results, fake news and selling your personal details to anyone who wants them. If the service is free, you are the product.

That is why I keep coming back to the idea that people will pay for a safe data store in a decentralised internet. If I now have to manage my own data, rather than a centralised service doing it for me, then what does that mean? It means that I need a safe way to manage my data. Even the most aware of us are probably bad at doing this – how often do you back up your photos and do you do it once, twice or many times? – and this will become a differentiating factor in the future.

For example, someone said to me: how will banks make money on storing memories? I said they would charge for it like an insurance policy. What are your memories worth? $1 million? OK, the charge for our data vault is $100 a year for that coverage; $1,000 for $10 million coverage; or $10 for $100,000 cover. You get the idea.

These ideas of a decentralised network will create new business models and structures, and the storage of digital assets will be a huge new financial marketplace opportunity for those who get there first.

I know I’ve blogged quite a bit about this recently:

But it’s not a new theme for me. For example, five to ten years ago I was saying the same thing:

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

Check Also

Are legacy companies holding back the future?

In my presentations I regularly talk about legacy Europe and America and leapfrog countries from …