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Who Needs Web3?

The internet is a meteor that crashed into human civilization. We absorbed the initial impact. Now, we need to figure out how to fit all the pieces back together.

Dror Poleg
Dror Poleg
6 min read
Who Needs Web3?

Next week, I'm kicking off the 6th cohort of Hype-Free Web3. It's a 3-week online course for people interested in the impact of new business models and consumer behaviors on their industries and careers.

Over the past 6 months, I've taught more than 600 alumni from organizations such as Google, Uber, Fidelity, HSBC, Sony Music, Atari, MIT, and even the Treasury Department and the FDIC. The course has a new name and updated focus. I will explain some of the changes below.

The internet is a meteor that crashed into human civilization. We absorbed the initial impact. Now, we need to figure out how to fit all the pieces back together.

Our problems have become globalized, but we lack global-scale solutions to coordinate our efforts. These solutions currently fall into two main buckets: The US model of relying on corporations to mediate and manipulate our interactions, behavior, and transactions; and the Chinese model of relying on the government to do the same.

Is there a third way?

Last week, Google announced a new program to delete the location data of users who visit "particularly personal" locations like "abortion clinics." The program was announced on the heels of the U.S. Supreme Court's ruling to de-legalize abortions and leave the matter to individual states.

Google is worried that state law-enforcement agencies will ask for information about citizens searching for and visiting abortion providers. And Google is not alone. During the same week, the Electronic Frontier Foundation advised women to practice caution when installing and using period-tracking apps.

Corporations, non-profits, and individual people are right to be concerned. Law-enforcement agencies (and hackers) regularly obtain search, location, and other data private corporations collect. They often do so for a good reason, but the ease with which such information is collected and obtained is stunning.

We barely noticed, but the world has turned on its head: In the past, only a suspected criminal would get their phone tapped, their correspondence logged, and their whereabouts tracked. Today, we are all subject to such surveillance.

Opting out is increasingly difficult. Most of our communication is conducted online, and more of our devices — from phones and watches to cars and refrigerators — are "smart" enough to know where we are and what we're up to. Basic interactions like chatting to a friend, borrowing something from a neighbor, or catching a ride with someone are now mediated by corporations that monetize and incentivize our behaviors in various ways.

As Tim Wu points out in The Attention Merchants:

“An earlier generation would find it astonishing that, without payment or even much outcry, our networks of family, friends, and associates have been recruited via social media to help sell us things. Now, however, most of us carry devices on our bodies that constantly find ways to commercialize the smallest particles of our time and attention”

The problem with the current arrangement is not that tech giants make money. The problem is that the only way for them to make money is through advertising that relies on the collection of highly-personalized data, tied to personal accounts that identify us by our email or phone number. Even Apple, a company that makes billions from selling differentiated hardware, is increasingly reliant on advertising powered by data collection.

Regardless of your political proclivities, this is not an ideal arrangement. Must we rely on corporate goodwill to protect us from draconian laws or permit us to support the causes we believe in? Isn't there a way to benefit from the wonders of networked software without agreeing to forfeit so much of our privacy and power? Is a different bargain possible?

I am not sure. To be precise, an alternative bargain seems possible but I do not know if it will be better than the one we have. Is this alternative worth pursuing and exploring? Most definitely.

Web3 (or Web 3, or Web 3.0) is an umbrella term for various efforts to reshape the web in order to:

  • Make it easy for users to control their own data and content and move between different apps and platforms;
  • Enable users to receive a share of the revenue their online activities generates for the platforms and apps they use; and
  • Enable web users and applications to resist censorship and the concentration of power in the hands of a small group of companies or governments.

Specifically, these efforts include developing a decentralized computing infrastructure that is difficult to censor or shut down arbitrarily and protocols that allow users to easily port their accounts, data, and digital assets across different apps and platforms.

Note that the goal is not to prevent companies from existing or profiting. Mostly, the goal is to allow companies (and other entities) to profit in new ways — ways that do not require the current bargain of free services in exchange for constant surveillance and ways that enable a more equitable distribution of power and profits among a larger number of people.

"Crypto" has been a huge distraction from the above vision. "Web3" is strongly linked to "crypto," but the two terms are not interchangeable. The Web3 vision might be achieved with a variety of technologies, and the ultimate uses of blockchains and tokens might be very different from the ones that made headlines over the past couple of years.

Unfortunately, the term "crypto" has become associated with too many activities that focus on short-term profiteering and scams. While every technological revolution has plenty of both (profiteering and scams), it's important to separate pure speculation from the speculation that is required to finance new ideas.

As Sebastian Mallaby pointed out in the Washington Post earlier this week, the early days of the railways, automobile, manufacturing, and (yes) internet industries were rife with profiteering and scams. These industries also had their booms and busts and some (like railways) hardly generated any profits even after a century of development. But they still changed the world. As Mallaby points out, "boom-bust cycles can’t tell you much about whether a technology will triumph."

And yet, crypto's booms and busts are unique. They are unique because tokens tie together two different activities: participation and investment.  To use a decentralized app, you need to own tokens. These tokens are both a way to use the app and a financial position that bets on the app’s success.

Imagine how crazier the early dot-com bubble would have been if every Microsoft or Yahoo user was also a shareholder of these companies. And imagine the intensity of the dot-com hype if 5 billion people were constantly sharing every new company and investment idea with everyone else on earth.

There's no need to imagine. We've already lived through something similar: The crypto boom was the first internet boom that happened on the actual internet. It will not be the last. And it has been a huge distraction to those of us trying to focus on what matters.

So what matters?

I mentioned the need to renegotiate the relationship between users and tech giants. But Web3 matters for an even more important reason. At its core, Web3 is an effort to develop new social coordination technologies.

We are facing global-scale coordination problems — climate change, income inequality, depleted resources, copyright theft (and hoarding), and conflicts over resources and ideology. The only way to tackle these problems is by coordinating the actions of people in different countries and incentivizing them to compromise their own short-term interests.

Increasingly, the internet and globalization mean that a problem somewhere is a problem everywhere. We "succeeded" at globalizing our challenges, but we lack global-scale coordination tools. Over the next decades, we must build new institutions, new tools, and new methods to cooperate and incentivize people. And we must do so in a way that maintains and enhances human dignity.

In his analysis of human affairs, Thomas Hobbes famously concluded that peace requires all members of society to submit to a single, central authority that wields absolute power. Along these lines, a world in which matters are increasingly complex, connected, and globalized requires a governing institution that is sophisticated in its methods, global in its scope, and more powerful than any empire we’ve ever seen.

What could such an institution look like?

One alternative is already emerging in front of our eyes in the People's Republic of China. The internet has created new challenges, and the Chinese Communist Party is using the internet to increase its control in the hope of meeting these challenges. This requires a growing level of surveillance, the control of public opinion by a small group of powerful people, and the ruthless elimination of dissent. This model may or may not work over the long term. But it does not seem very, erm, pleasant. And it represents a departure from the values that defined the world's most open and prosperous societies.

Is there a better alternative? Is it possible to coordinate human action on a global scale without compromising freedom and dignity to the extent China does?

Many of the most interesting projects in the Web3 movement are working on such alternatives. They are experimenting with new ways to finance and govern public goods, coordinate human action, and enable people to trust each other without relying on a central authority. Note that these efforts do not aim to replace existing governments, but to augment and sustain them — to give them the tools to handle an increasingly complex world without resorting to tyranny.

This might sound dramatic or naive. But these are the stakes. And they are relevant to all of us, regardless of our background or which industry we're in. And, of course, beyond the big picture, Web3 also presents a variety of business opportunities and cool ideas and people.

If you're interested in the future of the internet, new business models, emerging consumer behaviors, and new social coordination technologies — I'd love to see you at Hype-Free Web3 next week. Learn more and sign up here.

Have a great weekend.