For something that doesn’t exist yet, web3 is sure to piss off a lot of people.
It’s on the tip of the tongues these days in Silicon Valley. Web 3 tech hackers quarrel on social media. Last year investors invested $30 billion in startups based on it. Outstanding engineers are leaving their comfortable jobs at companies like Facebook for early careers.
The idea of a new frontier online has made people pay millions of dollars for digital tokens that revolve around cartoon monkeys.
But so far, Web 3 has been more a buzzword designed to confuse than to illuminate, and it’s causing something like an identity crisis for the tech industry — with repercussions for the rest of us.
What is web3?
It’s an acronym for Web 3.0. It is sometimes spelled with a capital letter “W”, but it is usually not.
The thinking goes that Web 1.0 was the first global web that gained popularity through web browsers in the 1990s, and that Web 2.0 followed a decade later with the rise of massive platforms like Google and Facebook.
Most Web 3 beacons treat it as an umbrella term, a vision of the future of the Internet where ownership and power are more widely distributed. This vision is based on transparent digital ledgers known as blockchains (the technology that underpins cryptocurrencies), and assumes that Big Tech will be rivaled by more democratic forms of Internet governance in which you, the user, will have a say – perhaps even a vote – on big decisions about how to operate platforms .
But this definition confuses many people.
Tech mogul Elon Musk, the richest person in the world, was recently at a loss when he tried to figure out what Web 3. “It sounds like a marketing buzzword rather than a reality right now,” he said. books on Twitter last month.
What is wrong with the current web?
In short, many technologists (not to mention plenty of users) worry that a handful of CTOs are too powerful. The likes of YouTube, Instagram, and Twitter host a large proportion of online content, including political speech, and these companies decide who to block. They also store massive amounts of data and take a growing share of Silicon Valley’s revenue.
It’s a situation where no one – except perhaps the shareholders – is really happy, and it wasn’t supposed to be this way.
Activist John Perry Barlow wrote in his 1996 book “Declaration of Cyber Independence”: “We are creating a world in which anyone, anywhere, can express their beliefs, no matter how unique, without fear of being coerced into silence or compliance.”
Software engineers have been playing around with alternatives for years. Think of the unified and open nature of email, but of social media. So far, though, services like Mastodon, which is similar to Twitter but without a central server, haven’t caught on. Twitter is fixing its own social media project called Bluesky.
If Web 3 is unproven, why this optimism?
The reason for optimism is the development of blockchain technology and cryptocurrency. Bitcoin, Ethereum, and other digital forms of money are some of the most concrete examples of a blockchain-based system, and not a single person in charge, found on the Internet.
And as the perceived value of these coins took off last year, with the total market value exceeding $3 trillion in November, so too predicts that the decentralized model can be applied to other areas of online life. If Bitcoin can work, as usual, why not use other blockchain-based financial products such as insurance or loans?
“Not only does cryptocurrency represent the future of finance, but, like the internet in its early days, it is poised to transform all aspects of our lives,” Andreessen Horowitz, a venture capital firm that has bet heavily on Web3, said last year.
The company defines Web 3 as “the Internet is owned by builders and users, and is orchestrated using tokens.” A symbol, in this sense, is like a title deed to a small piece of the internet, whether it’s something in a video game or something someone else might appreciate, like art.
Perhaps soon we will all have a lot of tokens, each one for something different and all rising in value over time, or so the thinking goes.
So we’ll all get rich from icons?
That’s what Web 3 evangelists are saying. But one prominent tech founder recently threw cold water on all the preaching.
Jack Dorsey, co-founder of Twitter and Block, tweeted last month: “You don’t own ‘web3.’ Instead, he said the investor class will own it as usual.” You will never escape their incentives. It is ultimately a central entity with a different brand.”
Dorsey, who days earlier was a Show A column in the Wall Street Journal about Web 3 “rebels”, said in a series of tweets he posted never It was part of web3 and is Call Huge investment in free and open source software. (Dorsey is nonetheless a Bitcoin booster and has said it could help bring about “world peace.”)
His posts angered few people. Andreessen Horowitz’s Marc Andreessen has banned Dorsey on Twitter, causing a mini-series in the tech world.
But web3’s top winners may actually be big companies. The non-fungible tokens that people buy and sell as art — including cartoon monkey tokens — have to be traded in a market somewhere, and OpenSea, one of those markets recently, was worth $13.3 billion. (Andreessen Horowitz is an OpenSea investor.)
A number of venture capital firms now specialize in cryptocurrency investments, and have invested more money in cryptocurrency and blockchain in the past year than ever before, according to estimates from Crunchbase and Pitchbook, two research firms.
A venture capital firm, Coinbase Ventures, a subsidiary of cryptocurrency exchange Coinbase, made 100 different investments last year, according to Crunchbase. The startups include an Indonesian website to buy cryptocurrency and an online marketplace to buy video clips from game streamers. Like startups in general, most of them are just starting to explore business models.
Where does the ‘democracy’ of the web come from?
Remember those tokens we’ll all have with web3? Each of these may come with voting rights.
The best example so far is a group formed in November with the idea of outsourcing some money to auction a rare copy of the US Constitution. The term for this type of group is Decentralized Autonomous Organization (DAO), and the group was constitutionally called DAO. This off-the-wall caper failed, but if the group succeeded, their plan was to vote on a plan to publicly display the document.
The recently formed DAO plans to buy a golf course, where shareholders get voting rights as they would in a country club.
People are leaving Big Tech for this?
The allure of Web 3 – money or perfect talk, or both – is big enough that top engineers are jumping out of the so-called Web 2 companies.
CNBC reports that two of Facebook’s senior engineers on its blockchain and digital currency project left the company to join the crypto team Andreessen Horowitz in October. They cited the investment firm’s track record of “developing the entire cryptocurrency ecosystem” – a mission far more extensive than they had at Facebook. And last month, the vice president of Facebook’s parent company Meta left for OpenSea.
It’s not exactly a brain drain, but the pace seems to be picking up.
Is this really the future?
The future is always uncertain, but the tech industry in general is in the lead, and the buzz around cryptocurrencies, whether it’s a bubble or not, is unmistakable.
Benedict Evans, a London-based tech investor, wrote this month that the crypto world is characterized by both “irrational religious hype” and “nefarious attacks.” He said it has helped shift the center of gravity in technology away from smartphones or social media, for example.
“Cryptocurrency is too big and potentially important, but it’s too vague and too early, and we can’t even agree on what to call it,” he said, without using the term web3.
Evans said there are other hot tech sectors — including gaming, self-driving cars and virtual reality — but there is likely little that can quell the hype of Web 3 in the near future without regulatory intervention from Washington or elsewhere. Other countries, including China, have cracked down on bitcoin mining, for example.
However, a few actual products would help the cause of Web 3 backers.
What will Washington do?
So far: mostly debate. The Biden administration is studying cryptocurrency regulations, and in December, Congress held hearings on potential regulation of cryptocurrencies — and thus all potential Web 3 tokens.
“What do you say to people who say this doesn’t look like a new financial system per se but an expansion of the old one?” asked Rep. Alexandria Ocasio-Cortez, DN.Y.
One of last week’s witnesses, Brian Brooks, was a former Trump administration official who is now CEO of blockchain technology company Bitfury. And only Andreessen Horowitz, a former government official, was kidnapped as part of a lobbying campaign to rewrite regulations around cryptocurrency.
Andreessen Horowitz also predicts that voters may favor pro-crypto candidates. “Web3 has emerged as a major political force,” she said last month, based on one study she paid for.