The best analysis I’ve seen (albeit pithy) on web3 came from Arthur Breitman about a week or so ago. The question was trending on Twitter and Arthur shared a few thoughts here
For those of you who don’t feel like opening the link to the tweet, here’s what he said.
Web1: content distributed to users
Web2: content produced by users and distributed to users
Web3: content produced by users and distributed to users on user controlled platforms
What exactly is web 3 or the “metaverse” for that matter?
I think the answer to this deserves some preliminary analysis with crypto cycles.
Crypto is a very nascent space, with just shy of over a decade under its short history.
With that short history comes a relatively small market capitalization as comparative to commodities, precious metals, etc. After 10 or so years the entire market capitalization of crypto isn’t even over 3 trillion USD.
Given that market capitalization, it rises fast and can swing just as fast downwards. Hence the volatility, which comes in waves every 4 years.
These waves are usually created following a Bitcoin halving event where Bitcoin miners block rewards for mining get cut, making Bitcoin more scarce. Eventually there will come a time where no more Bitcoin could be mined, but that’s a conversation for a much different time.
What’s become more than apparent to me is these crypto cycles are not as random as we might think. They extend beyond these halving events. Now, what do I mean by that?
Bitcoin redefined an existing problem and has been fairly successful in doing so. It changed the way we viewed money and value, for that matter.
Fast forward to 2017, the previous bull run. Initial coin offerings (ICO’s) were raising $20-50M every other day for some solution to whatever. This resulted in moving beyond Bitcoin and exploring vastly the capabilities of platforms like Ethereum and smart contracts. It also redefined traditional funding models (i.e. investment groups, VC funds, etc).
Fast forward even more to late 2019 and present. Decentralized Finance (DeFi) was introduced and provided the same legacy financial world instruments – lending, borrowing, etc. But, decentralized and amongst pseudo anonymous people on the internet.
I didn’t think something that would surely repeat the previous pattern of redefining an existing centralized problem, but it did. There’s over $200B in total value locked (TVL) across all DeFi platforms as of today.
Let’s enter the metaverse and JPEG land.
Web3, metaverse, NFT’s… you hear these phrases several times a day at this point. What does it all mean though?
There’s no granular or “perfect” definition for this. To be quite candid, it’s mainly a lot of internet dwellers over exposed to JPEG’s trying to pitch you a grandeur vision of why you should buy their bags.
Jokes aside (mostly), behind the NFT speculation craze we’re seeing today is actually the groundwork for something much bigger.
I’ll give you an example.
Say you’re one of the many who decided to buy an NFT at some point, a lizard for examples purpose. Maybe this lizard is now pretty valuable and your social media channels are now full of people with lizard pictures as their profile pic. They also keep screaming the floor is too low.
A few things happened here.
Firstly, instead of glamorizing your newly acquired lizard NFT, you’ve become intertwined into a newly formed community of people who also have these lizards. We can draw parallels to sporting teams. What once was no reason for someone to approach or converse with you, due to the shared common interest (your lizard NFT), you’ve now opened up doors that previously would have been closed socially.
Arthur Hayes does an amazing job at detailing this concept further here
Now, these NFT’s are tokens, by their very name (Non-Fungible Tokens). Web3 itself is the internet owned by the builders and users, orchestrated by tokens.
This orchestration can lie in the underlying management of the platforms in which these NFT’s are based, such as Tezos. What we are essentially seeing is tapping further away from big tech and revitalizing the very origin of what the internet was supposed to be.
The internet was most certainly not meant to be used to track, profile you, and collect data from you as we’ve witnessed from the likes of Facebook, Instagram, and others. Their entire business model relies on this.
Imagine a future where your cryptographic wallet address represents your identity. That wallet address reveals some details about you, through a profile you may have created for it or what have you. Take it a step further and imagine it’s your personnel number or identification for your job.
It’s not going to be a so-distant future where we begin to see these things come to life. I see DAO’s playing a critical role here as well in aligning incentives as we begin to push away from typical corporate structures. Just look at the rapid trend of remote based work in the past year or two, it’s not going away.
How everything binds together might require some more time to see, and thought for that matter.
However, one thing we can know for certain is that Tezos is making significant strides in making this vision a reality. It will be fascinating to witness the next few years as we traverse into web 3.