Chapter 1: Understanding Web3's Building Blocks

How is everyone in the world of Crypto, NFTs, DAOs, and Web3 doing? I genuinely want to know.

I find myself perplexed by the foundational elements of Web3—Crypto, NFTs, the Metaverse, DAOs, Blockchain, and so on. I have engaged with these technologies—creating, buying, selling, and writing about them—but I still don’t fully grasp their implications. I suspect many of you feel the same.

Instead of seeking definitive answers, I've opted to pose questions. There’s a compelling reason for this approach: advocates of these technologies often struggle to provide clear and understandable explanations regarding their benefits to society. By formulating specific inquiries, I hope to foster a discussion that helps us navigate this complex landscape. If satisfactory answers are elusive, perhaps we should focus on better questions.

What's the Issue with Centralization?

Is decentralization merely a buzzword in tech circles? If so, its frequent usage suggests that many aboard the Web3 ship are not feeling particularly secure. I understand that decentralization in Web3 refers to the autonomy of owning one's data and deciding how to use it across various applications. While that’s commendable, is it absolutely necessary to insist on it?

Is centralization inherently negative? Personally, I appreciate that the government centralizes services like waste collection. I value living in a society governed by uniform laws, such as the age of consent. I also find it beneficial that Google centralizes search results. In fact, one might humorously refer to the United States as the “Centralized States of America,” given how it has developed as a supposed land of freedom.

Isn't centralization a spectrum? I believe many arguments in favor of cryptocurrency would resonate better if the conversation on platforms like Twitter weren't so binary.

Question to ponder: "What’s the issue with centralization?"

Who Wants to Develop and Control a Platform?

One of the central tenets of Web3 is the belief that we should own our digital assets rather than the corporations that create them. To fully own your data, one would need to store it locally at home, implying that you would have to manage your own servers, correct?

As a responsible adult who pays taxes, owns cryptocurrencies, and creates NFTs, I have no desire to run my own servers. Even companies dedicated to software development often prefer not to manage their own servers. Therefore, we will likely continue relying on businesses to develop APIs that connect us to existing tools, allowing us to access various blockchains.

This reliance raises questions about how this differs from Web2. Is it merely a matter of choice? Can I opt to create my own API? I’m eager to understand how we can persuade the majority to engage with anything more complex than a web browser. Those who have interacted with individuals over 50 will likely understand my concerns.

Question to ponder: "Who wants to develop and control a platform?"

Is Web3 Truly Decentralized?

Assuming decentralization is advantageous and worth pursuing, why do platforms like Coinbase and OpenSea hold such significant positions within the Web3 community? Aren't they centralizing forces in a domain that claims to eschew centralization? Can they not remove users for rule violations? Might they not introduce competing assets against those of their users?

Accessing a blockchain directly through a personal browser or mobile device is virtually impossible. Consequently, we rely on APIs as previously discussed. The most effective APIs from reputable companies will attract more clients and establish industry standards. While new companies can emerge to interact with the underlying blockchain assets, can they truly compete with the brand recognition of established players? This assumes perfect market information, a condition that rarely exists in reality.

Moreover, it’s striking to note that the top 9% of accounts control 80% of the $41 billion market value of NFTs on the Ethereum blockchain. Bitcoin exhibits even greater centralization, with the top 2% of accounts owning 72% of the $800 billion Bitcoin supply, and 0.1% of Bitcoin miners accounting for half of all mining output. Such disparities are unsustainable for a technology that professes to democratize access.

Some may argue that decentralization is not an essential characteristic of Web3, prompting me to pose more challenging questions.

Question to ponder: "Is Web3 really decentralized?"

Are We Still in the “Early Days”?

People who emphasize that we are still in the “early days” often do so in the hope that more individuals will invest in their assets, which is essential for their value to increase. This resembles the structure of a pyramid scheme, and I’m weary of pretending that we aren’t all aware of this reality.

Bitcoin has reached a trillion-dollar market cap and ranks as the 10th most valuable asset globally, while Ethereum holds the 15th position. Large corporations are now acquiring these assets. Is this indicative of being in the “early days”? Yet, my own experience with Bitcoin and Ethereum has been limited to quick financial gains.

Bitcoin has been around for a decade. In contrast, when the web was similarly aged, it boasted half a billion users worldwide. VR headsets debuted two decades ago, and the concept of blockchains dates back 30 years. If these technologies were destined to become anything beyond speculative assets, wouldn’t we already be aware of their potential?

Question to ponder: "Are we really in the early days?"

What About the Scams and Thefts?

It seems there are indeed use cases for Web3’s foundational elements—money laundering, tax evasion, scams, and outright theft, among others.

Is there anything else? I genuinely want to know. Has anyone purchased anything with cryptocurrencies other than other cryptocurrencies, dollars, or NFTs? Has anyone utilized NFTs for purposes beyond sheer avarice? Is there a single DAO that has successfully scaled? If not, what are we truly accomplishing here?

Question to ponder: "What’s up with the scams and theft?"

Is It Inevitable, or Are You Working for Someone Else's Vision?

Recently, numerous large investors have made headlines due to their bold financial commitments. They have substantial stakes in Crypto, NFTs, DAOs, and Web3, totaling billions. Logically, they will strive to facilitate widespread adoption of these technologies, leveraging their considerable power and influence.

This reality raises important questions about whether these technologies are genuinely revolutionary or if they are being propelled forward by individuals who have invested millions and cannot afford to see them falter.

Strikingly, even as countless individuals (often unknowingly) do the bidding of venture capitalists, the industry continues to struggle to turn a profit. Doesn’t this fact reveal much about the overall health of the sector?

Question to ponder: "Is it inevitable, or are you working for someone else’s vision?"

Do You Believe It’s the Next Big Thing, or Do You Need It to Be?

These technologies are undeniably intriguing. However, people aren’t abandoning their current lives because they are convinced it represents the future. They require the notion of a new paradigm to materialize because the current state of the world is disheartening.

We face a housing crisis. The planet is in turmoil. We inhabit platforms that thrive on discontent and anger. Corporations produce memes on social media while exploiting labor overseas. We wish upon shooting stars that are actually billionaires indulging in space tourism. We chuckle at cows wearing VR headsets while Netflix automatically queues the next episode.

In this bleak landscape, there seems to be little left to do but gamble. Web3 offers an escape—a community in a world sorely lacking in genuine connections. It presents a chance to construct a better future or, at the very least, to stake everything on the uncertain outcome, because what do we really have to lose?

You know what? I’m not seeking an answer to this question.

Good luck out there!

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