web3 skepticism from a web3 optimist
Web3 proponents will spew the potential benefits for inclusion, empowerment, and economic development of a decentralized system but the reality is the system is and will remain a highly concentrated environment unless something changes. That’s all that is, potential. A veneer of a promise left unfulfilled.
The most pressing question to me has always been: does crypto actually solve anything or does it create an alternate system for a new few? The answer is sort of, and probably maybe. Some of its biggest, most visible implementations of the technology like NFTs (at least at their most reductive) a secondary art market which are prohibitively technically cumbersome, expensive and require a significant investment of time and energy most of the World cannot spare.
Things like “art collections” have intrinsic problems like proof of origin, tracing its chain of custody/ownership, and closed valuations in the offline world but instead of implementing technology to solve these we’ve created an alternate digital market for digital goods. It’s all very cool and I’m a big fan of buying whatever you like if you can afford it, but the illusory idea that it’s an environment where communities thrive from the ground up is dishonest — most “blue chip” projects rely on early adopters providing a huge platform for hype. Access requires you to be early or well connected which is hardly an equal playing field, they are also hugely capital intensive — spending anywhere between $100 to $300 in fiat to “invest” in a project you have little insight into is a rough experience. Getting good at spotting valuable projects takes a considerable amount of time, an engaged community and a fair amount of luck if you’re not on the inside track already. The internet is littered with zero value projects.
An aside: the notion of NFTs specifically is extraordinary if you think about the actual utility of the “object” vs the perceived value about it. As a ticket, real world contract analogue to ownership of any kind or a value accruing membership it could absolutely be useful.
With nothing left, survivorship bias is a strong drug, like doubling down once you win at the roulette table the odds are stacked against you and logically its unlikely you’ll keep anything if you bet everything trying to bet it all on black.
Intrinsically, web3 has obviously way more to offer than this one early use case, decentralized finance for example — bypassing the traditional means of earning and saving have revolutionary potential and there are already plenty of examples of projects which have robust economic backing and provide solid returns to their users. What’s best, is a lot of these projects are openly managed through DAOs or have opened up their code for review. This is breakthrough transparency for financial services, and a little sunlight is good in a world so broken and obscure that most of the World has been forced deal with financial institutions because they have no choice.
This is on the other front met with purposeful obfuscation, lack of regulation and rampant fraud. It’s a very high risk, high reward scenario today — hardly where people should bank on retirement or their life savings but worthy of exploration for those with enough time and risk tolerance to afford making mistakes along the way. Some of these pitfalls are bound to be resolved over time with education, some regulation and a healthy evolution of the infrastructure that stands up these projects as a whole.
I see the whole web3 thing as a positive but there’s simply a feeling I cannot shake — the issues I’ve described, financial accessibility, technical capacity and the huge risk of loss are not just dismissible problems and here’s why I think some part of this is bound to die:
- Over 40% of the World does not have access to the Internet still — for those reading this it’s hard to imagine but this is the reality of a vast swath of the population who is being left behind beyond this weird new web3 experiment.
- About 2 billion people are unbanked, meaning they don’t have access to any sort of financial services at all making onramp impossible. Before you immediately assume this is some sort of foreign problem…
- 10% of the US population is unbanked and 24% of them are underbanked meaning they have access to traditional financial services (checking, savings) but to survive rely on alternative financial services such as money orders, check-cashing services, and payday loans.
Finally, the technical savviness to figure out onramp into a truly decentralized web3 is enormous since it’s still centrally gated by intermediaries who verify who you are, take your money and get you in only to then have to move your money to your own wallet to transact. Banking, with more steps and new shiny intermediaries under the pretense of decentralization and individual ownership.
I beg you to ask: what are we working towards here and for whom? Is this just about creating an alternate system which will remain as exclusionary, exclusive and toxic as the latter with a thin veneer of positive potential or can we actually make it good? Did we just come up with a bunch of windmills or solutions to problems that didn’t really need a blockchain to be resolved? We’ll see.