This is an excerpt from my recent book, Building Nostr. You can download and read the whole book for free at building-nostr.coracle.social

The Economics of Censorship

Nostr was originally designed to be “censorship-resistant”. But this is only one part of a bigger vision. Nostr is designed to promote the digital freedoms of users — things like privacy, access to information, anonymity, freedom of association, and credible exit. Because of how cryptography was adopted (primarily by institutions) in the early days, the internet is no longer aligned with the interests of its users, but has largely been captured by “platforms”.

As a result, we have a state of rent-seeking in which the users who contribute all the value that the internet has to offer are exploited, undermined, manipulated, deceived, and sold by the custodians of that value. This is a far cry from the humanitarian dream of the early internet. In the words of Tim Berners-Lee,

We create the Web, by designing computer protocols and software; this process is completely under our control. We choose what properties we want it to have and not have[…] The goal of the Web is to serve humanity. We build it now so that those who come to it later will be able to create things that we cannot ourselves imagine.

In the fifteen years since this was written, the internet has only become more predatory, and proprietary. Everywhere you go, you’re being tracked — maybe for the purposes of understanding your behavior to serve you ads, maybe for reasons more convoluted, but always in the interest of the ones doing the tracking.

This isn’t to say the internet isn’t a net positive to those who use it. The internet is the single most successful technology in human history for promoting access to information, alternative community, and trade. But it is not what it should be. Reforming the internet requires active investment from those who stand the gain or lose the most from how it evolves — its users. No one can do this for us; we have to hold companies and platforms accountable ourselves. And in order to do that, we need to understand why censorship happens.

Censorship is not the product of mere arbitrary exercise of power, but of incentives. In authoritarian regimes, censorship is implemented to protect the regime’s power. In business, censorship is implemented to protect the business’ revenue.

Traditionally, products are sold directly to customers, who then get access to the good or service they’ve purchased. This business model can transfer to some extent to the realm of information-based products, particularly in a business-to-business setting, where information can be justified in terms of greater productivity.

But consumer software is an entirely different story. If your users are only there to improve their quality of life through access to entertainment or communication, and the marginal cost of production trends toward zero for digital goods, then the price will also trend toward zero because competitors can always offer the same product at a lower price.

Combine that with the imperative for platforms to aggressively acquire users, and you get a strong downward pressure on the upfront pricing of software products. “Network effect” is the idea that a network’s value does not grow linearly with the number of users, but quadratically with the number of connections between users.

Building a large network requires significant resources in order to fund growth or stay ahead of competitors. These resources in turn must be provided by people with capital. As a result, businesses that rely on scaling network effects are typically funded by investors and oriented at a return on investment. This includes social media platforms and similar businesses, such as search engines, marketplaces, and entertainment platforms.

Capitalists want to see the businesses they’ve invested in make a profit. The best way to make a profit in a market, according to Peter Thiel’s Zero to One, is to establish a monopoly. Because user retention depends on network effects, market saturation is always the goal, and switching costs must be high — companies must “capture” their users.

The art of creating this moat seems to have been perfected. Facebook has been around for a long time, as has Google. In contrast to early internet companies like MySpace, Yahoo, and AOL, these second-generation internet giants have learned how to simultaneously retain and monetize their users.

Very little of these companies’ revenue comes from direct monetization. Instead, these big tech companies monetize their users by making them the product. Users have two things that platform owners can sell: their attention and their data. Platforms can only sell these things because they have access to them by virtue of being intermediaries. Platforms subsist by inserting themselves into private or public relationships in order to siphon off these intangible goods.

This works because the majority of internet users either don’t believe their attention or data are worth anything (“why do I need privacy? I have nothing to hide”), or feel helpless to opt out of the attention economy. Seeing a billboard in your peripheral vision or having cameras record your license plate seem hardly comparable to paying a monthly fee for road use. Whether you care about being recorded or not, you’re still going to use the roads.

It’s true that data and attention are not particularly valuable on an individual basis. But they’re massively powerful in the aggregate. “Big data” is not mere information, but the ability to predict patterns of behavior, which can then be used at scale to manipulate people — to buy, believe, and act.

Advertising is not just about informing willing buyers about products and services, it’s about conditioning people to act in predictable ways. Social engineering (like all engineering) is progressive and totalizing — unless restrained. The cost of giving away our attention and data to these internet intermediaries is, ultimately, the loss of our free will.

This is particularly true because users are progressively getting less and worse service in exchange for their time and attention. Because big internet companies have access to economies of scale that individuals don’t, they have the ability to asymmetrically impose complexity costs on users who fall outside of the streamlined “ideal customer profile” they’ve built their business on. Quoting from this blog post:

Bigger players like corporations and governments gained a big systemic advantage over individuals: they make the rules but they don’t bear the costs of the rules breaking. They increase the complexity of everyday life and instead of being punished for it, they are rewarded for it.

A Path Forward

This slide isn’t inevitable. But it’s also human nature — everyone wants something for nothing, and so internet users have voluntarily given up their free will to gain connectivity, entertainment, and efficiency. Simply pushing back is not enough — the problem is structural, and time has allowed its beneficiaries to entrench their position.

This problem needs more than a technical solution — politics, culture, community, and capital all have roles to play here. Nostr’s role is to offer tools that individuals can use according to their own values, and for their own interests. Nostr makes it possible for internet users to preserve their own digital sovereignty and hold tech platforms accountable.

My personal hope for Nostr is that it will aid in the restoration and cultivation of human flourishing and agency in a world increasingly mediated by digital technology. Nostr does not solve every problem. The ones it does solve, it sometimes solves poorly. Nostr is not a panacea, it is a toolset that can be applied to our benefit or to our detriment, but which has certain intrinsic qualities that the internet desperately needs right now.

I want to emphasize that it is only through people that any of the internet’s ills can be cured. Nostr is not a comprehensive system for restraining digital evil (such a thing would be itself totalitarian), but a way of allowing individual and community agency to be exercised in solving problems germane to individuals’ and communities’ own particular circumstances.