The advent of the internet has completely changed the way information and content are being proliferated and used. With the democratisation of knowledge, there has also come increased control and censorship from government and private institutions which seems to be increasing day by day.
While we have gained access to this brave new virtual world, we have done so in exchange of ownership and rights over the information that we consume and share online, which can be manipulated, monetised, and even used against ourselves without our consent.
Big tech companies have transformed our personal data, regularly selling it to advertisers so they can efficiently target us, easily exploiting our desires and emotions for profit. While some argue that this brings convenience for the consumer, those who claim to have nothing to hide, some psychologists warn that the loss of privacy can lead to harmful psychological effects.
This novel kind of profiling can even be easily used for nefarious purposes, even in the political arena as a method to sway elections, with the most scandalous example being the Cambridge Analytica scandal.
The tracking of our online searches and communications is often done without the knowledge of the end-user. Now, as we continue to walk towards global demonetisation and, with the creation of Central Bank Digital Currencies (CBDCs), the loss of options for financial privacy is also a growing issue.
Governments and corporations will be able to easily block and track all of our transactions, effectively deciding how and where we can spend our money. Fortunately, the advent of cryptocurrencies has come as a new hope for privacy and ownership within the financial and digital landscape.
Web 3.0: The Decentralised Revolution
Bitcoin was created over a decade ago and has led to an unforeseeable tide of decentralised products that are changing the world.
Blockchain projects like Swarm aim to combat the issues mentioned above by providing a decentralised framework for what is known as web 3.0. Originally part of the Ethereum Foundation, Swarm has evolved into an ambitious project that aims to bring much-needed decentralisation, thereby allowing for a free internet with open communication and data sharing.
In this article, I sat down with Daniel Nagy to learn more about the future of virtual and financial privacy and control. Daniel is one of the brains behind the development of Swarm. During the interview, he detailed the inner workings and tokenomics of Swarm, what makes it stand out from other similar projects, and how the concept can change the world and provide a long-lasting technological infrastructure for the future decentralised web.
Q: Tell us a bit about yourself. How did you start your career? What projects have you been involved in before Swarm?
I began my career while still at university. Together with a friend, we started our own company selling handheld devices with barcode scanners for warehouse inventory management.
While working for the company, I finished my degree. Afterwards, I completed a PhD in information theory (on the topic of lossless data compression). I have also worked as a part-time cryptography teacher at Budapest University. Another highlight of my professional career was my involvement with a streaming service project for Tesco hypermarkets, my first opportunity to work on a large-scale project.
I joined the FinTech industry at the same time and started working on a pre-Bitcoin proto cryptocurrency project. It was designed to function as a digital payment system for microtransactions, but the project was quite centralised and failed because of it.
However, this experience piqued my interest in cryptocurrencies. I quickly realised, after Bitcoin’s inception, that the new blockchain technology was the real thing. Then, when Ethereum was announced in 2013, I got immensely excited. It was around that time that Viktor Tron invited me to join the Ethereum Foundation.
Becoming a contributor to the development of Ethereum was what ultimately led to my involvement with Swarm.
Q: Why do we need decentralised data storage?
I believe decentralised data storage is needed because centralised solutions are too vulnerable to all sorts of outside pressure and attacks. Humanity can not trust all of its information and data to centralised solutions. Some of the information we consider vital should be stored in a decentralised fashion to safeguard it against the pitfalls of centralisation.
Q: How can Swarm provide infrastructure for Web 3.0, and how will it help build a sovereign digital society?
Back in the 90s and the times of what we now call web 1.0, the internet was relatively decentralised and permissionless. If you wanted to have an online presence, you needed to spring out your own server, start up a blog engine or some kind of content management system, and register a domain name.
That all worked extremely well until your content started to become popular. If more and more people began to access your content, two things happened in rapid succession: your traffic charges skyrocketed, and your server would crash under the load shortly after.
On Web 1.0, all the costs of disseminating information were basically pushed to the publisher. A solution to this was provided by Web 2.0 companies and their large data centres. These companies started offering scalable infrastructure with almost unlimited hosting capacity, effectively taking the load and costs of operating a website off the shoulders of the publishers.
However, these solutions came with a considerable downside as Web 2.0 companies required publishers to hand over full control of their own data. Internet monopolies started to emerge as these companies gained the power to de-platform publishers, place advertisements on websites, sell publishers’ data without their consent, and decide who gets to access information and who doesn’t.
The next evolutionary step for the internet is known as Web 3.0, which was conceived as a way to get out of the aforementioned predicament. In this setting, the costs of disseminating content are fairly shared between the producers and the consumers, and that’s where Swarm enters the picture.
Swarm offers a platform where the costs of publishing content are shared efficiently and intuitively. Users can either pay for the information they wish to access or simply provide their bandwidth or storage space in exchange.
Q: Swarm has its own utility token, dubbed BZZ. How crucial is this element in the Swarm ecosystem?
There are two main use cases for the BZZ token. One of them, the SWAP accounting protocol, is fully functional and allows all bandwidth provision to be accounted for. So, if someone uses more bandwidth than they provide to the network, they will need to settle their wallet balance with BZZ tokens.
The other use case, the storage incentive system, is only partly functional at the moment. Figuratively speaking, this incentive system requires users to buy “postal stamps” for the content they want to upload. Put simply, content uploaders will use the BZZ token to purchase storage space and bandwidth from other network participants.
While these two use cases offer full utility to the token and allow the Swarm ecosystem to flourish, we have additional uses for BZZ. As an example, we intend to implement storage insurance in order to mitigate data corruption or any other kind of losses
Q: The Swarm system is self-sustainable from an economic viewpoint. How are you able to maintain ecosystem sustainability?
In order to use the Swarm system and its resources, users will need to pay or provide their own resources in the form of storage space or bandwidth. By itself, this creates a balanced and sustainable environment where every user is equal. Thus, freeriding and exploitation of other people’s resources is prevented.
Q: How does Swarm prevent loopholes in its economic model? How do you prevent users from exploiting the incentive system to their advantage?
That is something we cannot foresee with full accuracy. We aim to find a balance between decentralisation and functionality because if the rules are too flexible, they can’t be counted on. On the other hand, if the rules are too strict, it becomes impossible to close the loopholes.
The goal is to have enough flexibility to change the rules if the need arises. That way, we can easily fix any loopholes that we or our users encounter. In short, we will try to patch loopholes one by one as other distributed solutions, like Bitcoin and Ethereum, did before us. Some loopholes are hard to solve efficiently in a decentralised environment.
Q: How do external factors like speculation or market volatility impact the technical side of Swarm? For example, how will the development of Swarm be impacted if BZZ dumps amidst a bear market?
The funds that we collected during fundraising were kept in DAI stablecoin and some of it was converted into FIAT. At least in the short term, the exchange rate of the BZZ token will not affect the development of Swarm’s roadmap because our stablecoin funds finance it.
In the long term, the more BZZ token is worth, the more we can sponsor outside projects through grants and partnerships. We use the BZZ token primarily for third-party projects while the stablecoin funds finance Swarm’s core development.
Q: What sets Swarm apart from other competing projects like Filecoin, Chia, IPFS, or Dfinity?
I believe the main difference is that Swarm information is parceled in chunks and distributed uniformly across the network of nodes. This means that nodes don’t necessarily know what type of content they are hosting.
As far as I know, in other projects, the hosts and node operators need to decide what content they are willing to host. I believe this makes Swarm more censorship-resistant than its competition.
Q: How is Swarm going to disrupt the future? Can you provide us with some use cases?
I think that, eventually, public interest databases like Wikipedia, OpenStreetMap, and Project Gutenberg will be hosted on Swarm.
Currently, both Wikipedia and OpenStreetMap are faced with an impossible dilemma. They need to decide on the official truth because there can only be one version of these platforms. Some questions are inherently a matter of opinion, and there are multiple differing opinions between people.
On Swarm, however, forking large-scale projects is incredibly cheap. Multiple versions of these open-source platforms could run simultaneously on Swarm, thus solving this need to have a single official truth narrative.
I believe Swarm can contribute to a new information culture in which all opinions are accessible, and people have a clear understanding between facts and opinions.
That is one of the use cases I envision. However, it’s complicated to talk about future use cases of general-purpose technologies like Swarm. It would be like asking someone in the ’50s how computers will be used in the future.
Swarm has so many potential use cases we can’t foresee that trying to predict them would be akin to fortune-telling. However, if we allow our imagination to run freely, I would say that one use case might relate to Non-fungible Tokens (NFTs). As the NFT industry continues to grow, I believe decentralised storage for the metadata that these tokens carry will be elementary and Swarm can be a part of that.
Although many individuals may not be aware, we are currently fighting an information war. Governments worldwide are pushing propaganda on their own citizens. And they are doing so with the help of intelligent agencies, like the CIA, who have infiltrated the entertainment industries and managed to leave a mark on much of what we consume today.
This cognitive warfare, as described recently by NATO, poses a serious threat to our well-being and quality of life. However, decentralised solutions like Swarm are heavily detrimental for this kind of warfare, as they allow for free expression of ideas and sharing of uncensorable content.
The advent of Swarm and Web 3.0 will offer people the necessary tools to preserve their individual and financial freedoms. As we move towards an increasingly digital world with the fourth industrial revolution, the line between the digital and physical will begin to blur. Systems like Swarm will play a large role in metaverses and virtual reality settings, allowing the digitalisation of our economy and society to continue expanding in a healthy and safer manner.