IPFS is paving the way for a new digital economy

The digital revolution has forever transformed the way we buy, sell and trade goods and services. But in this new digital economy, economic power and competitive viability have become unevenly distributed to an extent that the world has never before experienced. That’s because a tiny number of players control the lion’s share of the digital infrastructure we all rely upon, and leverage that disproportionate market share to crowd out competitors.

According to an Aug. 10 Gartner report, just five companies control 80 percent of the global market for public cloud-based “infrastructure as a service” (IaaS)—Amazon, Microsoft, Google, and China’s Alibaba and Tencent. The content delivery networks (CDNs) that deliver us everything from cat memes to business-critical documents are in a similar stranglehold.

To resolve the inequity in this system—something that impacts every one of us, no matter where we live or what socioeconomic category we claim—we need to decentralize the protocols, platforms, and underlying technologies that drive the digital economy. We need to find new ways to trade and interact online that don’t rely on proprietary technologies and centralized web architectures. The Interplanetary File System (IPFS) is critical in doing so. 

IPFS is a decentralized internet protocol for storing and sharing data on a globally distributed network. It’s designed to make the web a more open place, true to the spirit of the internet’s original pioneers. It’s already been used to fight censorship in places like Turkey, where a local version of Wikipedia is being hosted after the government blocked access to the standard Web 2.0 version of the site.

And while we may still be years away from fully realizing a digital economy built on the distributed Web 3.0 IPFS facilitates, innovators building on top of IPFS today are already making waves in a host of different industries, from online shopping to weather risk mitigation and data privacy protection. 

Powering commerce

Take music streaming services, for example. Even incredibly popular and well-supported streaming platforms like Spotify and SoundCloud have long been plagued with problems. Artists receive very little compensation for their music, and uploaded content is often mislabeled and miscategorized. Additionally, because these streaming services are proprietary platforms, listeners and artists alike lack control over and access to the tremendous amounts of data these platforms gather while users are “just listening.”

A blockchain-based, decentralized alternative to those services, Audius is tackling these problems by implementing its music streaming service on top of IPFS. By utilizing IPFS as its underlying architecture for storing and sharing data, Audius bypasses centralized control over both creators’ content and users’ personal information. What’s more, Audius’ decentralized platform was specifically engineered to unlock positive change for creators. Its future roadmap includes a smart-contract-enabled monetization plan that disintermediates the music industry’s currently fragmented payment practices, bringing more revenue to creators while also granting them more agency in crafting their own business models.

Online shopping is another industry where IPFS innovators are making major strides forward. We all appreciate the convenience, flexibility, and cost savings we enjoy when shopping online—especially during pandemic times—but there’s a major trade-off when that means consenting to Amazon or some other marketplace collecting, storing, and selling our personal information. And the data-collection practices endemic in these big players’ business practices pose more than just a privacy risk: All that data is a honeypot for hackers and malicious actors who want our personally identifying information for scams and financial fraud. 

OB1 tackles these problems head-on by building its OpenBazaar and Haven shopping platforms on IPFS. By using IPFS as its underlying storage architecture, OpenBazaar and Haven enable buyers and sellers to interact directly, anonymously and securely without fear of a centralized marketplace leaving their personal data exposed to attack. It currently accepts Bitcoin, Bitcoin Cash, Litecoin and Zcash.

The benefits of IPFS don’t just extend to internet-centric industries, either. For example, while Arbol is a big-data platform making the most of IPFS to aggregate, standardize and deliver detailed weather data for use in smart contracts, those who benefit from their efforts include small-scale farmers who have long been unable to afford expensive legacy crop insurance in order to protect their livelihoods.

And this list goes on: These innovative, industry-transforming IPFS use cases are only the tip of the iceberg as enthusiasm continues to grow for building products and services on the decentralized web. No matter how you approach it, though, the message is clear in a time when the world needs a humane, equitable, decentralized digital economy like never before. By helping today’s innovators build solutions that are user-centric, privacy-preserving, and more secure, IPFS will power that change.

Jessica Schilling (Twitter: @dzesika) is a user experience strategist, information architect and product designer with a professional history in fintech, online identity privacy and tech for higher education. She is currently working on Protocol Labs’ IPFS project.