The Inevitable Read online

  Accessing is not very different from renting. In a rent relationship the renter enjoys many of the benefits of ownership, but without the need for an expensive capital purchase or upkeep. Of course, renters are disadvantaged as well because they may not gain all the benefits of traditional ownership, such as rights of modification, long-term access, or gains in value. The invention of renting was not far behind the invention of property, and today you can rent almost anything. How about women’s handbags? Top-of-the-line brand-name handbags sell for $500 or more. Since bags are often matched to outfits or seasonal fashions, a selection of fancy bags can get expensive real quick, so a sizable bag rental business has emerged. Rentals start around $50 per week, depending on the bag’s demand. As expected, apps and coordination make renting smoother, more effortless. Renting thrives because, for many uses, it is better than owning. Bags can be swapped to match outfits, returned so one does not need to store them. For short-term uses, sharing ownership makes sense. And for many of the things we will use in the upcoming world, short-term use will be the norm. As more items are invented and manufactured—while the total number of hours in a day to enjoy them remains fixed—we spend less and less time per item. In other words, the long-term trend in our modern lives is that most goods and services will be short-term use. Therefore most goods and services are candidates for rental and sharing.

  The downside to the traditional rental business is the “rival” nature of physical goods. Rival means that there is a zero-sum game; only one rival prevails. If I am renting your boat, no one else can. If I rent a bag to you, I cannot rent the same bag to another. In order to grow a rental business of physical things, the owner has to keep buying more boats or bags. But, of course, intangible goods and services don’t work this way. They are “nonrival,” which means you can rent the same movie to as many people who want to rent it this hour. Sharing intangibles scales magnificently. This ability to share on a large scale without diminishing the satisfaction of the individual renter is transformative. The total cost of use drops precipitously (shared by millions instead of one). Suddenly, consumer ownership is not so important. Why own when you get the same real-time utility from renting, leasing, licensing, sharing?

  For better or worse, our lives are accelerating, and the only speed fast enough is instant. The speed of electrons will be the speed of the future. Deliberate vacations from this speed will remain a choice, but on average communication technology is biased toward moving everything to on demand. And on demand is biased toward access over ownership.

  Decentralization

  We are at the midpoint in a hundred-year scramble toward greater decentralization. The glue that holds together institutions and processes as they undergo massive decentering is cheap, ubiquitous communication. Without the ability to remain connected as things spread wide into networks, firms would collapse. That’s true, but also slightly backward. It’s truer to say that the technological means of instant long-distance communications enabled this era of decentralization. That is, once we wrapped the globe in endless circles of wires crossing the deserts and beneath the oceans, decentralization was not only possible, but inevitable.

  The consequence of moving away from centralized organization to the flatter worlds of networks is that everything—both tangible and intangible—must flow faster to keep the whole going together. Flows are hard to own; possession seems to just slip through your fingers. Access is a more appropriate stance for the fluid relations that govern a decentralized apparatus.

  Nearly every aspect of modern civilization has been flattening down except one: money. Minting money is one of the last jobs left for a central government that most political parties agree is legitimate. It takes a central bank to battle the perennial scourges of counterfeit and fraud. Someone has to regulate the amount of money issued, keep track of the serial numbers, ensure that the money is trusted. A robust currency requires accuracy, coordination, security, enforcement—and an institution that takes responsibility for all those. Thus behind every currency stands a watchful central bank.

  But what if you could decentralize money as well? What if you created a distributed currency that was secure, accurate, and trustworthy without centralization? Because if money could be decentralized, then anything can be decentralized. But even if you could, why would you?

  Turns out you can decentralize money, and the technology to do this may be instrumental in decentralizing many other centralized institutions. The story of how the most centralized aspect of modern life is being decentralized holds lessons for many other unrelated industries.

  To begin: I can pay you in cash, and that decentralized transaction is anonymous to a central bank. But moving physical cash around is not practical as our economy goes global. PayPal and other peer-to-peer electronic systems are able to bridge the vast geographical spans on a global economy, but each of its peer-to-peer payments must go through a central database to be sure a dollar is not spent twice or is not fraudulent. Mobile phone and internet companies devised very useful payment schemes for impoverished areas based on a phone app, such as M-Pesa. But until recently even the most advanced e-money system needed a central bank to keep the money honest. Six years ago some shady characters who wanted to sell drugs online with the anonymity of cash were looking for a currency without a government hand. And some admirable characters championing human rights were looking for a money system that would work outside of corrupt or repressive governments, or in places of no governance at all. What they together came up with is Bitcoin.

  Bitcoin is a fully decentralized, distributed currency that does not need a central bank for its accuracy, enforcement, or regulation. Since it was launched in 2009, the currency has $3 billion in circulation and 100,000 vendors accepting the coins as payment. Bitcoin may be most famous for its anonymity and the black markets it fueled. But forget the anonymity; it’s a distraction. The most important innovation in Bitcoin is its “blockchain,” the mathematical technology that powers it. The blockchain is a radical invention that can decentralize many other systems beyond money.

  When I send you one U.S. dollar via a credit card or PayPal account, a central bank has to verify that transaction; at the very least it must confirm I had a dollar to send you. When I send you one bitcoin, no central intermediary is involved. Our transaction is posted in a public ledger—called a blockchain—that is distributed to all other bitcoin owners in the world. This shared database contains a long “chain” of the transaction history of all existing bitcoins and who owns them. Every transaction is open to inspection by anyone. That completeness is pretty crazy; it’s like every person with a dollar having the complete history of all dollar bills as they move around the world. Six times an hour this open distributed database of coins is updated with all the new transactions of bitcoins; a new transaction like ours must be mathematically confirmed by multiple other owners before it is accepted as legitimate. In this way a blockchain creates trust by relying on mutual peer-to-peer accounting. The system itself—which is running on tens of thousands of citizen computers—secures the coin. Proponents like to say that with bitcoin you trust math instead of governments.

  A number of startups and venture capitalists are dreaming up ways to use blockchain technology as a general purpose trust mechanism beyond money. For transactions that require a high degree of trust between strangers, such as real estate escrows and mortgage contracts, this validation was previously provided by a professional broker. But instead of paying a traditional title company a lot of money to verify a complex transaction such as a house sale, an online peer-to-peer blockchain system can execute the exchange for much less cost, or maybe for free. Some blockchain enthusiasts propose creating tools that perform a complicated cascade of transactions that depend on verification (like an import/export deal) using only decentralized automated blockchain technology, thereby disrupting many industries that rely on brokers. Whether Bitcoin itself succeeds, its blockchain innovation,
which can generate extremely high levels of trust among strangers, will further decentralize institutions and industries.

  An important aspect of the blockchain is that it is a public commons. No one really owns it because, well, everyone owns it. As a creation becomes digital, it tends to become shared; as it becomes shared, it also becomes ownerless. When everyone “owns” it, nobody owns it. That is often what we mean by public property or the commons. I use roads that I don’t own. I have immediate access to 99 percent of the roads and highways of the world (with a few exceptions) because they are a public commons. We are all granted this street access via our payment of local taxes. For almost any purpose I can think of, the roads of the world serve me as if I owned them. Even better than if I owned them, since I am not in charge of maintaining them. The bulk of public infrastructure offers the same “better than owning” benefits.

  The decentralized web/internet is now the central public commons. The good of the web serves me as if I owned it, yet I need to do very little to maintain it. I can summon it anytime, with the snap of a finger. I enjoy the full benefits of its amazing work—answering questions like a genius, navigating like a wizard, entertaining like a pro—without the burdens of ownership, simply by accessing it. (I pay its taxes with my subscriptions for internet access.) The more our society decentralizes, the more important accessing becomes.

  Platform Synergy

  For a long time there were two basic ways to organize human work: a firm and a marketplace. A firm, such as a company, had definite boundaries, was permission based, and enabled people to increase their efficiency via collaboration more than if they worked outside the firm. A marketplace had more permeable borders, required no permission to participate, and used the “invisible hand” to allot resources most efficiently. Recently a third way to organize work has emerged: the platform.

  A platform is a foundation created by a firm that lets other firms build products and services upon it. It is neither market nor firm, but something new. A platform, like a department store, offers stuff it did not create. One of the first widely successful platforms was Microsoft’s operating system (OS). Anyone with ambition could build and sell a software program that ran on the OS that Microsoft owned. Many did. Some, like the first spreadsheet, Lotus 1–2–3, prospered tremendously and became mini platforms themselves, birthing plug-ins and other third-party derivatives for their product. Levels of highly interdependent products and services form an “ecosystem” that rests upon the platform. “Ecosystem” is a good description because, just as in a forest, the success of one species (product) depends on the success of others. It is the deep ecological interdependence of a platform that discourages ownership and promotes access instead.

  Later, a second generation of platforms acquired more of the attributes of markets, so they were a bit of a market and a firm. One of the first of these was iTunes for the iPhone. Apple, the firm, owned the platform, which also became a marketplace for phone apps. Vendors pitched a virtual stall and sold their apps on iTunes. Apple regulated the market, weeding out junky, exploitative, or nonworking applications. It set rules and protocols. It oversaw the financial exchanges. You could say Apple’s new product was the marketplace itself. ITunes was an entire ecosystem of apps constructed on the capabilities built into the phone, and it boomed. Since Apple kept adding ingenious new ways to interact with the phone, including new sensors such as a camera, GPS, and an accelerometer, thousands of novel species of innovations deepened the iPhone ecology.

  A third generation of platforms further expanded the power of the marketplaces. Unlike traditional two-sided markets—say, a farmers’ market that enables buyers and sellers—a platform ecosystem became a multisided market. A good example of this is Facebook. The firm created some rules and protocols that formed a marketplace where independent sellers (college students) produced their own profiles, which were matched up in a marketplace with their friends. The attention of the students was sold to advertisers. Game companies sold to students. Third-party apps sold to advertisers. Third-party apps sold to other third-party apps. And so on in multiple-way matches. This ecosystem of interdependent species keeps expanding, and will keep expanding as long as Facebook can manage its rules and its own growth as a firm.

  The wealthiest and most disruptive organizations today are almost all multisided platforms—Apple, Microsoft, Google, and Facebook. All these giants employ third-party vendors to increase the value of their platform. All employ APIs extensively that facilitate and encourage others to play with it. Uber, Alibaba, Airbnb, PayPal, Square, WeChat, Android are the newer wildly successful multiside markets, run by a firm, that enable robust ecosystems of derivative yet interdependent products and services.

  Ecosystems are governed by coevolution, which is a type of biological codependence, a mixture of competition and cooperation. In true ecological fashion, supporting vendors who cooperate in one dimension may also compete in others. For instance, Amazon sells both brand-new books from publishers and, via its ecosystem of used-book stores, cheaper used versions. Used-book vendors compete with one another and with the publishers. The platform’s job is to make sure it makes money (and adds value!) whether the parts cooperate or compete. Which Amazon does well.

  At almost every level of a platform, sharing is the default—even if it is just the rules of competition. Your success hinges on the success of others. Maintaining the idea of ownership within a platform becomes problematic, because it rests on notions of “private property”; but neither “private” nor “property” has great meaning in an ecosystem. As more is shared, less will act like property. It is not a coincidence that less privacy (constant sharing of intimate lives) and more piracy (disregard of intellectual property) are both breeding on platforms.

  However, the move from ownership to access has a price. Part of what you own with ownership is the right—and ability—to modify or control the use of your property. That right of modification is sorely missing in many of today’s popular digital platforms. Their standard terms of service forbid it. You are legally restricted as to what you can do with the stuff you access versus what you buy. (To be honest, the ability to modify is also squeezed from classic retail purchases as well—think of those silly shrink-wrap warranties.) But the right and ability to modify and control are present in open source platforms and tools such as the Linux OS or the popular Arduino hardware platform, which is part of their great attraction. The ability and right to improve, personalize, or appropriate what is shared will be a key question in the next iteration of platforms.

  Dematerialization and decentralization and massive communication all lead to more platforms. Platforms are factories for services; services favor access over ownership.

  Clouds

  The movies, music, books, and games that you access all live on clouds. A cloud is a colony of millions of computers that are braided together seamlessly to act as a single large computer. The bulk of what you do on the web and phone today is done on cloud computing. Though invisible, clouds run our digital lives.

  A cloud is more powerful than a traditional supercomputer because its core is dynamically distributed. That means that its memory and work is spread across many chips in a massively redundant way. Let’s say you were streaming a long movie and suddenly an asteroid smashed one tenth of the machines that made up the cloud. You might not notice any interruption in the movie because the movie file did not reside in any particular machine but was distributed in a redundant pattern across many processors in such a way that the cloud can reconfigure itself if any of those units fail. It’s almost like organic healing.

  The web is hyperlinked documents; the cloud is hyperlinked data. Ultimately the chief reason to put things onto the cloud is to share their data deeply. Woven together, the bits are made much smarter and more powerful than they could possibly be alone. There is no single architecture for clouds, so their traits are still rapidly evolving. But in general they are h
uge. They are so large that the substrate of one cloud can encompass multiple football field–size warehouses full of computers located in scores of cities thousands of miles apart. Clouds are also elastic, meaning they can be enlarged or shrunk almost in real time by adding or dropping computers to their network. And because of their inherent redundant and distributed nature, clouds are among the most reliable machines in existence. They can provide the famous five nines (99.999 percent) of near perfect service performance.

  A central advantage of a cloud is that the bigger it gets, the smaller and thinner our devices can be. The cloud does all the work, while the device we hold is just the window into the cloud’s work. When I look into my phone screen and see a live video stream, I am looking into the cloud. When I flick through book pages on my tablet, I am surfing the cloud. When the face of my smartwatch lights up with a message, it is coming from the cloud. When I flip open my cloudbook laptop, everything that I work on is actually somewhere else, in a cloud.

  The ambiguity of where my stuff is and whether it is in fact “mine” can be illustrated by the example of a doc on Google. I usually use the Google Drive app to write a marketing letter. “My” letter appears on my laptop or my phone, but its essence lives in Google’s cloud, dispersed across many far-flung machines. A key reason I use Google Drive is its ease of collaboration. A dozen or more collaborators can see that letter on their tablet and work on it—edit, add, delete, modify—as if it were “their” letter. Changes made on any of those copies will appear simultaneously—in real time—on all other copies anywhere in the world. It’s kind of miraculous, this distributed cloud existence. Each instance of the letter is much more than a mere copy, a term that suggests an inert reproduction. Rather, each person experiences the distributed copy as the original on their device! Each of the dozen copies is as authentic as the one on my laptop. Authenticity is distributed. This collective interaction and distributed being makes the letter feel less mine and more “ours.”