Is Web 3 the best of Web1 + Web2?

The Economist | Jan 24, 2022

is Web3 the future of the internet - Is Web 3 the best of Web1 + Web2?LIKE SEEMINGLY everyone these days, Moxie Marlinspike has created a non-fungible token (NFT). These digital chits use clever cryptography to prove, without the need for a central authenticator, that a buyer owns a unique piece of digital property.  Digital artists, celebrities and even the occasional newspaper have issued and sold them to collectors, often for hefty sums (the immaterial version of The Economist’s cover image fetched over $400,000).

Although it looked cryptographically sound like any other NFT, however, Mr Marlinspike’s token could shift shape depending on who accessed it. If you bought it and viewed it on a computer, it transformed into a poop emoji. After a few days the NFT was taken down by OpenSea, a marketplace for digital artefacts. This played into Mr Marlinspike’s hands. For his aim was not to raise cash but to raise awareness. His token showed that NFTs are not as non-fungible as advertised.

See:  Moxie’s impressions of web3 (from making some distributed apps)

The Marlinspike caper was the latest turn in perhaps the biggest controversy to erupt in tech world for several years. On one side sit techno-Utopians, firms offering assorted web3 services and their VC backers. They claim that web3 is the next big thing in cyberspace, that it is truly decentralised—and that it promises juicy returns to boot. Last week Andreessen Horowitz (a16z for short) reported to be raising a $4.5bn web3-related fund, to add to three existing ones worth a total of $3bn.

Pitted against them are the sceptics. They range from Mr Marlinspike, highly respected even among the techno-Utopians for creating the secure-messaging app Signal, to Jack Dorsey, who founded two platforms of the sort that web3 promises to supersede (Twitter in social media and Square in payments). They argue that a truly decentralised internet is a pipe dream—

“You don’t own ‘web3’. VCs and their [limited partners] do,” Mr Dorsey warned last month.

The centre cannot hold

The web3 movement is a reaction to perhaps the greatest centralisation of all: that of the internet. As Chris Dixon, who oversees web3 investments at a16z, explains it, the original, decentralised web lasted from 1990 to about 2005. This web1, call it, was populated by flat web pages and governed by open technical rules put together by standards bodies. The next iteration, web2, brought the rise of tech giants such as Alphabet and Meta, which managed to amass huge centralised databases of user information.

Web3, in Mr Dixon’s telling, “combines the decentralised, community-governed ethos of web1 with the advanced, modern functionality of web2”.

This is possible thanks to blockchains, which turn the centralised databases to which big tech owes it power into a common good that can be used by anybody without permission.

See:  If true, the valuation of this popular NFT marketplace would be the very top of the crypto market

What all these companies have in common, explains Mr Dixon, is that it is hard for them to lock in customers. Unlike Google and Meta they do not control their users’ data. OpenSea, in which a16z also has a stake, and Alchemy are just pipes to the blockchain. If their customers are unhappy, they can move to a competing service.

The idea is that this makes web3 companies try harder to satisfy customers and keep innovating.

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NCFA Jan 2018 resize - Is Web 3 the best of Web1 + Web2? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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