Skip to main content

Is Web3 the new world order, or just utopia?



(source: Adobe)

As it is with all technological change, every industry must understand, assess, and prepare to incorporate the “new” with the existing. The payment industry, which is undergoing almost constant change, is no exception to this rule. But to understand this change, we must start at the beginning – with Web 1.0 or the “static web”, so called because you would load all the data at once from a web server. This would start to change at around the turn of the millennia with Web 2.0.

In 1999, Microsoft experimented with what later would be called “AJAX” (Asynchronous JavaScript And XML), which was an enhancement to its web browser so that it could asynchronously pull data from the web server without refreshing the whole page. This enabled websites to become more interactive and behave more and more like applications.  It was this underlying technology together with Javascript frameworks that enormously simplified content creation and self-publishing, and ultimately gave rise to social media platforms (with a slew of other technologies that emerged in the same time frame – notably HTML5, noSQL databases and server-side scripting). Today, we look at Web 2.0 and no longer think of it as powered through evolutionary technology, but there is a clear relationship between the advances of technology and the use cases that were derived from it. Among other things, it has allowed big platform companies to centralize a lot of general-purpose Internet activity – be that Google for search, Facebook for social interactions or Netflix for Movies. In many ways, Web 2.0 is a successful technology push. 

Web3 also talks about technology, mostly distributed applications that are running on blockchain and the possibility of decentralized autonomous organizations (DAO’s). This today manifests itself in the world of DeFi (Decentralized Finance), where you can do financial transactions without needing a bank. It is the fact that it’s not centrally regulated and supposedly distributed without central governance that could lead to broader applications that would remain unregulated. At the core of this, is the desire to remove central controls (to decentralize) and give the power back to the people. Similar to how bitcoin was a reaction to the financial crisis in 2008/09, this feels like a reaction to the big tech players and governments that have started to centralize our digital lives. 

Vitalik Butherin himself talks about the need for decentralization in his paper: “Decentralized Society: Finding Web3’s Soul”. In the abstract, the paper states:

“We call this richer, pluralistic ecosystem “Decentralized Society” (DeSoc)—a co-determined sociality, where Souls† and communities come together bottom-up, as emergent properties of each other to co-create plural network goods and intelligences, at a range of scales”.

Further, it states:

“With such augmented sociality, web3 can eschew today’s hyper-financialization in favor of a more transformative, pluralist future of increasing returns across social distance”.

He later tried to clarify in a Fortune article that he is not at all in favor of the “bored Ape”‡ phenomena and thinks too much effort has gone into DeFi. In short, he seems very idealistic about the future of society and would like to see the next version of Ethereum, which is more sustainable, play an equalizing role shaping such a society. 

But this generated several thoughts in my mind. First off: what interests me is the question of human nature in all of this. I would argue that the Web3 camp is looking at technology as something of a savior and believing that we had to address the technology to address human nature. But the reality at the moment is that most things running on Ethereum are “make a quick buck” schemes, very much in line with how Wall Street Day Traders operate and less so with how a pluralistic society could participate in and benefit from these activities.

Which brings me to another perspective of decentralization that comes from the mind of Tim Berners-Lee (yes, that one) who is looking to solve decentralization with existing technology and while he also pushes technology, he has a stark warning for blockchain aficionados: “When you try to build that stuff on the blockchain, it just doesn’t work,” as pronounced in a recent interview. While his approach is not exactly novel, it is in the public domain and certainly addresses the idea that end users retain control of his or her data – which also aligns with the decentralized interests of the blockchain enthusiasts and is the whole point of Web3.

While we don’t know what specific challenges Tim Berners-Lee sees with blockchain, I would like to give an insight into how complex the blockchain actually is through the eyes of Marcel Waldvogel (English/German) in his series of reports but also particularly, his recent Web3 expose in which he compares the decentralization of Web3 with the peer-to-peer networks that first saw the light two decades ago and have long since disappeared. His main argument is that, even with such an approach, there will be much more complexity and thus it still requires governance (in the form of gateways) to maintain such a decentralized system. 

To finalize, I’m making the case that Web3 and taking back control of data, is technology agnostic – the real issue here is human nature, precisely because there are incentive schemes at work that go against the idealistic beliefs of a pluralistic society.

My personal belief is that Web3 will not be based on blockchain or crypto, because:

- There are enormous complexities and efforts that come with it

- There are much simpler technologies to address it

- It’s a matter of regulation, because the wild west profit incentive that is happening right now with “bored Ape” and DeFi, as well as big tech’s appetite for personal data, and protection of people’s privacy are the real issues. 

I’d like to end this exploration and opinion piece by simply stating the obvious: not all technologies make sense.




† The paper describes «Souls» as accounts or wallets that can hold so called Soulbound tokens
‡ The «Bored Ape Yacht Club» is a collection of NFTs on the OpenSea market that have attracted incredible sums of money (Bored Ape Yacht Club - Collection | OpenSea)





Comments

Popular posts from this blog

Will Libra change the world?

I have some history with this – no, not directly but I’ve been researching the various attempts that Facebook made in order to enable their user base to make person to person as well commercial payments. I could be wrong but none of these efforts seemed to have panned out for Facebook. Case in point, Facebook has had an  e-money license  for their Irish and Spanish subsidiaries for nearly three years – this licenses are in theory “passportable” throughout Europe which would have given Facebook the opportunity to offer some form of payment service throughout the EU. I’ve known of some implementations in France and the UK but never anything that would have enabled them to go cross-border. In other words, Facebook has had to deal with the same payment fragmentation landscape in Europe and elsewhere than the rest of us. When Facebook officially threw in the towel by  shutting down  the P2P payment service on its messenger platform, I knew this was ominous. On the other hand, and like

Apples Vision Pro Headset strategy is all about its Arm-chips.

  Apple has given us a vision of what their VR and AR future might entail. But as have others pointed out numerous times, the whole point of the showcase at the WWDC 23 was to let people experiment, I’ve heard others say that it’s like the launch of the Apple Watch when Apple didn’t really know what would become of it. This is similar and yet different.  Just like the Apple Watch (and the iPad before it), Apple sought to porting its whole ecosystem onto a watch – granted, the Apple Watch can’t live on its own and a better comparison would probably be the iPad. The iPad can live without any other Apple device and unlike the iPhone, never really had a clearly defined function other than to watch movies and browse the web. It was not until it gained the ability to be used with a pencil that artists and designers started to explore the potential.  I’m trying to point out that Apple took 5 years from the first iPad in 2010 to the iPad Pro with pencil in 2015 to find its “killer-app”. But th

Will smart phone cameras be better than digital mirrorless cameras?

  If you believe Terushi Shimizu or rather, the way the press is formulating it , then camera phones will have better image quality in 2024 than your trusty DSLR or mirrorless digital camera. He backs this up with sensor technology advancements and computational photography. He has a point.     However, as a digital camera enthusiast myself, I must strongly disagree with this point of view. The message might be interpreted in such way that its meaning reflects a view that we are no longer bound by physics to get the best image quality.     The thing is this, the bigger your camera sensor, the more photons it can capture. However, this comes at the realization that big sensors require big lenses which in turn makes the camera big and heavy. I’m simplifying of course, but that’s physics. For camera makers it is therefore always a question of tradeoffs: do you want better image quality or do you want a smaller and lighter camera. Camera phones or cameras in smartphones, have changed this