The Case for Web3 Infrastructure
If you build it, will they come?
What is Web3?
Web3 is a basket term for new technologies built on cryptocurrency and related “decentralized” tech. Unlike Web2 technologies where trust, ownership, censorship, and control are mediated by few large tech companies, Web3 technologies are owned and controlled by user, creators, and the protocol developers. It is a reimagining of the invisible underlying infrastructure of what we know today as “the Internet” and it is drawing in top talent from across the tech industry:
“There is a giant sucking sound coming from crypto,” said Sridhar Ramaswamy, chief executive of search engine start-up Neeva and a former Google executive, who competes with crypto companies for talent. “It feels a bit like the 1990s and the birth of the internet all over again. It’s that early, that chaotic and that much full of opportunity.” - The New Get-Rich-Faster Job in Silicon Valley: Crypto Start-Ups
What is driving the demand for Web3?
The demand is being driven by dissatisfaction and distrust with the structure of the Internet and a desire to reframe its ownership models. Andreessen Horowitz’s Web3 policy page summarizes the demand under three pillars: an alternative to broken big tech paradigms, more resilient/inclusive digital infrastructure, and level of trust in institutions.
As a thought experiment, ask yourself:
Has your trust in large public and private institutions grown or declined over the past 10 years?
If you could have invested 1% of your savings in ownership of ‘the Internet’ in 1995 as a general purpose technology, would you?
When did you last receive a dividend payment for the ad revenue generated from your social media activity?
The Case for Web3 Infrastructure
Haters Gonna Hate
Like any good technology movement, Web3 has its share of true believers and naysayers. Its criticisms boil down to a lack of technical substance in the Web3 world vs Web2. For example, if you wanted to rebuild Twitter’s technology infrastructure on Web3 technology, it would be somewhere between difficult and impossible.
Some of the world’s most prominent entrepreneurs have weighed in with their view that Web3 may be nothing more than hot air pumped by VCs:
These are reasonable critiques to the broader Web3 ecosystem, because much of the recent growth in Web3 has been funded by large Silicon Valley VCs. However, the devils are in the details:
We are still very early into the Web3 ecosystem’s development.
True ownership of Web3 varies widely by each project, and deserves much more analysis to paint a fair picture.
True Believers
Despite is nascent stage, there are still true believers in the disruptive potential of Web3. This December 2021 article in Foreign Policy magazine makes the case that Web3 decentralized protocols have the potential to overtake services which are today offered by well known Web2 companies and eventually services offered by nation states:
These tech companies [Uber, Lyft] ensure both driver and rider can complete a transaction, record star ratings from both parties .. are more modern regulators than the paper-based models of the 20th century. These companies are, in important instances, already achieving state ends faster than the state.
These companies won’t remain companies forever—they’ll be phased out by protocols that split the upside with their users.
However, the next step is the full Web3-based decentralization of online marketplaces and sharing economy services, which is already well underway via peer-to-peer trading of cryptocurrencies (so-called decentralized exchanges). These new forms of transnational regulation, where app users have a stake—and a say—in how their platforms are run, will expand beyond cryptocurrencies to the peer-to-peer exchange of other goods and services over time.
Prominent VC firms are lining up to put their money behind the movement:
The foundation of DeSo, the blockchain started by the founder of social media site BitClout, has unveiled a fund to support the development of a decentralized social media ecosystem.
It will draw from the $200 million in venture capital the project has received from Andreessen Horowitz, Coinbase Ventures and others.
Work to Be Done
Realizing the benefits of Web3 will require both new reimagining of how to rebuild familiar concepts on Web3 and also creative bridging of old Web2 technologies to this new space. Despite ample investment to date, the Web3 ecosystem has significant work to become as user friendly and ubiquitous as their Web2 counterparts:
Prominent technology entrepreneur Kevin Rose claims sums up the current technical gaps in this space explaining, “Its early days, I’ll give you an example, you could not build Twitter on the infrastructure we have today .. we need Centralized infrastructure now, I think we’re still a few years out from that dream.”
How will the gaps be bridged between the constraints of Web2 and the promises of Web3? Let’s find out together!
wow,. Impressive, a little over my head but can't wait to hear more! Keep it coming.