Like many people who’ve been following the blockchain space for a long time, I try to learn, unlearn and revise my opinions on it. I’m going to try to capture where my views stand as of November 2018 by dedicating posts to different parts of the ecosystem that could end up creating trillions in future value:
1. Higher Order Antifragility: Why I’m Still Bullish on Crypto as Store-of-Value
2. It’s About Values, But Values Don’t Always Win: Why I’m Bearish on Web 3.0
Note: I deliberately avoid discussing private blockchains. They have nothing to offer over well-designed, well-built software that uses no blockchains. Between trusting parties, any use of blockchain isn’t only pointless, but also a terrible design choice (my post about web 3.0 might give you an idea about why). Suits don’t get fired for choosing private blockchains in 2018, but they most likely should.
Thanks to my friends Matthieu Courtin (Kenetic), Kenrick Drijkoningen (GGV) and Benjamin Joffe (HAX) for their thoughtful feedback & contributions.
— This post is part of the Blockchain’s Trillion Dollar Futures series —
Web 3.0 (also known as “the decentralized web” or simply the emerging space of decentralized networks and applications) is the crypto category that everyone should be watching in the next few years. Thousands of founders, funds and media outlets make daily claims that cash and store-of-value were just the beginning, and that just like the unsuspecting earthlings of 1995, we’re about to witness the emergence of massive, world-changing applications powered by blockchains.
It’s too early to make outlandish predictions, but it doesn’t prevent many people from making them and defending them religiously. What I’ll try to do in this post is boil the situation down to a list of observations and key questions that I’m asking myself when thinking about the future of web 3.0.
Let’s start with some observations:
- Blockchains are not unique enablers for any app. Unique enabler is what smartphones were for Uber. Technically, 100% of the apps that could be built with blockchain could also be built with any commercially available database
- However, blockchains differ from regular apps by providing “unbreakable guarantees”: they are permissionless, censorship-resistant and out of the control of any single entity. They predefine roles and rules for all participants
- Those guarantees appeal to some people because they imply openness, competition, true ownership, technocracy, freedom and free market
- Those guarantees come at a cost for users who use blockchain products. We live in a world where many people can’t do simple foreign exchange math. As of 2018, using the decentralized web requires understanding technical concepts such as private keys, using a new set of software tools and managing an inventory of different utility tokens to consume different services. Users also have to accept the finality of disasters such as loss of private keys, and the fact that often there is no customer support phone number to call when the worst happens
- Those guarantees also come at a cost for founders, compared to traditional tech businesses. Founders who take a radical decentralized route can’t use the world’s most advanced cloud infrastructure (AWS, for example). They can’t charge dollars for their services. They put sky high barriers in front of potential users (from obtaining utility tokens to installing special software). They sacrifice governance and the ability to iterate and change their product over time, which is a fact of life in tech startups. They have to think about liquidity and choose one blockchain to live exclusively on, because blockchains aren’t interoperable yet
The internet is where it is today because it made life convenient for users and founders. But the success of the decentralized web doesn’t seem to be about convenience as much as it’s about values. I think about web 3.0 as a version of the internet that trades convenience for better values.