Web3/Crypto: Why Bother?

But the thing that really seems weird is that all you need to do make it interesting is 1) define what you mean by web3 (it’s a slippery weasel word that changes meaning whenever the people using it needs it to) 2) define a few uses that are obviously better than the alternatives and justify them without hand waving (including explaining why what would appear to be fundamental show stopping flaws are not in fact that)

If you can’t do that (and no one seems to be able to) the maybe, just maybe, it is bullshit?

The general historical trend is to make money more abstract and to be able to perform more complicated functions with it. But fundamentally money is a social technology that consists of three things: An abstract unit of value in which money is denominated, a system of accounts, which keeps track of the individuals' or the institutions' credit or debt balances as they engage in trade with one another and the possibility that the original creditor in a relationship can transfer their debtor's obligation to a third party in settlement of some unrelated debt. [0]

Crypto seems to satisfy the essence of that in a pretty cool way. DeFi projects are experimenting with the question of, "can we build the financial instruments and capabilities that a complex economy require on top of, and directly integrated with, this type of monetary system.

Like any technology that requires a large network of users to be valuable it has a difficult bootstrapping problem. But it seems to be gradually working its way to larger and more important transactional contexts. First with illegal digital marketplaces and now in countries with weak monetary system like El Salvador (and with unbridled speculation along the way).

Maybe all of the current crypto projects will fail but it will be interesting to see the nature of monetary systems in 10, 20 and 50 years from now. What aspects of these current experiments have been adopted?

[0] Money: The Unauthorized Biography

Has the author ever heard of OpenStreetMap, Wikipedia, or a million other projects like them? I'm also not quite sure "permissionless data" is how I'd describe a database that stores tiny amounts of data at a massive cost. Pay-to-play is permissionless iif you have the money.

Sometimes the cure is worse than the disease.

Bitcoin has been around for 12 years, but in real life I don't know anyone who has ever used something crypto related for anything else than risky investment, or basically gambling. I'm very skeptical.

The worst part of this is that I feel like I could get dragged into this. That at some point I'll have no choice but to start digging into this and dedicate time to other stacks because the money behind Web3 succeeds in shoving it down everyone's throats.

This is someone talking about technology fixing problems, but ignoring the messy real world. For example, we have repeatedly seen how governments can control things which "nobody owns."

Another item which stood out was the idea of Web3 taking back control from the big tech companies. But if they are monopolies, then shouldn't it be the government which takes them down?

Someone suggested it is because they have invested heavily in ETH mining.

But there’s a large group of older people who cling to crypto because they think it'll make their ideas sound relevant again. While appearing "disruptive", the crypto space actually privileges those (generally older) folks who already have money to burn (like the Winklevoss twins, whose payout from FB provided more money than they could ever spend on themselves in one lifetime).

- In the early days of the automobile there were hundreds of car companies. Now there are essentially what, 10 worldwide?

- In the early days of personal computing there were hundreds of competing platforms, PC brands, etc. Now there are essentially what, 10 worldwide?

- In the early days of the internet there were hundreds (thousands?) of dial-up and last mile internet providers (sometimes literally some person in your neighborhood with a T1 and modems in a garage). Now there are what, 10 in the US?

- In the early days of the internet there were hundreds of web hosting companies, e-mail providers, etc. Now almost all of the internet runs on what, three?

These examples go on and on (mobile devices, cell providers, pretty much anything and everything).

Point being it's extremely unlikely (to me) that as the immutable blockchain ledgers all of this is built on grow endlessly (storage, compute, bandwidth, etc) and attempt to scale to any meaningful application, transaction rate, etc beyond the toy level it's at now "decentralized" will almost certainly turn into a handful of power players that can bring the advantages offered by massive economies of scale.

1. Retconning

2. As always, web3 and crypto is the next WWW, and the next Internet, and the next car, and the next wheel. Even though literally all signs are pointing to it being the next Juicero or the next Enron.

> We also need permissionless data. Why do we need this? Because otherwise we are left with a few large corporations ... We of course know where this winds up and that’s why pretty much everyone hates their cable company and their electric utility.

That's quite a logic leap. We need permissionless data because that's why everyone hates their cable company.

> prior to the Bitcoin Paper we literally didn’t know how to have permissionless.

1. We did.

2. Retconning yet again. Bticoin paper is literally this:

--- start quote ---

A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.

We propose a solution to the double-spending problem using a peer-to-peer network.

--- end quote ---

The etire paper mentions permissions or permissionless exactly zero times.

> It is difficult to overstate how big an innovation this is.

Yes, you have. Yoi have just significantly overstated how big it is.

> As such Web3 can, if properly developed and with the right kind of regulation, provide

Ah yes, regulations. Which, if I remember from just a few paragraphs above "then leads us to all sort of regulatory contortions aimed at rectifying the power imbalance but in practice mostly cementing it. "

> And if widely adopted Web3/crypto technology will also start to improve along other dimensions. It will become faster and more efficient.

And that will surely happen just because you say it will happen. Also because innovation I guess?

> And much like the PC was a platform for innovation that never happened on mainframes or mini computers, Web3 will be a platform for innovation that would never come from Facebook, Amazon, Google, etc.

Innovation never came from Juicero either. Somehow, your web3 is surely the next Internet, and not the myriad of failed "innovations".

Why add magic number guessing for financial gain to something like a photo sharing platform?

Maybe your answer is micro transactions, but then how do you protect consumers from fraud and abuse with reversibility and dispute resolution? This seems like a feature and not a bug of our current financial system.

Things like Patreon and Kickstarter exist already and seem to do a fairly good job of this. Why do we need all of the downsides of cryptocurrency to do something that already works well for billions of people?

What a naive and short sighted world-view this is, it's almost grotesque. No company or government derives its power from holding a big database. By the same argument it would follow that Venezuela must be a really wealthy country because it's got lots of oil. And it's the same kind of argument as saying Stripe or Paypal or some other Fintech got big because they had the idea of "enabling payments on the internet".

Power is derived from getting others behind a cause and then executing on it. That's it.

If you're not (or have been and got out), then it's nothing but the delusion of a sect of believers who want to wish it into existence.

Being invested fundamentally changes the way people think and allows them to come up with any justification for their investment. It's not just crypto, but pretty much everything else where people expect easy returns at the expense of other people, nature, other countries, the future, etc.

There is nothing special or magical about this technology. Just because it uses an immutable data structure called 'block chain' and cryptographic hashes left and right, doesn't automatically make it useful or needed. In fact, the opposite is true due to the POW being a race to burn as much (mostly) coal for the benefit of very few.

The fact that the vast majority of crypto enthusiasts, who have absolutely no idea how it works and what it represents, decided to part with their fiat in the hope that money grows on Merkle trees and pushed the price to astronomical levels does not validate the technology itself, but rather is an example of human psychology and greed at work.

I hope the whole crypto delusion crumbles as quickly as possible before it takes down the whole world economy with it. Or maybe that is exactly what must happen so that the world wakes up to reality. Maybe that is the whole point of it.

For the average person, there is no real use for Web3 because there is no actual definition for it.

My impression is that Web3 is being praised as decentralized, yet it is people with a lot of money who are the one's regulating the pace right now.

And that is a tad bit concerning to say the least, because if I invest millions into something (whether as an individual or a VC) - I'd like to feel a sense of "ownership", otherwise that money could have been spent helping real causes.

I'd go as far as saying that for most people, including those entrenched in spending their hard earned money, the word Web3 is immediately associated with NFTs, not the actual blockchain technology. And that says a lot.

The problem isn't centralization. It's centralization through a company which exerts too much of its own influence and censorship and monetizes your usage for its own benefit. Plenty of centralized databases allow free speech and don't seem to monetize your data: look at HN or if you're more radical, 4chan.

Idk if all centralized services are doomed to be corrupt so decentralized is the best we can do, like all monarchies are doomed to be corrupt so democracy is the best we can do. But unlike monarchies that hasn't really been shown. Maybe if someone invents a more efficient way to serve decentralized data the web will transition, but until then most decentralized services are most useful only as a backup to centralized services.

Counterpoint: remember 3D TVs? Or those chatbot things that briefly received all the VC money a few years back?

Crypto, NFT's, blockchain & web3 are currently in a mania phase so my 2022 resolution is to aggressively ignore them so I don't get sucked in before the inevitable correction. I can't afford to be stuck with a pile of tulip bulbs.

The fun thing about cryptography is that allows building internet services that can beat the blockchain. There is nothing preventing you from creating a service where people upload encrypted stuff that is only associated to a key id. In fact there are already services that kind of do this.

What bothers a lot of us isn't the libertarian nirvana ideal, it's the fact that most loud proponents have a financial interest and stand to gain by increasing adoption, even if only temporarily. Even if they truly believe the technology is pointless and has no future, they are incentivised to pretend that it is revolutionary in order to increase the value of their investments so they can offload their holdings. This makes it difficult to trust anybody writing positively about cryptocurrency-related topics. It's like knowing a manufacturer pays people to write positive reviews about their product and then suddenly seeing lots of blogs and comments raving about how great the products are with little justification.

If you can separate the distributed database technology from the financial speculation then I will be a lot more enthusiastic about it. However, without the get-rich-quick aspect I suspect such a technology won't get nearly as much excitement overall. Mastodon and Diaspora are already working examples of decentralised social networks and this article doesn't state what advantage web3-based products would have over them and people generally don't seem very excited about them.

While I agree that FB, twitter and alike are just big content holders and providers, I cannot agree that vast majority (of users) even understand the implications or care to go decentralised and redundant (in respect to content).

So it seems the appeal of the so called web3 is still very weak. And btw It’s not even a web, really. It seems to me rather an extremely bloated approach to ‘torrenting’ assets. And extremely energy-pricey.

Where are the mass usage use cases beyond "get rich quick" schemes?

We have had the technology for years and all we got are NFC schemes, speculation and hot air.

In the old times we called this "a solution in search of a problem", but these solutions are imaginary.

This, probably, hints the the top of a couple of bubbles.

No, blockchain in itself doesn't mean it's not controlled by a single entity. There are many permissioned and private blockchains:

https://www.foley.com/en/insights/publications/2021/08/types...

And the reason we all got internet connections in the mid-90's wasn't Web0. It was email. Web0 was a toy thing that only us geeks played around with, that came free with your email account. All the "serious" stuff that we use the web for now was in the walled gardens (CompuServe or AOL).

Web3 needs a "killer app" like email or spreadsheets. Still not seeing one.

[0] Source: I had this happen to me. Working a desk job as an admin clerk in a transport company, and suddenly our monthly budget/financials had to be sent to head office in Lotus 123 instead of paper. So I got a PC (286, 4Mb of memory woot!) and learned Lotus 123. Fun times :)

Are Web3 people just using "web" as a stand-in for the internet?

As for the crypto parts, I'm all for making everything possible cryptographically secure by default and E2EE.

Is it true that major blockchains out there are really not controlled/controllable by a small number of people?

I read that top 10,000 account holders hold over a third of all bitcoin [1]

Assuming same thing happens with other blockchains, isn't that the same problem as top 10,000 Facebook shareholders owning a third of its shares? Basically the system is decentralized on paper, but in reality massive centralization happens driven by economic incentives, same as in non-blockchain world.

[1] https://time.com/6110392/bitcoin-ownership/

That being said I have no ideea where this tech is going. Maybe it will tranform enough times it becomes useful to me. A better analogy for me is the gold rushes. A lot of bad things happened during those but it also encouraged migration and settlement of some unexplored regions.

If I don't get involved it doesn't cost me very much that other people try. Let them do the work and take the risks. If they produce anything useful I will profit. If not...

(I know about the environment cost)

If I have a tungsten cube sitting on my table, it is theoretically possible that I could track that tungsten cube backwards through time. It's sitting on my desk now, but before that it was in a box on a UPS truck, before that in a foundry somewhere, before that it was in the earth, before that the elements were in a supernova which themselves could be traced back all of the way to the origin of the universe.

So the fact of the cube sitting on my desk is really just an expression of all of the events leading to it sitting on my desk, and this isn't something that can be fabricated no matter how much authority you have (you could like, but the universe would know it as a lie).

Blockchain is that. I have some value in my wallet, but that value can be traced all of the way back through various transactions to when it was mined/minted/whatever, and actually the entirety of the various crypto ecosystem could be traced back to, literally, the genesis block.

That is a Very Big Deal. It means that the block chains are internally consistent universes of their own, with no central authority. That's a big deal for gaming, for ownership proxies (like NFTs), for currency, and for really anything else that exists within our own universe.

To say it in a somewhat flowery way: our own universe is a physical blockchain.

- Immutability: building any software requires iteration, and therefore mutability. How do you build a startup if you can't ALTER TABLE on your database (or it requires a new database)?

- Irreversibility: if there are any bugs, or mistakes in the code, you can't fix it later (and in fact, someone may be able to steal a lot of your tokens)

- Dependency on real-world data sources: even if smart contracts are ironclad, they can dependent on potentially erroneous or manipulable data sources

- Off-chain centralization: many of these blockchain apps such as the play-to-earn games have a lot of centralized control that is not on the blockchain and under the discretion of the developer. Probably because of the reasons above

At a meta level, the hardest problems are people problems and not solvable by technology. Trying to solve people problems with ironclad code seems like a fool's errand. If there was a killer app that wasn't handicapped by the issues above, that would make me a believer.

The key point here is "Some People". But to make meaningful change a majority of people have to switch to a new system. The sad truth is: 90% of people do not care.

The best example for this is podcasts. They started out as a decentralized utopia. Self hosted files, self hosted feeds, multiple apps to listen to them, improvements of existing formats (mp3 chapters were not really a thing before podcasts), there were even talks about enabling BitTorrent distribution.

Fast forward a few years, now Spotify seems to accumulate most of the podcast universe and a lot of the existing podcast use them as a distribution platform. And their exclusive content is drawing in more and more users.

So my question here is: if we have a decentralized system that works but people willingly use a centralized alternative of that, how can you claim that decentralization is remotely popular?

You need to address this social issue before coming up with any kind of technology to solve it.

At the end of the day, an internet server will (and should) be managed by a single entity (person or corporation). Why? Well, why not? Why should _I_ host _your_ website (IPFS)? Just so that some granny with a laptop can cryptographically prove it's yours as originally intended?

For example, I personally don't care what FB (now Meta) does with my data - my likes aid in teaching an algorithm to understand humanity better than humans themselves? That's fucking awesome!

How would Web3 change this even?

There'll always be a need in understanding people in ways no one can imagine yet, and to do so, someone has to leverage your data in ways you might not like (mostly because you don't understand the need, or you're just a sheep in a herd screaming "that's mine!"). This is inevitable.

P.S. I am still struggling to understand Web3, please bear with me and my rant.

Web3 does not solve the problem of being bullied or controlled. It makes it worse. You can dislike Facebook, but it is a legal entity that the state can hold accountable. Who is held accountable in Web3? What recourse does anyone have if things are published about them that harm them in Web3? Russia created a well-funded agency to troll the web and manipulate public opinion. It seems to me they will love Web3.

Entities that will vie to control Web3 will be rich, powerful, and better protected from legal moves against them.

We already have a decentralized web. It called the Web. Anyone can connect a server to it.

Please Mr Albert Wenger. You are a VC and not a technical expert on what is a database or a blockchain.

It makes absolutely no sense to compare a database to a blockchain. These things are completely different and have entirely nothing in common except that they persist data. You wouldn't compare a file to a database to make a point, would you? Also, you don't have the authority anyways to make that comparison as I doubt you know the technical details that differentiate a database from a blockchain.

Databases aren't blockchains and blockchains aren't databases. Stop comparing them for your ignorance's sake.

Wow. There are so many factual errors in these sentences that I’m not even sure where to start.

I’ll start by giving the author the benefit of doubt and assume that by „personal computer” they meant the IBM PC (1981) and its family. (Otherwise we’d have to assume that they completely ignore the existence of pre-PC home computers, many of which were both less powerful and significantly cheaper.) It’s also not true that the PC was unable to multitask (remember Concurrent CP/M-86?)

First, note that IBM, at the time of introducing the PC, was – and continued to be, well into the 21st century – _the_ major purveyor of mainframes. So saying that they „ignored the PC” implies that they ignored themselves, which doesn’t make sense.

Second, the initial PCs were just not powerful enough to compete with mainframes or minicomputers. The sets of usecases of „big” computers vs. PCs were almost completely disjoint until perhaps the 1990s. There were reasons why the PC exploded in popularity in the 1980s (open architecture being the #1 reason), but the author is silent about that.

I know this is tangential, but I see a lot of handwaving in this post and, frankly, not much else. Why should I listen to someone who can’t get their facts straight? Why bother, indeed?

Cryptocurrencies are necessary. A parallel monetary system secured by cryptography and codified by algorithms, is highly necessary for nations with corrupt regimes. Being able to move fiat money into stablecoins and get a loan against it within seconds is necessary and has real utility.

Web3 does not really have utility. It's all driven by token price speculation right now. The big thing is if you think about the general population, nobody really cares about decentralization. They just want a good user experience. A centralized but good user experience is good enough for 99% of the population.

Lee’s web1 started in universities and it took years until people believed in it. Web2 came slowly as companies wanted to let their users interact more with their websites. I guess *AMP software was a major turning point in this, open source and available to everyone. You can be a part of web2 and never even know the name of a single VC.

What is happening right now is the absolute opposite. Money is at the very center of the discussion to begin with. Don’t get me wrong, I’m not a socialist, but I understand that a revolution such as web1 or 2 cannot be steered by money. If it happens (or when it happens I guess) it is probably going to be in a completely different way as what is being discussed on Twitter today.

But one thing that I do have to say is interesting about the tech is embedding smart contracts. This is legitimately interesting and novel, and probably the best justification for web3 tech.

What is the connection between "web3" and "NFTs" and "Cryptocurrency"? I mean apart from all being loosely related to the same underlying blockchain tech - are there other points of contact?

Will be interesting to see how this develops

   text-align: justify;
   hypens: auto;

I'm not going to force justification for people on small devices (it looks bad on these) but it sure is pleasant to me on a high-density, kinda large, screen.

This is painfully wrong. Almost true for Facebook, but in general these companies most valued assets are their systems and operations, not the data itself.

Also I’m pretty sure the first PCs weren’t cheaper at all.

> prior to the Bitcoin Paper we literally didn't know how to have permissionless

Simply not true. Torrents allow you to store and retrieve objects from a decentralized object "database" without an individual having control over it.

It won't.

It can't.

The problem is that validating transactions on a blockchain must be expensive. If they were cheap, then I could spend a few bucks, take over a blockchain, and say that my transactions are the valid ones.

There's no way around this issue.

However, I don't see it as a "web3 all the things" like web2 was, but as a set of protocols for certain kinds of behavior we're beginning to see online more and more. We'd probably add it in without thought (like we did Facebook's share buttons 10 years ago) if the tech weren't so complicated and the energy concerns so pernicious.

A lot of the success will come down to how successful everyone is at standardizing on schemas. In a decentralized world, I'm skeptical of that working out better than it did for web2, but I wish everyone luck.

Even the somewhat centralized platforms have so much high speed commerce on them that they don’t disrupt anyone. Even people that quickly exit to the bridges are not stopped and couldn't be, on the centralized-ish ones.

That’s a lot of alpha and value extraction to miss. Especially if you invest in the bridge :)

Don’t worry you’ll read about it late, in 2030, ngmi

If this take, "crypto is bad technology but we're at the very start of it, it will get faster and more efficient," shouldn't Bitcoin Cash have won a long time ago? Few seem to care about actually using cyrpto for anything other than increasing fiat. It's 90% wash trading.

A permissionless database was invented as part of an effort to create p2p electronic cash.

For any application The funnel is practically nonexistent, except to the luddites that still need onboarding into a wallet. No different than trying to show an existing experience to an AOL user in 1995 versus showing it to the people writing editorials questioning what the World Wide Web was. “Is there any useful application on the World Wide Web, why has nobody convinced me for me, why has everyone started ignoring my bait about what useful means! I swear I wont move the goalpost if you talk to me, this time!”

For marketing theory its matches perfectly, get a user to pay $1 and you’ve found the audience that would pay more, while bouncing the freeloaders. Any web3 application has authorized payments built in and users prepared to create a transaction with a fee.