With all the attention – and divisive debates – around Web 3 this past month, you might think the idea of a third, more decentralized internet era is entirely new.
In truth, “Web 3.0” has been part of a two decades-long discussion around the societal, cultural and political distortions created by the dominance of big internet platforms such as Google and Facebook and around the negative impact of Web 2.0’s data-driven economics. It long precedes the latest crypto-based iteration as Web 3, which Ethereum and Polkadot co-founder Gavin Wood spearheaded via a 2014 blog post that CoinDesk republished last week.
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Both sides of this raging debate have reasonable points of view. There’s the Chris Dixon position that Web 3 projects are creating real value and the countervailing Jack Dorsey position that the term is just a buzzword exploited by venture capitalists to boost their equity and token investment.
That smart people – including two famous “Tims” (discussed below) – have been exploring an exit from Web 2.0 for so long suggests Web 3 projects have worthy ambitions and that there will be public benefits and business payoffs if they succeed.
On the other hand, this long history reminds us that solving a very big problem is hard and that investors would be wise to take grandiose promises with a grain of salt.
Setting aside any opinion you might hold on either of these positions, it’s important to focus on the core structural issues with Web 2.0 and why there’s a need to change them. Doing so reveals a fundamental problem that’s crying out for a Web 3 advance: the misalignment between the interests of the giant companies that dominate the internet and those of the general public.
Blockchain technology can help address that, but it is by no means the only part of the solution or necessarily the most important part. We need a mix of technologies (both decentralized and centralized), regulation and economic rationale to enable business models that bring those competing private and public interests together.
But first, the question of how we got here requires a look at the long history of Web 3.
Web 3 means ‘not Web 2.0’
Web 3 is conceptually inseparable from the idea that society needs to escape Web 2.0 and its monopolization problems. For a long time, Web 3 has really just meant “the model that comes after Web 2.0.”
Sir Tim Berners-Lee signaled this need for an upgrade in 2006, when – according to a recent article by famed tech publisher Tim O’Reilly – the inventor of the world wide web coined the term “Web 3.0” to describe his longstanding vision for a new “Semantic Web.” Berners-Lee saw the evolution of universal data formats and artificial intelligence removing the need for intermediation by third parties to allow a true “machine-to-machine” communication network.
Whether Berners-Lee truly coined “Web 3.0” is not clear. (A quote from a 2006 New York Times article linked in O’Reilly’s column has the legendary computer scientist saying, “People keep asking what Web 3.0 is” – suggesting others had uttered the term before him.) Less in dispute is the idea that O’Reilly himself coined the term “Web 2.0,” having built a 2004 conference around the idea before explaining it in an influential 2005 essay.
By 2004, it was well known that Google, Facebook and Amazon – the survivors of the late-nineties dot.com bubble – had consolidated massive market power around ever-growing communities of value. What O’Reilly did was give a name to the new, network effects-driven business model that enabled their dominance: an ever-expanding mass user base on a common platform whose growth self-fulfillingly attracted more users to create a honeypot for advertisers. The emergence of these powerful intermediaries was a stark departure from the internet’s original decentralized idea, where publishers and users of information were expected to have direct, permissionless access to each other.
It wasn’t immediately obvious to most that this system was a socially harmful one, that the source of the platforms’ success – their ability to gather massive amounts of unprecedented user data about and package it for advertisers and other buyers of that information – would evolve into “Surveillance Capitalism.”
People didn’t foresee that we’d become dependent on the unchallenged control these few platforms wield over information, much less how, in handing over access to our eyeballs and clicking fingers, we’d be monitored, corralled into echo chamber groups, and manipulated with target ads and disinformation without even realizing it.
That’s what I mean by a misaligned business model, one that serves the owners of production but not the customers they are supposed to serve. It’s a very dysfunctional way for society to distribute information. It’s the problem that a future Web is waiting to solve.
‘Web 3.0’ becomes Web 3
By the time of Gavin Wood’s 2014 essay, the mess we were in was clearer. There was also a new way of looking at it.
Blockchain technology advocates were now positing it, not only as a way to resolve the centralized internet’s problems but also as a novel way of framing them. In focusing on the blockchain-centric concept of “trust,” Wood, who was co-founding Ethereum at the time, shifted our gaze away from the standard economic theory that decentralization’s inefficiency had opened the door to centralizing monopolies and pushed it toward Web 2.0’s meta problem: that the distrust among decentralized communities leads people to entrust centralized entities to coordinate their exchanges of money and valuable information with each other. What was always true for banks and money could now be seen in the realm of exchanges in another valuable commodity: data.
The next step was to posit that blockchains such as Ethereum, in supplanting trust in centralized entities like Google, offered the alternative of a verifiable, “truthful” means of tracking exchanges via open protocols and decentralized validator networks. If we could achieve that, the argument went, we could replace monopolistic platforms with decentralized communities of data sharing. Business models would emerge where applications service those communities’ transactions of money and information but, in keeping with the idea of “self sovereign identity,” control over that valuable personal data would reside solely with each individual user.
Wood was so focused on such ideas that, after leaving Ethereum, he dedicated his work at Parity Labs to this giant fix-the-internet objective. In founding the Web3 Foundation in 2017, he effectively rebranded Web 3.0 as Web 3.
Four years later, with Web 3 almost a household word and largely associated with crypto products such as non-fungible tokens (NFT), are we achieving these objectives?
The jury is out. For one line of analysis, read Twitter critiques such as former Twitter CEO Jack Dorsey’s, who argued the Web 3 industry is more about VC profits than real functionality. For another, see the polite responses from the likes of Balaji Srinivasan, who touted the superiority of Ethereum’s trustless “smart contracts” over Twitter users’ need to trust the platform’s “social contracts.”
Or there’s the blog post by Signal founder Moxie Marlinspike (real name: Matthew Rosenfeld), who argued that Web 3 is far harder to achieve than crypto cheerleaders believe because the cost and hassle of running one’s own web server naturally leads people to defer control to more efficient centralized platforms. That prompted a nuanced response from Mike Hearn, a former Bitcoin core developer, who cited Bitcoin’s SPV (simplified payment verification) wallets as an example of a lightweight user-controlled software that can process information while maintaining integrity and avoiding dependence on centralized servers.
All sides make valid points. One thing’s certain: We still have a long way to go to escape The Matrix. Blockchain’s “trustless” exchange models might be part of the fix, as might the emergence of decentralized autonomous organizations (DAO), where the power of collective action could overcome the network effect advantages of centralized platforms.
But much more is needed. As O’Reilly argued in his more recent article, if Web 3 is to go beyond its “idealism” and become “a general system for decentralized trust, it needs to develop robust interfaces with the real world, its legal systems, and the operating economy.”
Thankfully, people are building such bridges. Demand will drive them. For one thing, the entrance of mainstream, lawyer-controlled media corporations into the NFT and metaverse industry will demand these normalizing features get built. Still, to O’Reilly’s point, blockchain and crypto are not solo solutions. Many other elements are needed.
Let’s not forget the goal here: for humanity’s sake, we need a way out of the Web 2.0 morass. Keep striving, Web 3 builders.