Why I am optimistic about web3
Internet services were created using open protocols that were governed by the internet community during the initial phase of the internet, which lasted from the 1980s to the early 2000s. As a result, individuals or organizations could develop their online presence with the assurance that the game’s rules would not alter in the future. During this time, major web properties including Yahoo, Google, Amazon, Facebook, LinkedIn, and YouTube were launched. As a result, centralized platforms like AOL lost a lot of their significance.
For-profit tech firms, most notably Google, Apple, Facebook, and Amazon (GAFA), created software and services that quickly surpassed the capabilities of open protocols throughout the second era of the internet, which spans from the middle of the 2000s to the present. As the prevalence of mobile apps increased among internet users, this tendency was exacerbated by the phenomenal expansion of smartphones. Users eventually switched from these simpler, open services to these more complex, centralized ones. Even then, users would often use GAFA software and services to access open protocols like the web.
The good news is that incredible technology was made available to billions of people, many of whom could utilize them for free. The bad news is that it has become far more difficult for entrepreneurs, creators, and other groups to expand their online presence without worrying that centralized platforms will change the rules on them and rob them of their audiences and income. The internet became less engaging and dynamic as a result, which in turn inhibited innovation. The discussions over issues like fake news, state-sponsored bots, “no-platforming” of users, EU privacy legislation, and algorithmic biases demonstrate how centralization has also stoked larger societal problems. In the upcoming years, these discussions will only get more heated.
#web3: the next phase of the web is here
Government regulation of major internet corporations is one way to combat this centralization. This response makes the assumption that the internet and earlier communication networks like the phone, radio, and television networks are analogous. However, the internet, a software-based network, differs fundamentally from the hardware-based networks of the past. Hardware-based networks are extremely difficult to redesign once they are established. Software-based networks can be redesigned by innovative business practices and market pressures.
The internet, which connects billions of completely programmable computers at the edge over a very basic core layer, is the pinnacle of software-based networks. Software is merely the encoding of the human intellect, and as such, its design space is virtually limitless. In general, internet-connected computers are free to run any software that their owners wish. With the correct incentives, anything that can be imagined may spread swiftly online. Technical innovation and incentive design meet in internet architecture.
The basic internet services will probably be virtually entirely rearchitected in the upcoming decades because the internet is still in the early stages of development. web3 networks are community-governed, decentralized networks with capabilities that will someday surpass those of the most sophisticated centralized services, combining the greatest aspects of the first two internet eras.
Why decentralization matters
The idea of decentralization is sometimes misconstrued. For instance, it is sometimes asserted that supporters of web3 networks desire decentralization because they want to avoid being subjected to governmental censorship or because they hold libertarian political beliefs. These do not constitute the primary justifications for decentralization.
Platforms that are centrally managed have a known life cycle. When they first start out, they exert every effort to enlist consumers and complementary third parties like developers, companies, and media outlets. They do this to increase the value of their services because platforms are by definition systems with multiple interacting network effects. Platforms’ control over users and third parties continuously increases as they climb the adoption curve.
Their interactions with other network participants shift from positive-sum to zero-sum as they reach the peak of the curve. The simplest method to keep expanding is to collect user data and compete with competitors for audiences and earnings. Microsoft vs. Netscape, Google vs. Yelp, Facebook vs. Zynga, and Twitter vs. its third-party clients are some historical examples of this. Although they continue to charge a hefty 30% tax, reject apps for what seem to be random reasons, and subsume the functionality of 3rd-party apps at will, operating systems like iOS and Android have behaved better.
This shift from collaboration to competition appears to third parties to be a bait-and-switch. The top businesspeople, programmers, and investors have learned to be cautious when constructing on top of centralized platforms throughout time. Decades of experience have shown that doing so will lead to disappointment. Users also forfeit their right to privacy and data control, making them more susceptible to security breaches. These issues with centralized platforms will most likely worsen in the future.
Why I am optimistic about web3
Decentralized networks should succeed, but that doesn’t guarantee that they will. Let’s examine some specific causes for optimism in this situation.
Developers create software and web services. In the world, there are millions of highly qualified developers. Only a small percentage work for huge technology companies, and of those, only a small percentage produce new products. Startups or groups of independent developers have produced many of the most significant software projects in history.
Decentralized networks can prevail in the third internet era for the same reason they did in the first: by seizing the attention of businesspeople and programmers.
The competition in the 2000s between Wikipedia and its centralized rivals like Encarta serves as an instructive parallel. Early in the 2000s, when the two products were compared, Encarta was by far superior due to its superior topic coverage and accuracy. But since it had a vibrant network of volunteer contributors who were drawn to its decentralized, community-governed ethos, Wikipedia improved at a much faster rate. Wikipedia was the most visited encyclopedia website online in 2005. In 2009, Encarta was discontinued.
The lesson is that instead of comparing centralized and decentralized systems as hard products, you should think of them as dynamic processes. Centralized systems frequently start out completely functional and only progress at the rate at which staff members at the sponsoring company do so. Decentralized systems are initially unfinished but, given the appropriate circumstances, can rapidly expand as more people join their ranks as contributors.
Developers of the core protocol, developers of complementary web3 networks, developers of third-party applications, and service providers who run the network all participate in multiple, compounding feedback loops in the case of web3 networks. These feedback loops are heightened by the associated token’s incentives, which, as we’ve seen with Bitcoin and Ethereum, can accelerate the growth of web3 communities (and sometimes lead to negative outcomes, as with the excessive electricity consumed by Bitcoin mining).
My conclusion: Decentralized networks won’t magically solve all of the issues with the internet. However, they provide a considerably more effective strategy than centralized systems.