I started this post after a weird night in Lisbon. We arrived with a group of friends to a fantastic apartment located in the best neighborhood of the city. Candles, club lights, paintings and wine all around. Really cool. The stage was set for a terrific night. Unfortunately, it went in the opposite direction. The hosts talked for 2 hours in a row about how great they were and how much they knew about art, Burning Man, kite-surfing, Portugal and Web3. It was not a conversation; it was a lecture. A boring lecture. And there was no way out.
The Web3 speech was the hardest to digest. My friend asked what Web3 was, and the hosts delivered a 10 minute answer full of smart and complicated words that when put together made no sense at all. They couldn’t explain it. No data. No facts. All BS.
Since this was the third time in a week I had listened to people talk about Web3 without making any sense, I decided to listen to experts and put some thoughts together.
What is Web3?
In Web1 you were only able to read on the Internet. In Web2 you can read and interact (i.e. Facebook) on the Internet. In Web3 you can read, interact and own part of the internet.
From a different perspective, I like thinking about it in the following way: in Web2 you have 2 groups of people that have economic benefits and make decisions on a platform: founders and investors; in Web3 you have 3: founders, investors and users.
“The community decides the future of the platform”. “Uber drivers own part of Uber”. “Harry Potter fans write together the next Harry Potter book and get benefits for doing so”.
What are Web3’s main benefits vs Web2? Decentralization, transparency, cooperation and user ownership.
Decentralization: do we need decentralization? I believe that for most cases we don’t. As Scott Galloway said, and Yuval Harari described it on Sapiens, human’s superpower is mass cooperation and that cooperation is based on trust. We trust each other to succeed. Moreover, decentralization doesn’t make sense from a practical perspective: imagine taking votes for every decision (e.g: choosing a platform’s color) and asking billions of people to vote; monkeys would probably rule the world if we did. Also, is Web3 really decentralized? I am still trying to find hard data on voting power, but from what I read and listened to so far, the answer is no; decisions are taken by few people. Is this bad? No, but we should stop using the decentralization flag.
Transparency is another big Web3 flag, which is great, but again, how much do we need it? If we trust people/institutions to make decisions, we can trust them and hold them accountable. That is why we have the law. Do we need to be able to see every transaction on a platform in order to use it? I believe most people don’t. Also, transparency can create security problems (and Web3 is suffering from it); if everybody knows how much we make and what we do, we become great targets for hackers.
The third most used argument in favor of Web3 is Cooperation – but cooperation already works in Web2. There is probably no better example than Wikipedia, which doesn’t use Web3 technology; only good rules with “old” tech. Moreover, as mentioned before, the illusion and romanticism around cooperation is an innovator’s trap. We need people to lead, hold them accountable for bad acting and reward them for their good services. Do people really want to participate? I don’t think so. Wikipedia’s content was created by 0.02% of its users1 and there are superstars like Steven Pruit who made at least one edit to one-third of all English Wikipedia articles – his reward was social recognition and coverage in the Times magazine.
Tech is still a question mark. Web3 tech is still inefficient (Ethereum, the most used blockchain, can process 24 transactions per second vs. several thousands by Visa and Nasdaq, and processing-cost comparison is even worse) and user experience is not ready for mass adoption; it is really complicated. The fact that supports this is that there are around 30 million Metamask wallets2, which, according to experts, is a good proxy for the Web3 population interacting with applications beyond just investing. 30 million users is what Instagram had when it was acquired by FB; still a long way to go before the adoption of billions.
User ownership: this is Web3’s biggest advantage. Putting regulation aside, tokens are “easier” to trade than shares: trading can be done 24/7, there is no need for an intermediary (thanks to blockchain) and settlement is immediate (vs. days).
Web2 platforms are more robust, agile, secure, and do a lot of the things that Web3 platforms do but in a more efficient way. Web3 has great use cases such as NFTs, and as tech evolves there is more to come. Tech will get better: the Web3 community is extremely smart and (some) humble enough to recognize the existing tech problems (Ethereum’s new version will have radical improvements).
Is Web3 ready for mass adoption? Not yet. That said, Web3 opened everybody’s eyes (including Instagram), and I believe the “next Instagram” will be a hybrid between Web3’s model (user ownership) and Web2’s technology/centralization.
¡Éxitos y conquistas!
PS: I wrote this post in English to honor Pipi, Luis and Mike, who were terrific hosts in Portugal and were smart enough to get us out of the party pretending their house was being robbed
1 The Cold Start Problem
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