I Helped Elon Find Web3

Web3 Is Going Through An Existential Crisis

TABLE OF CONTENTS

  • Reviewing Elon and Jack’s Tweet.
  • Reviewing Web3 Governance Issues.
  • Venture Capitals and Non-Community Funding.
  • Everyone’s Here for the Money.
  • Web2 → Web3 Switch Tradeoff.
  • The Lack of a Decentralized Internet.
  • Maybe Web3 needs Some Time.

LEVEL → BEGINNER.
PREREQUISITES → NONE.

TL; DR(KEY POINTS);

not me though but Okay
  • Elon Musk and Jack Dorsey question the authenticity of Web3 on Twitter.
  • Governance structures are could make or break the authenticity of Web3.
  • Venture Capitals poses a risk to Web3 in various ways.
  • The Community seems to be here for the money.
  • Most people are okay with the web2 privacy trade-off
  • Web3 uses an internet that is centralized and that makes web3 apps centralized
  • Web3 could turn out almost perfect, time would tell.

REVIEWING JACK DORSEY AND ELON’s TWEET

Early December 2021, the world’s richest man Elon Musk tweeted

Weeks later, Jack Dorsey, the founder of Twitter Inc tweeted…

Later the same day Jack tweeted, Elon tweeted…

This series of tweets saw conversations and controversies among various sets of people and the crypto/web3 community, including Marc Andreessen of Andreessen Horowitz blocking Jack on Twitter.

In this publication, I overview the shortcomings of the decentralized web a.k.a Web3.0.

REVIEWING WEB3 GOVERNANCE ISSUES

Governing is an uphill task, and although it seems like decentralized governance is icing on the cake, there are a lot of problems that could arise with total forms of decentralized governance.

Security is the bane of networks, and with the incessant hacks occurring across various blockchains, there’s an important question to answer

“Do the protocols where these hacks occour or the participants of the network help the victims of the hack or allow the hacker go free, since it’s a decentralized network?”

For example, on web3 apps, the token of the underlying network is needed for transactions, therefore, tokenization is important across these protocols. When some crypto YouTubers were hacked a few weeks ago, Their bank accounts weren’t tampered with. If a web3 user’s account gets hacked, there’s a high probability they have funds on the blockchain which they use to pay for fees or expensive NFT avatars which could also get siphoned.

Once again, it’s back to the quoted question above and what is getting traded off.

VENTURE CAPITALS AND NON COMMUNITY FUNDING

Building on web3 required funding. Companies would definitely have to raise funding to accelerate production.

We’ve seen projects turn to venture capitals for funding which is a faster way to get funding with lesser complications, and of course, this has its effects.

The decentralized web was envisioned to be the backbone for a creator and owner’s economy, however, venture capitals pose a risk to this.

When a venture capitalist invests in a project, they get an allocation of the protocol’s token which they are to hold or sell over time for profits and this is often a large share of the token’s supply compared to what individuals get.

The ownership economy offers users a stake in the governance of the protocol and since venture capitals often get large shares of the tokens, they get higher stakes in the governance of the protocol, and this is just one of the numerous disadvantages.

This video by Coinmarketcap questions the relationship between VCs and Web3.

EVERYONE’S HERE FOR THE MONEY

“This is a life-changing opportunity, like in the early days of the internet”

The above sentence sells the significance of the web3 revolution as perceived by most of its users.

Most people see web3 as an avenue to make more fiat money and it makes sense considering that In most countries, you can’t buy much with cryptocurrencies. So what happens when to these protocols if they don’t have enough funding to keep their web3 apps alive.

Since when did tech become interesting?

WEB2 → WEB3 SWITCH TRADEOFF

Most users sufficiently enjoy these web2 services and are already too deep to stop using them.

Imagine losing all your recommendations from Spotify, followers on Instagram, and Tiktok just for data privacy which actually doesn’t really matter to most people.

With the privacy and security issues on web2 come extremely beautiful features that are hard to overlook.

THE LACK OF A DECENTRALIZED INTERNET

There is no existing project that is completely decentralized and this is due to three major reasons

  1. The internet used to interact with these services is centralized.
  2. The front-end of most Dapps is hosted on centralized servers.
  3. Many people use centralized cloud computing services to mine cryptocurrencies.

MAYBE WEB3 NEEDS SOME TIME

Growth takes time and builders and building behind the scenes. Some projects that are optimizing and building for a more decentralized, secure, and favorable web3 include.

  • Internet Computer → Building the decentralized web stack.
  • IPFS → Decentralized file system.
  • Arweave → a Decentralized storage system.
  • Oasis Network → Privacy and Security Optimized blockchain.
  • Cosmos → Enabling Interoperability across blockchains.
  • Cardano → Decentralized opensource blockchain platform.
  • Ethereum → Decentralized opensource blockchain platform e.t.c.

With the power of a community and better incentive structure design to keep the community, a perfect web3.0 is possible although I think this would take time to perfect and a couple of tradeoffs

Check out this article → What does 2022 hold for web 3.0;

WHAT DOES 2022 HOLD FOR WEB 3.0.

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Disclaimer: This is educational content for Fundamental Analysis purposes and NOTHING in this publication should be considered Financial Advice.


I Helped Elon Find Web3 was originally published in DataDrivenInvestor on Medium, where people are continuing the conversation by highlighting and responding to this story.