Busting web3 Myths

Hello,

I’ve been in Copenhagen all week so I wasn’t able to get this newsletter out till now (that’s what happens when you leave packing till the last minute), but I came across this site a few weeks ago and knew I wanted to get my thoughts out about it.

There’s a community called ‘Yesterweb’ who’ve published a manifesto stating they want all the benefits that web3 provides (decentralized, permissionless etc), without the crypto/blockchain part - they’ve entitled this: “Keep the web free, say no to Web3”.

I’ll break down the things I agree with, what I take issue with and my takeaways for you to make sense of all this, dear reader.

Be warned, I feel they take a pretty condescending tone with everything web3, but I can fight fire with fire 🔥 (*precedes to cat roar*)

Let’s get to it!

Definitions:

Before I can really understand and question what I take issue with, let’s start by getting on the same page around the definitions they’ve proposed and my take on this. I’ve screenshoted (in black) the Yesterweb descriptions.

web3:

..okay. I agree with the ‘decentralized online ecosystem’ part, and I’m not disagreeing that it’s turned into a bit of a buzzword (I’d say other groups have turned it into a buzzword, not just the “crypto/NFT/DeFi community”.

The Ethereum website defines web3 as:

An integral part of the discussion is the context behind why we have now have web3 and its differences between web1 and web2. Feel free to read the whole post on the Ethereum website if you want to dig into the detail.

While I can understand this vision comes across as idealistic (“power in the hands of individuals, not corporations”), there is a fundamental reason why the current system doesn’t work and why a new system is required. Web3 takes the best of web1 & web2 to build a decentralized, better internet.

Blockchain:

In the internet’s current form, I agree with the above definition and opinion - we don’t need everything recorded on a ledger.

However, for where we’re going and the advent of NFT’s/digital collections, being able to utilize digital ledgers to lend legitimacy to digital collections is important. Also, who’s to say a ‘new’ internet, isn’t built upon blockchain technology by making information accessible and ‘on-chain’?

Finally, there is also the decentralization argument - by distributing computing power across nodes, we are less reliant on companies with highly scalable data & server capabilities - a key advantage in the web2 world.

NFTs:

Largely agree - NFTs help identify ownership of a digital asset. It’s ‘non-fungible’ meaning no single NFT is the exact same as another - each has their own unique characteristics. The below images show a specific ape from the Bored Ape Yacht Club collection and its unique traits, compared to the other 9,999.

Yesterweb’s web3 critiques:

Now that you’ve heard from Yesterweb on their definitions and my take, let’s go through each of their critque’s of web3.

Some of which I agree with and others I feel require a second look.

Ponzi’s, Ponzi’s everywehere!

If you read my UST/Luna breakdown a few weeks ago, you’ll know that I think Ponzi schemes are inevitable and prevalent right now. The benefit of being in a bear market means there’s less ‘hype’ and less of an incentive for people to ‘ape’ into anything.

Ponzi’s are prevalent when there’s money to be made from newbies - a ponzi is what moves money from newcomers to early adopters, incentivizing newcomers to keep bringing in new people. I also described this playing out with STEPN a couple of months ago.

While there’s a financial incentive in promoting projects you have a stake in, this is certainly not limited to just the cryptocurrency industry nor is this the only incentive - more money into the ecosystem, leads to more experiments in innovative projects (and yes, some may fail or be a ponzi, but not everything falls in this bracket). This is what progress looks like.

We all have to be vigilant and weed out seedy/shilled projects, but I wouldn’t not invest (time or money) because a small % in this industry have bad intentions.

We don’t know what we don’t know

Like with anything, there’s a learning curve for us to experience.

There’s node infrastructure, liquidity mining, yield farming, zero-knowledge proofs - so much for us to learn and understand.

But isn’t that the same with everything?

Additionally, not every programmer understands everything about the libraries and frameworks they’re using. They know it works, so they use it, like lego blocks.

The above statement by Yesterweb confuses the traditional ‘learning curve’ of most things (see image below) with ‘it’s-so-complicated-it-must-be-a-scam’.

“But cryptocurrency is bad for the environment”

I’m not going to deny that cryptocurrency consumes a lot of energy - more specifically, cryptocurrency (or, Bitcoin) mining (mainly from the “Proof-of-Work” approach. Bitcoin mining for instance, consumes as much energy as Finland, Malaysia or Sweden.

Saying this, there are concerted efforts to co-locate Bitcoin mining operations with zero-carbon resources, such as nuclear, hydro, wind and solar, could help reduce the carbon emissions associated with the mining itself.

New research in efficient energy and grid usage and the shift to a Proof-of-Stake model (significantly less energy usage compared to Proof-of-Work), as well as the benefits of the industry, mean the environmental impact is less than stated by mainstream media or the above Yesterweb statement.

“It rewards early adopters”

So, just like a venture-backed startup?

Without funding behind projects or startups yet to find a sustainable business model, we wouldn’t have many of the solutions we have today.

“The public has no idea whether the project will be successful or not” - so just like any business? It’s high risk, but those who seek high returns, should be exposed to higher risks. There’s no such thing as a free lunch.

This one seems the most anti-innovation statement compared to the rest.

Closing Thoughts

While I disagree with the majority of Yesterweb’s anti-web3 manifesto, it’s important to immerse ourselves in divergent views - only by understanding the other party’s viewpoint, can I explain where I stand on the line and have clarity in what I think.

I look forward to reading how the Yesterweb statement develops, and see my own viewpoint change. Onward!

Until next time

I hope you enjoyed this week’s edition - I'd love it if you shared it with a friend or two.

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Fahim