Operating some server software on the wimpy VPS is very different different from having everybody's daily-use computers be fully networked with other computers. Also, you likely already have an Internet connection so the marginal cost is zero. And you don't need a credit card to do it.
To get network effects, it's all about low friction and low barriers to entry.
There is still a long way to go to make it work for your grandparents, however I think we already made quite some progress. The act of getting a domain and a server itself is still something most people might not be comfortable with though.
In the end I think there are only technical issues to be solved to get to a state where having a server and installing apps, just like most people now do with mobile apps on their phone, is entirely viable.
Here's the announcement, they moved back from being a for profit startup to an open source community effort. Most of team is now working at cloudflare.
The consequences of that asymmetry go much further than just a price difference. It's about a whole raft of applications that are simply impossible or at best extremely hard.
The internet was meant to be peer-to-peer not server-to-consumer.
Adding more servers, even at $5 won't change that.
The internet started as a server-to-client effort, and the peer-to-peer nature evolved much, much later. The entire purpose of ARPANET et al in the early days was to give researchers access to national supercomputing centers across the US. If anything, what we're seeing today is a regression to the days of old because large corporations provide centralized value to consumers, and consumers can't pry themselves free.
You're mistaken, ARPANET is not the internet. ARPANET was one network, there were others. The intenert is the internetworking or network of networks that emerged from connecting those networks together.
From the network standpoint it is peer-to-peer as the internet is a network of dumb pipes with intelligence put in the periphery of the network. This is different from say the european minitel network[1] where dumb terminals were connected to a central intelligence.
But it can never be truly peer-to-peer or decentralized due to the economics of last-mile connectivity. Connecting machines in a neighborhood is more expensive and difficult from an infrastructure perspective than hooking up a computer in a server farm.
This in of itself changes the costs and expectations of the parties involved which means things will likely slump back to a permutation of this status quo even with a different standard.
Only if you assume high bandwidth cost. If it's more convenient to do something at home, it is cost-dependent whether people opt for the more cumbersome but cheaper centralised solution.
The current last-mile problem is that there is not enough demand for high-bandwidth applications to justify rapid improvement (we'd all have 10 gig connections by now if the 2000's trend had continued).
This comment show a big misunderstanding about the nature o the internet. The internet is dumb decentralized network with the intelligence placed in the periphery.
The server farm is part of the periphery of the network and has a last mile connectivity same a residential home connection. It is really expensive and only makes senses if you stockpile machines to have economies of scale.
