— 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:
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.
Do values always beat convenience? Idealists think so. I prefer to ask how appealing the values are, and how much convenience is sacrificed. That’s why I think we should watch three important variables in the coming years:
Web 3.0 is more likely to happen if P goes up, U goes down and F goes down. At the risk of clumsily dressing up a qualitative statement as a quantitative one, you can think about it like this:
You can also use this framework to evaluate specific projects and use cases. For example, let’s see how it explains Bitcoin’s success as a store-of-value:
People assume that the geeks will “figure things out” and drive down U and F to zero by building decentralized infrastructure for web 3.0, but it’s not a trivial statement:
Interestingly, there is a prisoner’s dilemma at play today: the world is better off when the internet has better values, but as a founder I would rather build a centralized company around 99.5% of my ideas, simply because I have a higher chance to win this way.
Idealists celebrate the idea of “rebuilding the internet” and creating new types of economic activities. That, of course, implies massive value creation. I think this scenario is too aggressively priced into current market prices, investor dollars and media coverage.
Here’s a less revolutionary scenario that could play out: decentralized technologies will be part of the future as opposed to what defines the future. Several big blockchains might become the “native databases” that the internet never had. Bitcoin could be the database of cash. Civic could be the database of identity. Ethereum could be a database of ownership (in AWS terms, it means Ethereum would be more like S3 than EC2). If that happens, would the market cap of Ethereum take off or take a correction down from the current 20b USD?
The tremendous amounts of over-confidence and group thinking in the crypto community can confuse the most sober of minds. It also got truly hard to know where people’s idealism ends and their greed begins. At the very least, I think it’s way too early to tell if the revolution will not be centralized, or if any revolution will happen at all.
Originally published at itai.com on November 14, 2018.