Balaji Srinivasan tweeted a response to this that said, “Free was a great business model. Better-than-free is a greater business model.”
I hope the above tweet simplifies things for people that don’t understand Web 3.0 or what is going to be the decentralized crypto web.
The decentralized web turns the current web on its head. In the current web, when you get free stuff, you are the product. In Web 3.0, when you get free stuff you might be rewarded in some way other than just use of the product.
For example, I use the web browser Brave. When I use it, I receive tokens, BAT, and they get deposited in my wallet. Will they be worth anything? I don’t know. But, it’s better than using other browsers that mine my data and give me nothing.
Over the coming months, when I get inspired and feel like I have the right material and words, I will try to be like Milton Friedman was with economics. One of his greatest skills was making very difficult economic concepts understandable by everyone.
I think it is very important to realize that computing power will change dramatically in the next ten years. We are used to seeing big servers, some networked. Quantum computing will be revolutionary to speed, computational power, and processing large swaths of data, unlike anything man has ever seen.
Think of the current business model of gigantic internet tech companies. They provide a free service, you use it. You get utility out of using it. They get your data.
They make millions of dollars on your data as you know.
Technically, the way the current web works, large walled gardens are created off a base layer of tech. It’s not unlike looking at a skyline. Lots of independent buildings.
Web 3.0 looks more like a farmer’s field when you seed it. Or stars in the sky. Endless. This post uses some stronger words and imagery to talk about it.
Web 3.0 is a revolution. A revolution wherein people are in control and not being controlled. A revolution that vouches for all, and distributes power to everyone. A revolution that is free from central manipulation and power concentration. A revolution that is bulletproof and makes people and their opinions bulletproof. This, my friends, is Web 3.0.
I think that’s a tad bit idealistic but you should see the point.
Many Web 3.0 companies don’t have a corporate suite. They are owned and fully controlled by the entities that own the cryptocurrency that makes the company go. This is very hard for traditionalists to wrap their head around.
Who is accountable? No one, since it’s owned by a network. Who do the plaintiff lawyers file suit against? There is no one point of contact or failure to sue. What about a Board of Directors? How are you the director of the network?
One thing that doesn’t change is microeconomics. Iron laws of microeconomics still govern Web 3.0. Crypto might be new, but it still adheres to concepts we have researched and talked about since Adam Smith first postulated them formally in “A Wealth of Nations”. Networks will produce where MC=MR.
Unlike centralized companies which control data, Web 3.0 is distributed. For example, CME Group has a clearinghouse that has lots of data and information on trades. It centralizes settlement and payments, along with collections. In Web 3.0, this would be distributed across a network on the web. There would be transparent rules on settlement not made by one corporation and payments would be made with a token across the network in seconds.
In Web 3.0,
You can be a producer and make money.
You can simply buy a crypto and make money, doing nothing else.
You can be a customer, and get paid for your effort
All entities can have a “vote” on the network if they own the coin that the network values.
One of the things the web has done since its inception is get rid of middlemen. The web is hyper-efficient and gets rid of chaff. But, in doing so, the surplus that was distributed among a lot of middlemen has concentrated. Amazon is but one example.
Web 3.0 will continue to destroy middlemen. But, in exchange, it will also compete with Amazon. A lot of centralized towers in our skyline example will meet the wrecking ball.
One practical event that happened in the last year was the deplatforming of mostly conservative websites and conservative commentators. Amazon’s AWS totally shut down the rising competition to Twitter with its action against Parler. That cannot happen in Web 3.0 if the entity being targeted has an ownership stake of some kind.
Check out Filecoin. Replay the coordinated deplatforming of Parler and assume Parler used Filecoin. It would have been impossible for them to do it unless 51% of the Filecoin users decided to kick them off the network which is improbable.
It remains to be seen, but Web 3.0 might enable small businesses rather than destroy them as we have seen with Web 2.0.
A lot of people have a negative opinion of crypto. You can see why. The points of failure have been at centralized exchanges. Remember Mt. Gox? It’s also hard to put your faith into something that isn’t backed up by the full force and faith of the government. It’s also hard to put confidence in something that was originally used by nefarious people. People forget the first internet browser was used to surf porn and do all kinds of out of mainstream activities before it became mainstream and respectable.
If you can wrap your head around these basic concepts, you are on your way to beginning to understand what Web 3.0 really means, and how you will play a role in it.