What is Web3?
Deloitte, for its part, sees the Web3 as part of a larger concept of the “semantic web”:
“Many people identify Web 3.0 with the Semantic Web, which centers on
the capability of machines to read and interact with content in a manner more
akin to humans. Recently, definitions of Web 3.0 have begun to include
distributed ledger technologies, such as blockchain, focusing on their ability to
authenticate and decentralize information. Theoretically, this could remove the
power of platform owners over individual users.”
Gartner links the origins of the term to “Gavin Wood, co-founder of Ethereum, who argues that centralization is not socially tenable long-term. Also called Web 3 and Web 3.0, Web3 eliminates the need for, and functions of, Web 2.0 central authorities and “gatekeepers,” such as major search engines and social media platforms.” [Emphasis from the original quote]
Ethereum, while admitting “it's challenging to provide a rigid
definition of what Web3”, lists 4 “core guiding principles, including
decentralization, permissionless, use native payments (i.e., cryptocurrencies
instead of “outdated infrastructure of banks and payment processors”), and
trustless (e.g. relies on miners instead of “trusted third-parties”).
What does Tim O’Reilly, Bill Gates, and Gartner have to say about this?
Tim O’Reilly coined the term “Web 2.0” back in 2005. According to his seminal post on the topic, he introduces the jump
from Web 1.0 to Web 2.0 by looking at how Google (which he believes is “the
standard bearer for Web 2.0”) compares to Netscape. Specifically, he notes that
“the value of the software is proportional to the scale and dynamism of the
data it helps to manage.”. He also touches on a number of other concepts,
including the ability to harness the wisdom of the crowds, cloud computing, as well as the long tail.
The original post is worth the read because it gives a benchmark of sorts as to what does “good look like” when claiming the web has gone through a version upgrade.
In terms of what O’Reilly thinks about Web3, it can be found here. He summarizes his primary challenge in a single sentence:
“None of the examples in the article focus on the utility of what is being
created, just the possibility that they will make their investors and creators
rich.”
The article he is referring to was this one published by NY Time in the fall of 2021. The article mentions, social media, collectibles, and gaming.
Bill Gates is a bit more direct:
“Speaking at a TechCrunch talk on climate change Tuesday, the
billionaire Microsoft co-founder described the phenomenon as something that’s
“100% based on greater fool theory,” referring to the idea that overvalued
assets will go up in price when there are enough investors willing to pay more
for them… Gates joked that “expensive digital images of monkeys” would “improve
the world immensely,” referring to the much-hyped Bored Ape Yacht Club NFT
collection.”
Regardless, O’Reilly and Gates end-up in the same place. Compared to the Railway, Radio, and Internet Bubbles of the past, there is no infrastructure being built here to move people/goods, broadcast programming through the air, or enable the routing of packets of information in a dynamic way that enables us to work from home during a pandemic.
In contrast, there is literally nothing when it comes to crypto. With bitcoin, you do not actually have a tangible thing to hold on to; there are no digital coins or pieces of code to point to. Instead, your holding are mathematical calculation of your “ins” and “outs” (see here for our post/process flow of bitcoin). Sure, that’s part of the security – but from an economic perspective that is quite a difficult pill to swallow. Add on top of that, there is no centralized intermediaries to turn to when things don’t work out with these “assets” – you have massive issues in understanding how this different than people paying fortunes for tulip bubbles, I mean bulbs.
As noted in the previous post on NFTs, I do think that NFTs offer some type of infrastructure to the future. O’Reilly is not so sure. However, what we do agree is there massive gap on the institutional side of things:
“The failure to think through and build interfaces to existing legal and commercial mechanisms is in stark contrast to previous generations of the web…The easy money to be made speculating on crypto assets seems to have distracted developers and investors from the hard work of building useful real-world services.”
O’Reilly points out that the Web 2.0 – despite the DotCom Crash – still had successful ventures that could be pointed to, such as Amazon and Yahoo that were making money, hiring people, providing services to millions of users and “had all built unique, substantial, and lasting assets in the form of data, infrastructure, and differentiated business model”.
And Gartner?
Gartner on a recent blogpost unveiling its Hype Cycle for Blockchain and Web3, 2002, made an important observation:
“In
the meantime, other than cryptocurrency trading, we still have not seen killer
use cases yet. They need to leapfrog over current applications in terms of
making our lives better.”
Though Web3 is something new, there’s a lot more that needs to be done
before it can be crowned a Version 3.0 of the World Wide Web.
