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1. Introduction: The Problems

Litepaper

1.1 Privacy & Neutrality: Balkanization of the Internet

About Net Neutrality
As of June 11th of 2018, the legal protections against content discrimination on the internet are gone. As far as the FCC is concerned, net neutrality is dead.
The policy’s fate was sealed back in December 2017, when FCC chairman Ajit Pai’s Restoring Internet Freedom Order was approved in a 3-2 vote along party lines. Pai’s order, which goes into effect today, rolls back the net neutrality protections that were put in place by former chairman Tom Wheeler. They promise — in name, at least — unrestricted access to online content minus the burden of regulation. But in fact, the new ruling clears the way for massive internet service providers to do practically whatever they like — including paid prioritization, throttling, and otherwise messing with traffic as it moves across the internet. It will take a long time to see the practical effects of the new rules, but make no mistake: this is a big deal, and it’s the first step in a long, slow process that will reshape the internet in very ugly ways.
About the Balkanization of the Internet: Catalysts for Fragmentation
Power tends to corrupt, and absolute power corrupts absolutely– Sir John Dalberg-Acton

The global internet is the US internet

Despite its global reach and cosmopolitan contributor base, the internet and the Web remained firmly under US corporate auspices, and therefore US government control. This historical reality is the root cause of cyberbalkanization.

Centralized Data is the new oil

If the US has a “home field advantage” through control of internet traffic routing, so does it have an “away field” advantage by controlling the AI-powered data mining power of world’s most popular web service platforms.
Snowden and the US global surveillance apparatus
Snowden’s revelations laid bare the vulnerability of foreign nations to US espionage, which was occurring at multiple levels from the data transmission layer to the web service layer. From a US perspective, the NSA mass surveillance program is a logical utilization of its power as the gatekeeper of the modern internet. By maintaining supreme control over internet traffic flow and web service user data, the US gained enormous strategic advantages in its effort to maintain its status as the world superpower. Any nation wielding such power would be rationally expected to act in a similar manner. There is no reason to believe that US tech giants have stopped collaborating with the US intelligence agencies in data sharing and surveillance programs.
There is no reason to believe that US tech giants have stopped collaborating with the US intelligence agencies in data sharing and surveillance programs
The rational case for cyber-secession
The component causes of cyberbalkanization effectively distill into a single necessary cause — the US control of the creation, storage and transmission of online data. What was previously a community-built highway is now a toll road operated by a single gatekeeper of overreaching influence and power. Allies and rivals alike have begun efforts to break free from the US-controlled cyberspace in an effort to protect their informational sovereignty as an urgent matter of national security. A future of siloed, firewalled and incompatible internets is upon us and this rapid acceleration towards cyberbalkanization is being spearheaded by China, Russia and Europe.”
Balkanization Now, The rise of the internet ‘walled gardens’
  • China maintains a completely independent internet ecosystem which is maintained by the dictate of the Chinese Communist Party. The Great Firewall of China defends Chinese cyber borders and facilitates censorship of citizens by blocking access to content undesirable to the Chinese government. Perhaps more importantly, the Great Firewall keeps the data of Chinese citizens, businesses and military beyond the reach of the US surveillance apparatus. China stands as the only the nation to have successfully broken free from US internet and telecommunication dominance while demonstrating the potential for economic prosperity. It exists as the most fully formed cyberbalkanized nation.
  • In 2014, the Russian national security body commissioned the Russian Government to create an independent internet for the BRICS bloc (Brazil, Russia, India, China and South Africa) that would exist beyond the sphere of Western influence. Russian press secretary Dmitry Peskov stated “We all know who the chief administrator of the global internet is. And due to its volatility, we have to think about how to ensure our national security…It’s not about disconnecting Russia from the World Wide Web, it’s about protecting it (Russia) from possible external influence.”
  • The trend towards cyberbalkanization is not only being observed among US rivals. The Snowden leaks revealed US spying on its Western allies, who are beginning to assert their informational sovereignty. Rather than create their own social media companies, Europe is gaining control of its citizens’ data by exerting soft power over US web service giants by means of legal action and fines. The infamous General Data Protection Regulation (GDPR) mandates the storage of EU citizens’ data to be stored on servers located within the EU borders. As the US threatens to redraw the global geopolitical border with anti-NATO rhetorics, the online world is beginning to mirror the political and national contours of the physical world.
  • The recent German legislation known locally as NetzDG perfectly illustrates the dual consequences of cyberbalkanization — foreign espionage protection and domestic censorship. This act allows Germany to fine internet giants like Facebook, Google and Twitter up to 50 million Euros for failing to remove illegal content from their platforms within 24 hours. As is expected of any absolute dictate, the definition of “illegal” is increasingly arbitrary and susceptible to slow but inevitable restrictions on freedom of speech.
The perils of a Cyber balkanized world
How might we imagine a Cyber balkanized future in which the global cyberspace commons becomes fragmented across national and geopolitical boundaries? The major cyber blocs will continue to build domestic internet industries that route all traffic and store all user data internally. This will exacerbate a data siloing effect, restricting information flow across borders and rendering web services unusable from external geographic locations.
Cyberbalkanization will fundamentally be a triumph of the state over the individual right to free expression, free access to information, and freedom from intrusive surveillance. Unimpeded cyberbalkanization has the potential to unwind the prosperity gains achieved in the decades since the creation of the internet and the Web, contributing to the emergence of conflict between nations unseen by the current generation.
In the face of inevitable cyberbalkanization that heralds nationalistic isolation, mistrust and eventually open conflict. The creation of a new internet is therefore an urgent and timely undertaking on which the hopes of the free world rest. Cyberbalkanization will fundamentally be a triumph of the state over the individual right to free expression, free access to information, and freedom from intrusive surveillance.

1.2 Interoperability: Balkanization of Blockchains

About Avoiding Blockchains Balkanization: Prioritizing Interoperability
We define “interoperability” here as the ability for blockchains to exchange data between platforms—including off-chain data and transactions—without the aid of third parties. By examining the progress of Web2 architecture from early theory to mass adoption, we argue that blockchain protocol interoperability is nothing short of a fundamental requirement to realize the full potential of the technology. In the face of competition and commercial pressure, the ecosystem is currently in danger of “Balkanization”—i.e. becoming a series of unconnected systems operating alongside, but siloed from each other.
In order for the ecosystem to prioritize interoperability, it must establish a secure, radically decentralized, and trustless settlement layer onto which simultaneously-operating blockchains can anchor their transactions.
You never change something by fighting the existing reality, to change something, build a new model that makes the existing model obsolete– Buckminster Fuller
The Risk of Balkanization (yet again)
The problems of today’s Web2 architecture—in particular the siloing, vulnerability, and mismanagement of user data—are traceable to the deviation of the industry from early Internet values, which originally prioritized interoperability as a key to a sustainable and equitable web-connected world. At its current pace, the blockchain ecosystem is at risk of similar “balkanization,” where protocol interoperability is deprioritized as companies race to demonstrate their own blockchain’s use case quicker than their competitors’.
The risk is that the pressures for mainstream adoption could arrive before the Web3 infrastructure is sufficiently interoperable and secure to manifest the full vision of its original architects. Web3 could end up looking much like Web2 does today in terms of financial exclusion, information siloing, and data insecurity; Underwritten by a series of blockchains which by competitive design do not interoperate at the protocol level.
An attempt in the early 1990s to avoid balkanization of the Internet eventually resulted in accidental, extreme centralization in which a cabal of five infrastructure providers gained control of the entire protocol layer. In one sense, this is a lesson in the importance of native governance protocols and of reasonable regulation in developing healthy markets for new technologies. Good regulation that results in fairer, more open competition ultimately results in a richer market overall. Some retention of public interest also introduces a feedback loop of checks on the development of a novel technology as it scales. One shortcoming of the private infrastructure layer as it took shape was that insufficient attention to security, where it had not been as critical a concern; no security mechanisms nor R&D into security issues generally introduced vulnerabilities that still exist today [source]. The almost total lack of intentional governance has also resulted in the extreme lack of so-called “net neutrality,” hence unfair prioritization of network speeds to the highest bidder and vastly unequal access to networks overall.
Measures taken to prevent balkanization instead resulted in an all-but-irreversibly balkanized infrastructure layer
Too late for this Internet, it’s broken beyond repairs and upcoming regulations to advance totalitarian control over everything and everyone will finish the job…
The consequences of information being siloed in the blockchain in which it was created are straight from the history books of the Internet: The Internet centralized at the infrastructure layer due to scaling pressures to meet public enthusiasm and mass adoption.
Should the Web3 ecosystem reach that point before protocol interoperability is sufficiently pervasive, the same thing will happen again. Without native blockchain interoperability, third parties will step in to manage the transfer of information from one blockchain to another, extracting value for themselves in the process and creating the kind of friction the technology is meant to eliminate. They will have access to and control over that information, and they will have the ability to create artificial scarcity and inflated value.
The vision of a blockchain-powered Internet future the industry so often evoked is nothing without interoperability. Without it, we will find ourselves in a future with a global network nearly identical to the dominant Web2 landscape today. Everyday consumers will still enjoy their smooth and consistent interaction with Web3, but their data will not be secure, their identity will not be whole, and their money will not be theirs.

1.3 The rise of Totalitarianism

Surveillance capitalism is best described as a coup from above, not an overthrow of the state but rather an overthrow of the people’s sovereignty and a prominent force in the perilous drift towards democratic deconsolidation that now threatens Western liberal democracies. Big-data companies present the future as a new era of transparency and freedom. In fact, the end-point of information capitalism is a social order that can only be described as totalitarian.
Industrial capitalism depended upon the exploitation and control of nature (with catastrophic consequences that we only now recognize). Surveillance capitalism depends instead upon the exploitation and control of human nature– Shoshana Zuboff, Harvard Business School
Back in the 1980s and 1990s, as the world moved broadly toward individualism, free-agency, smaller government, and globalism. The tech breakthroughs of that era were mainly deemed supportive of such libertarian trends.
Just after the Tiananmen Square massacre, Ronald Reagan declared that “the Goliath of totalitarianism will be brought down by the David of the microchip.” But in recent years, the world has been moving in a very different direction—toward community, populism, centralized control, and nationalism. Not coincidentally, today’s tech breakthroughs are again moving in tandem—toward empowering the group, not the individual (who now understands he is the product, not the customer).
The digital revolution was meant to emancipate. In the Declaration of the Independence of Cyberspace from 1996, John Berry Barlow declares the new digital reality, Cyberspace, to be an independent new world of freedom and equality without oppression of the old world of nation-states ruled by governments. Barlow compares the digital revolution to the American War of Independence and the pioneers of digitalization to the heroes of the American Revolution: “… those previous lovers of freedom and self-determination who had to reject the authorities of distant, uninformed powers.”
The digital reality that came to pass the following years and we are now in the midst of is far away from the digital utopia of liberation and self-determination. The Internet and the digital technology may just as well pave ways for new forms of oppression and dominion. Instead of being a force of democratization and emancipation, the digital revolution may turn out being the opposite and contribute to undermine democracy and political self-determination.
Digitalization and the Internet have enabled such massive data collection that surveillance may be almost total with no angles out of sight or blind spots: an updated digitized version 2.0 of Jeremy Bentham’s Panopticon (“all-seeing”) where one’s life is being monitored in detail 24-7 without any possible refuge from the gaze of the authorities.
In the Panopticon, privacy is not an option
Jeremy Bentham’s original architectonic plan for a Panopticon. A prison in which inmates are monitored constantly with no blank spots in the cells to hide from the Guards’ gaze. Whether the surveillance takes place in institutions such as prisons, schools, hospitals, the workplace, the army or is generalized to the whole society, it aims at the same result: the production of obedient subjects who conform to what is expected and wanted by the authorities—normalized and law- and norm-abiding citizens.
It does not necessarily require an authoritarian state aiming at social order and harmony as a primus motor to reach totalitarian conditions. An unregulated market for data and user information and the hunt for profits may be sufficient. Google is leading the way in a race and mission of colonizing, commodifying, and monetizing every aspect of our life.
The same year China initiated the construction of the Social Credit System, 2014; on the other side of the Pacific Ocean in Silicon Valley, Hal Varian, chief economist at Google, held a speech addressing the great opportunities made possible by extraction of data combined with massive processing power. The speech revealed a vision for a future of a surveillance capitalistic society with no more room for privacy than in China. According to Varian, the elimination of privacy is the (fair) price to pay, not for social order and harmony, but for the functionality, efficiency, and convenience of the products and services Google provides to the users.
Gathering and analyzing information about the user is the condition for personalizing the products for the user. Privacy is exchanged for enhanced user experience and the convenience made possible by personalized optimization and customization of the products that automatically tailor them to the individual user. Only when Google knows at least your location, budget, and food preferences, it is able to provide a relevant suggestion for a restaurant nearby to have dinner. The more personal information Google possesses, the more efficiently and conveniently it is able to serve one’s individual needs and demands.
That is the basic justification of the surveillance. However, even more surveillance, data mining, and information gathering are necessary to realize the tech giant’s vision. The ambition is that Google products should run so smoothly and conveniently for the user that it is not even necessary to google or ask Google questions. As company founder, Larry Page is quoted for saying:
[Google] should know what you want and tell it to you before you ask the question.
The prototypes of surveillance capitalism are Google and Facebook, which extract information from their users and deploy it to re-engineer their behaviour for maximum profit. Human experience is raw material to be mined. Individual autonomy is usurped by ubiquitous monitoring, with techniques of behaviour modification digging deep into what was once a private and subjective world. Personal experience is commodified, and reshaped in the interests of capital. Whatever utopian claims may have been made for it as a force that emancipates individuals, this is a type of collectivism that subverts what has in the past been described as free will.
This is a type of collectivism that subverts what has in the past been described as free will