What does it take to bring about an online revolution? As 2022 arrives, a new movement, under the banner of Web3, has become one of the most discussed – and least understood – forces in tech circles. But it’s still not clear what practical problems it will solve to become part of everyday life.
Each iteration of the web builds on new technical capabilities. With the first version, it was the ability to browse between static web pages. With Web 2.0, the web becomes a more interactive, real-time medium, and the users themselves become the content.
These developments, built on top of the open protocols of the internet, are radical enough to support new forms of mass online behaviour. So what is supposed to be Web3 will move to Decentralized online world?
Its core innovation is based on distributed consensus made by blockchains – the ability to reach binding agreements with complete strangers, without relying on any intermediaries or agencies which central. Imagine if large groups of people could transact spontaneously: what new miracle of human coordination could happen? Cryptocurrency boom applied the idea to money, but Web3’s full promise lies in using similar technical platforms to mediate many other forms of human interaction.
The arguments behind this certainly fit the mood of the times, with its distrust of elites and institutional authority. Beyond that, it seems to offer an easy answer to the power of Big Tech: You too can take back control of your data and your online life, and have the opportunity to share the enticing profits. led by Big Tech.
It’s a fascinating yard. But behind the decentralization rhetoric, it’s unclear what real-life uses will actually draw people away from the online services that are still hugely popular today.
The first explosions occurred in the field of decentralized finance, where individuals transacted without intermediaries, and digital collections called NFTs. These hardly indicate other uses. Much of the attraction of the former lies in circumvent financial regulations, while the latter is the reason for a speculative frenzy.
There are other reasons to be wary. Remove the institution that supports the mass human interaction framework and what’s left? As several regulators have warned, the current system of financial market regulation relies on oversight by banks, brokers and market regulators.
It’s true that regulators haven’t figured out how to limit the tech giants of today. But does Web3’s promise – to have everything according to the rules baked into software, guaranteed by bulletproof cryptography – make ordinary people feel more confident that their interests are being taken care of?
Using new digital currencies to lubricate the wheels of this decentralized online world – a process known as encryption – will have other implications. It will turn online activities into a marketplace where every interaction is instantly monetized. As such, it would represent a form of hyperfinancialization with unpredictable effects on how people behave online.
This at least seems like a fair starting point for building a fairer system, one that puts individuals in control. But the results of revolutions often don’t match the rhetoric of the launch.
Bypassing old intermediaries often pave the way for a new set of intermediaries – as the first Web did. The blockchain dream has its limits. It’s not possible to put everything into an open, distributed database, where all nodes can be instantly updated to reflect each new set of transactions. That leaves plenty of room for new intermediaries to grow around the edges, turning promises into practical services.
The wild speculation that has accompanied the crypto boom is also a reminder that orderly profit sharing is unlikely.
This is not to say that the central technology behind Web3 doesn’t have radical potential, or that – like the first dotcom boom – today’s speculative frenzy won’t germinate tech businesses. next important. So far, however, advocates of the new technology have struggled with a major challenge: coming up with practical applications that can match the daily aspirations of millions of users. Silicon Valley works on the principle that if you throw enough intelligence and technical capital at a problem, a better way will emerge. We shall see. In the past, web revolutions have been messy. This one looks like it’s going to be messier than most.
richard.waters@ft.com
