On the border of Kentucky and Virginia is a place where the Russell Fork River has carved a canyon 1,600ft deep through the Appalachian Mountains.

There, at Breaks Interstate Park on August 11, 2006, a Democratic volunteer named Shekar Ramanuja Sidarth made a video which coursed across the internet and changed the direction of US politics. More than 2,000 miles west, at Silver Lake, Los Angeles, Joe Anthony, another young activist, discovered just a few months later that politicians still control much of what flows through the internet and can sometimes turn it off at source. The stories of Sidarth and Anthony frame the debate about how far the internet "2.0" can, or will be allowed to, influence the 2008 presidential contest.

In 2004, the shock of energy coming out of the liberal left on the internet almost propelled Howard Dean to the Democratic nomination before voters plumped for the safer option of John Kerry, who took several months to acknowledge publicly even the existence of his own website. The advance of technology since has seen 2008 being billed as "the internet election".

Videos on YouTube are lethal new weapons for campaigns, especially now that it has been ruled to be beyond the scope of federal election laws. Recent hits on the website include a portrayal of Hillary Clinton as Big Brother, a model draping herself over pictures of Barack Obama and John McCain's bizarre rendition of "Bomb, Bomb, Bomb, Bomb, Bomb Iran" to the tune of the Beach Boys' Barbara Ann.

Collaborative blogs such as the anti-war Daily Kos now have readerships rivalling those of national newspapers and increasingly behave – and indeed are courted – as if they are part of the political establishment they ostensibly decry. At the same time, social networking forums such as MySpace and Facebook provide campaigns with access to mounds of fresh ammunition, untapped legions of donors and armies of previously unmobilised activists.

But for now, the campaigns appear determined that the internet should be used to destroy, not create, as they fight on traditional battlegrounds with strategies virtually unchanged since the advent of the TV era.

This negative political force was felt at its fiercest after Sidarth filmed Republican senator George Allen last August. As a volunteer for Jim Webb, the Democratic challenger for Allen's seat in the 2006 Congressional elections, his job was to act as a "tracker". This is a now standard campaign procedure to ensure video recordings are kept of every public utterance made by opponents. Sidarth arrived at the Breaks Interstate Park on a sunny afternoon, expecting the Republicans would be as civil to him as they had been at other such events, sharing food with him and sometimes offering directions for the next engagement by Allen ­ at the time eyeing a 2008 White House run.

But then the Senator decided, for reasons bedded deep in his psyche, to turn on the dark-skinned, spikey-haired Sidarth, the Virginia-born son of Indian immigrants. "This fella over here with the yellow shirt, Macaca, or whatever his name is. He's with my opponent. He's following us around," he said.

"Let's give a welcome to Macaca here. Welcome to America and the real world of Virginia." Sidarth says, "I could feel his hostility. I just did my best to keep filming. As soon as I was finished I called the Webb campaign. They were shocked ­ they posted it on YouTube pretty quickly." The word "Macaca", it transpired, was a racial insult derived from the word for "monkey" and used by whites in Francophone Africa, where Allen's mother had grown up. The video swiftly went "viral", getting hundreds of thousands of views and chiming with other allegations about Allen's racism that had been bubbling through blogs. It became perhaps the single most memorable moment of last year's campaign, culminating in Webb winning the election, the Democrats gaining control of the Senate by the margin of one seat, and leaving the Republicans searching ever since for an authentic Southern conservative to take the place reserved for Allen in the 2008 presidential race.

Sidarth, 21, has thought hard about why the video had such an impact. "When you post something on YouTube it is the users who choose whether or not to make it popular," he says. "This was not like a campaign force-feeding it to people. On the web they can draw their own conclusions from what they see – that's what makes it so powerful." These days, he prefers to talk about the positive aspects of his internet work for Bill Richardson's presidential campaign, a candidate who he says is similarly unscripted by "pollsters in Washington who like to tell politicians what to do".

The most idealistic web activists dream of using the medium not just as an attack tool. They see it as a means of reinvigorating democracy, holding politicians to account directly and allowing people to take ownership of campaigns, even decisions.

In the 2008 race, no campaign has sought to dress itself in that mantle of modernity as much as that of Barack Obama. The internet is a snug fit for his self-image of a young, unconventional candidate seeking to recreate America's sense of community. He even has an "innovation agenda" policy to make the internet the foundation of a new American economy. And, when Joe Anthony, a 29-year-old legal researcher, was inspired to set up a MySpace group for Obama, the initial response from the senator's aides was enthusiastic. From his first-floor apartment in Silver Lake, he spent hours building up the fan page, answering e-mails and detailing policy positions taken by the candidate.

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