Web2 Architects Are Not Fans of Web3: Is This Actually Surprising?
Does it make sense to rally against Web3 while proposing the faulty status quo? What is the ‘controversy’ between Web2 and Web3 really about?
It seems that Elon Musk set anti-Web3 sentiment in motion when he called Web3 “bs” at the beginning of December. Soon after, developers on both sides of the fence chimed in. Jack Dorsey, relinquishing his role as the CEO of Twitter, entered the fray by describing Web3 as an infrastructure owned by VC.
This is a reference to a host of Venture Capital firms that are at the forefront of funding the entire blockchain space, from DeFi to GameFi. Elon Musk then stepped in, asking where exactly Web3 is, to which Dorsey added another quip that appears to be diminishing Web3 as a concept.
It is no surprise that social media networks like Twitter are prone to creating such controversies. However, what precisely is the subject matter here? Here is a breakdown of the alleged conflict.
From Web2 to Web3
Taking a few steps back, if one advocates against Web3, a look at what Web2 is is needed. To understand that, we first have to go to Web1, the most decentralized form of the internet we have ever seen, or probably will see. Businesses, institutions, individuals, and governments created their own websites that had static, non-engaging content.
More importantly, they all relied on their own marketing skills to push them into the public eye. This non-interactive era lasted up until mid the 2000s. From then to now is the period of Web2, marked by the rising dominance of behemoth corporations.
The Web2 era reached its pinnacle with complete centralization of power within the hands of half a dozen corporations — Google, Facebook, Microsoft, Twitter, Apple, and Amazon.
It is safe to say that these companies now control the majority of what information is accessed online, including what can be searched and what can be expressed. In turn, these big tech companies have fostered a market culture whereby any rising competitor is bought out, solidifying their position as the market leaders.
By doing this, the corporations have made themselves indispensable to internet users. Their reach and power are such that they are annually called to congressional hearings, and are arguably treated as parallel government bodies built on international scales. In fact, due to their massive network effect, it has become common to call for these companies to be designated as common carriers.
In contrast to private carriers, common carriers wouldn’t be able to deplatform a business or an individual without legal grounds. Therefore, the ever-shifting and arbitrarily interpreted community guidelines would be rendered moot. With this in mind, how does Web3 fit into the future of the internet?
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Web3’s Disrupting Proposition
The underlying benefit of Web3 is that it transfers a measure of control of the internet’s infrastructure to the user. Blockchain technology is crucial in making it happen. When a platform has governance tokens, it gives users partial infrastructure ownership. These tokens also serve as utility tokens, paying the network’s costs in a transparent manner.
From Livepeer and Filecoin to Mastodon, LBRY and Signal, they all make it far more difficult to be at the mercy of Big Tech’s whims, including their potential abuse of private data.
Most recently, over 200 newspapers have filed lawsuits against Google and Facebook, alleging unfair market manipulation under existing antitrust laws. Web3 has the potential to drastically mitigate these abuses by implementing Web1 decentralization with Web2’s modern functionality. Web3 bridges the two with the economic lifeblood by introducing native monetization — cryptocurrencies/tokens.
In practical terms, this would mean that Web3 can:
- Make internet presence resistant to tampering from a few groups which could have their own political and cultural agendas.
- Ensure the enforcement of digital asset property rights and contracts without mediators.
Case in point, NFTs alone have given digital artists something that was previously impossible; an exceedingly convenient way to track resales of their work and automatically gain royalties with each one. Such a new rebalancing of power could be applied to the entire Web3 ecosystem, especially with DAOs (Decentralized Autonomous Organizations) thrown into the mix.
Is Web3’s Potential Endangered By VC Firms?
By far, Andreessen Horowitz (a16z) with $19.2 billion AuM, and Polychain Capital with $2 billion AuM, are the biggest blockchain investors around, to just name a couple. The question is, how can their centralization effect be measured?
Simply put, by seeing what is the initial token distribution across smart contract platforms. The more tokens distributed via a public sale, the more decentralized the network is.
The red portions – insiders – represent VC firms and developers. As you can see, some are more decentralized than others. Solana, Binance, Celo, Flow and Fantom are on the more centralized side of the spectrum while Ethereum and Cardano have a much greater public token ownership.
Leaving aside the legal issue of the SEC potentially regarding these tokens as unregistered securities, as it happened with Odysee.com, the question asks itself. Does Web3 lead to greater decentralization and seamless monetization than the current Web2 model?
In the end, both Elon Musk and Jack Dorsey have made their fortunes on that model. The threat of tokenized centralization is worth pointing out and is something to be wary of. However, the alternative in the form of Dorsey’s own funding and VCs don’t get us away from this issue.
Browser wallets such as MetaMask represent the most visible Web3 implementation. Do you think these on-ramps can be subverted? Let us know in the comments below.