a16z partner's new book excerpt: Read Write Own, a new movement for ownership

Written by: a16z

Compiled by: Deep Tide TechFlow

Introduction

In a16z's weekend special edition Newsletter, we will share adapted excerpts from Chris Dixon's (A16z partner) newly published book, Read Write Own: Building the Next Era of the Internet. It mainly discusses the shortcomings of the existing internet and the advantages of a new type of internet brought by blockchain in the future.

Main Text

The internet may be the most important invention of the twentieth century. It changed the world, just as earlier technological revolutions (the printing press, steam engine, electricity) did.

Unlike many other inventions, the internet was not immediately monetized. Its early designers created this network not as a central organization, but as an open platform that anyone (artists, users, developers, companies, and others) could access equally. At relatively low costs, without needing approval, anyone anywhere could create and share code, art, writing, music, games, websites, startups, or anything else people could imagine.

Moreover, whatever you created was yours. As long as you followed the law, no one could change your rules, demand more money from you, or take away what you had built. The design of the internet was permissionless and democratically governed, just like its original networks: email and the web. No participant enjoyed privileges. Anyone could build on these networks, controlling their own creative and economic destinies.

This freedom and sense of ownership ushered in a golden age of creativity and innovation, driving the development of the internet and leading to countless applications that changed our world and how we live, work, and entertain ourselves.

Then everything changed. Starting in the mid-2000s, a small group of companies seized control. The internet became intermediated. The web shifted from permissionless to permissioned.

The good news is: billions of people gained access to amazing technologies, many of which are free to use. The bad news is that a centralized internet operated by a few major ad-based service companies means fewer choices in software, weakened data privacy, and diminished control over online lives. For startups, creators, and other groups, it became increasingly difficult to thrive on the internet without worrying that centralized platforms would change the rules, take away their audiences, profits, and power.

While these platforms provide significant value, they also control what we see and hear. The most obvious example is "deplatforming": in this case, service providers often expel people without transparent due process. Additionally, people may be banned without their knowledge, a practice known as "shadowbanning." Search and social ranking algorithms can change lives, make or break a business, and even influence elections.

A more subtle but equally concerning issue is how these centralized networks limit and constrain startups, extract high rents from creators, and deprive users of rights. The negative impacts of these design choices stifle innovation, tax creativity, and concentrate power and wealth in the hands of a few.

This is especially dangerous when you consider that the killer application of the internet is the network itself.

Most of what people do online involves networks: the web and email are networks, social applications are networks, payment applications are networks, and marketplaces are networks. Almost every useful online service is a network. Networks—certainly computing networks, but also developer platforms, marketplaces, financial networks, social networks, and various online communities—have always been a powerful part of the internet's promise.

Developers, entrepreneurs, and ordinary internet users have nurtured and cultivated thousands of networks, unleashing an unprecedented wave of creativity and coordination. However, most of the enduring networks are largely owned and controlled by private companies.

The problem stems from permission. Today, creators and startups need permission from centralized incumbents to launch and grow new products. But dominant tech companies leverage the power of permission to stifle competition, disrupt markets, and extract fees. And these fees are outrageous: payment fees in app stores can be as high as 30%. This is more than ten times the standard in the payments industry.

In other markets, such high fees are unheard of, reflecting how powerful these companies have become.

These large centralized networks are ruthless, anti-competitive, and abuse their power. They suppress competitors and reduce consumer choice. By cutting off third parties that are building applications for users, they punish many developers, which in turn punishes users by providing fewer products, less choice, and less freedom. Today, almost no new startup activity occurs on social networks.

Many people do not see a problem with the status quo, feel satisfied with it, or do not care much about it. They are content with the comfort provided by these centralized platforms and networks. After all, we live in a vibrant era. You can connect with anyone (assuming the company owner agrees). You can read, watch, and share anything you like. There are many "free" services available to us—the entry fee is just our data. As they say, "If it's free, then you are the product."

Perhaps you think this trade-off is worth it, or you believe there are no viable alternatives to online life. Regardless of your stance, one trend is undeniable: centralized power is steering the internet inward, concentrating power in what should be decentralized networks.

The inwardness of the internet is stifling innovation, making it less interesting, vibrant, and fair.

Even if someone recognizes the problem, they often believe that the only way to constrain existing giants is through government regulation. This may be one solution. But regulation often produces unintended side effects that entrench the power of existing giants. Larger companies can cope with compliance costs and regulatory complexities, while complex regulations stifle the growth of newcomers.

We need a fair competitive environment. To achieve this, we need thoughtful regulation that respects the fundamental fact: startups and technology provide a more effective way to curb the power of existing companies. Moreover, short-sighted regulation overlooks the differences between the internet and other technologies. Many regulations assume the internet is similar to past communication networks, such as telephone and cable networks. But these hardware-based legacy networks are different from the software-based internet. The internet certainly relies on the physical infrastructure owned by telecom operators. But what drives internet service behavior is the code running on personal computers, phones, and servers. This code can be upgraded. With the right functionality and incentives, new software can spread across the internet.

Due to its plasticity, the internet can be reshaped through innovation and market forces. Software is special because it has nearly limitless expressiveness. Almost anything you can imagine can be encoded into software; software is the encoding of human thought, just like writing, painting, or cave paintings. Computers accept these encoded ideas and run them at lightning speed.

This is why Steve Jobs once described computers as "bicycles for the mind." They accelerate our capabilities.

Software is so expressive that it should be seen more as an art form than as engineering. The plasticity and flexibility of code provide a very rich design space, more akin to the possibilities of creative activities like sculpture and fiction writing than to engineering activities like bridge building. Like other art forms, practitioners often develop new genres and movements that fundamentally change the possibilities.

This is what is happening today. Just as the internet seems to be irreversibly consolidating its position, a new software movement has emerged that can reimagine the internet. This movement has the potential to restore the spirit of the early internet: providing creators with secure property rights; reclaiming ownership and control for users; breaking the grip of large centralized companies over our lives.

This is still in its early stages. The internet can still achieve its original vision. Entrepreneurs, technologists, creators, and users can make this happen. The dream of an open network that fosters creativity and entrepreneurship does not have to die.

This is the beginning of internet innovation, not the end. However, there is a sense of urgency: the U.S. has already lost its lead in this new movement.

Read Write Own: A New Movement

To understand how we got here, it is helpful to be familiar with the general outline of internet history: the primary thing to know is that power on the internet comes from how networks are designed. Network design (how nodes connect, interact, and form an overall structure) may seem like an obscure technical topic, but it is the most important factor determining the distribution of rights and funds on the internet. Even small initial design decisions can have profound consequences for the control and economics of internet services.

In short, network design determines the outcomes.

Until recently, networks were divided into two competing types:

• "Protocol networks," such as email and the web, are open systems controlled by communities of software developers and other network stakeholders. These networks are equal, democratic, and permissionless: anyone can access them freely. In these systems, money and power often flow to the edges of the network, and incentive systems grow around them.

• "Corporate networks" are networks owned and controlled by companies rather than communities. They are like walled gardens controlled by a giant corporation; they are theme parks controlled by a single large enterprise. Corporate networks run centralized, permissioned services that allow them to rapidly develop advanced features, attract investment, and accumulate profits to reinvest in growth. In these systems, money and power flow to the center of the network, to the companies that own the network, away from the users and developers at the edges of the network.

I view the history of the internet as a development through three stages, each characterized by a dominant network architecture:

• In the first stage, the "Read Era" (approximately 1990-2005), early internet protocol networks democratized information. Anyone could type a few words into a web browser and read information on almost any topic through websites.

• In the second stage, the "Read-Write Era" (approximately 2006-2020), corporate networks democratized publishing. Anyone could publish posts through social networks and other services, addressing a mass audience.

• Now, a new architecture is driving the third stage of the internet. This architecture represents a natural synthesis of the first two types, and it is democratizing ownership. In the upcoming "Read Write Own Era," anyone can become a stakeholder in the network, gaining powers and economic advantages that were previously only available to a few company affiliates (such as shareholders and employees).

This new era promises to combat the monopolies of large companies and return the internet to its vibrant roots.

People can read and write on the internet, but now they can also own.

"Blockchain" and "blockchain networks" are the technologies driving this movement. This new movement has various names. Some call it "cryptocurrency," as its technology is based on cryptography. Others refer to it as "Web3," indicating that it is leading the third era of the internet. Regardless of which name you prefer, the core technology of blockchain has unique advantages. Blockchain networks are the most credible and civic-minded forces against internet monopolies.

You might still be wondering, what problem does blockchain solve?

Some people will tell you that blockchain is a new type of database that multiple parties can edit, share, and trust. A better description is that blockchain is a new type of computer, but you cannot put it in your pocket or on your desk like a smartphone or laptop. They store information and run rules encoded in software that can manipulate that information.

But the significance of blockchains lies in the unique way they (and the networks built on them) are controlled.

In traditional computers, hardware controls software. Hardware exists in the physical world, owned and controlled by a person or organization. This means that ultimately, one person or a group of people controls both the hardware and software. People can change their minds at any time, and thus change the software they control. Blockchain disrupts the power relationship between hardware and software, just like the earlier internet did. In a blockchain, software controls a set of hardware devices. Software governs everything.

Why does this matter? Because for the first time in history, blockchains can establish unbreakable rules in software. This enables blockchains to make strong, enforceable commitments to users. One of the key commitments involves digital ownership, placing economic and governance power in the hands of users. Blockchains can make strong commitments about future behavior, allowing for the creation of new networks.

Thus, blockchain networks solve problems that early network architectures could not:

• They can connect people in social networks while empowering users over corporate interests.

• They can support markets and payment networks that facilitate commerce, but with lower commission rates.

• They can enable new forms of monetized media as well as interoperable and immersive digital worlds.

• They allow AI products to compensate creators.

So yes, blockchains create networks, but unlike other network architectures, they have more satisfying outcomes: blockchain networks combine the social advantages of protocol networks with the competitive advantages of corporate networks. Software developers gain open access, creators establish direct relationships with their audiences, fees are low, and users gain valuable economic and governance rights. At the same time, blockchain networks possess the technical and financial capabilities to compete with corporate networks. Therefore, blockchains can:

• Incentivize innovation.

• Reduce the tax burden on creators.

• Allow network contributors to share in decision-making and profits.

Asking "What problem does blockchain solve?" is like asking "What problem does steel solve compared to wood?" Blockchain networks are a new type of building material for constructing a better internet.

Casino vs. Computer

New technologies are often controversial, and blockchain is no exception. Many associate blockchain with fraud and get-rich-quick schemes. There is some truth to this, just as there was with past technology-driven financial frenzies, from the railroad booms of the 1830s to the internet bubble of the 1990s. Public discussions mainly focus on IPOs and stock prices, but some entrepreneurs and technologists have risen above these fluctuations, rolled up their sleeves, and built products and services that ultimately deliver on the hype.

There are speculators, but there are also builders.

Today, there exists a similar cultural divide around blockchain:

• One group—the "casino culture"—is primarily focused on trading and speculation. At its worst, this gambling culture has led to disasters like the bankruptcy of the cryptocurrency exchange FTX. This group attracts most media attention, affecting the public image of the entire field.

• The other group—the "computer culture"—is the more serious side of the two, driven by long-term vision. Practitioners in this group understand that the financial aspects of blockchain are merely a means to achieve greater goals, a way to align incentives toward larger objectives. They recognize that the true potential of blockchain lies in building better networks, thereby creating a better internet. These individuals are quieter and receive less attention, but they are the ones who will have a lasting impact.

This is not to say that the computer culture does not care about making money. We are a venture capital firm. Most of the tech industry aims for profitability. The difference is that true innovation takes time to yield financial returns. This is why most venture capital funds (including our own) have adopted deliberately longer holding periods. Creating valuable new technology can take up to ten years or longer.

The computer culture is long-term, while the casino culture is not.

Thus, the struggle between computers and casinos is the main theme of this software movement.

Of course, both optimism and cynicism can be exaggerated. The internet bubble and the subsequent crash reminded many of this. The way to see the truth is to separate the nature of technology from its specific uses and misuses. A hammer can build a house or tear one down. All technologies have the capacity to help or harm others; blockchain is no exception. The question is, how can we maximize the benefits while minimizing the drawbacks?

The decisions we make now will determine the future of the internet: who will build, own, and use the internet; where innovation will occur; and what experiences everyone will have. Blockchain and the networks it enables unleash the extraordinary power of software as an art form.

This movement has the opportunity to change the course of history, reshape the relationship between humanity and the digital, and reimagine possibilities. Anyone can participate—whether you are a developer, creator, entrepreneur, or user. This is an opportunity to create the internet we want, rather than the one we inherited.