Web3 first impressions

Intro

Let's see some legit criticism about Web3.

In this article, Moxie wrote about his first impression of Web3. Spoil alert: he didn't like it 😉

It's satisfying to see the author speak out the cold embarrassing facts while too many people in this area are just drinking the Kool-Aid. However, I think the author missed the point of why Web3 is indeed exciting. I'll explain it in my comments below.

Highlights

So given all of the recent attention into what is now being called web3, I decided to explore some of what has been happening in that space more thoroughly to see what I may be missing.

web3 is a somewhat ambiguous term, which makes it difficult to rigorously evaluate what the ambitions for web3 should be, but the general thesis seems to be that web1 was decentralized, web2 centralized everything into platforms, and that web3 will decentralize everything again. web3 should give us the richness of web2, but decentralized.

Yeah, to understand web3, one needs to know what are the 1 and 2. But decentralization is not the central idea, but just a means to an end. Web2.0 is the technology that enables the normal user to write blogs, leave comments, and upload videos. Centralization is just a means to maximize the economics of scale and network effect.

There are two main reasons the author thinks this decentralization promise won't hold:

1. People don’t want to run their own servers, and never will.
Even nerds do not want to run their own servers at this point. Even organizations building software full time do not want to run their own servers at this point.

2. A protocol moves much more slowly than a platform.
After 30+ years, email is still unencrypted; meanwhile WhatsApp went from unencrypted to full e2ee in a year. People are still trying to standardize sharing a video reliably over IRC; meanwhile, Slack lets you create custom reaction emoji based on your face.

He also dipped a toe in the NFT water.

To get a feeling for the web3 world, I made a dApp called Autonomous Art that lets anyone mint a token for an NFT by making a visual contribution to it. The cost of making a visual contribution increases over time, and the funds a contributor pays to mint are distributed to all previous artists
At the time of this writing, over $38k USD has gone into creating this collective art piece.

It's a cool idea, something I wish I had made. It seems also got some impressive revenue.

To be clear, there is nothing particularly “distributed” about the apps themselves: they’re just normal react websites. The “distributedness” refers to where the state and the logic/permissions for updating the state lives: on the blockchain instead of in a “centralized” database.

At this point, there are basically two companies. Almost all dApps use either Infura or Alchemy in order to interact with the blockchain.

This was surprising to me. So much work, energy, and time has gone into creating a trustless distributed consensus mechanism, but virtually all clients that wish to access it do so by simply trusting the outputs from these two companies without any further verification.

So as an experiment, I made an NFT that changes based on who is looking at it, since the web server that serves the image can choose to serve different images based on the IP or User Agent of the requester. For example, it looked one way on OpenSea, another way on Rarible, but when you buy it and view it from your crypto wallet, it will always display as a large 💩 emoji. What you bid on isn’t what you get. There’s nothing unusual about this NFT, it’s how the NFT specifications are built. Many of the highest priced NFTs could turn into 💩 emoji at any time; I just made it explicit.

I didn't dare to imagine that the hot NFT market is actually built on top of such an embarrassingly poor foundation. And by the way, I like this clever NFT idea. This is the kind of exploration people should do, rather than making yet another set of animal-themed money-grabbing profile pictures.

And then another problem is revealed:

After a few days, without warning or explanation, the NFT I made was removed from OpenSea
What I found most interesting, though, is that after OpenSea removed my NFT, it also no longer appeared in any crypto wallet on my device.
All this means that if your NFT is removed from OpenSea, it also disappears from your wallet. It doesn’t functionally matter that my NFT is indelibly on the blockchain somewhere, because the wallet (and increasingly everything else in the ecosystem) is just using the OpenSea API to display NFTs,

So, at the moment, the NFT world is OpenSea, and OpenSea is the NFT world. This defies the point of having NFT in the first place.

Given the history of why web1 became web2, what seems strange to me about web3 is that technologies like ethereum have been built with many of the same implicit trappings as web1. To make these technologies usable, the space is consolidating around… platforms. Again. People who will run servers for you, and iterate on the new functionality that emerges. Infura, OpenSea, Coinbase, Etherscan.

This might suggest that decentralization itself is not actually of immediate practical or pressing importance to the majority of people downstream, that the only amount of decentralization people want is the minimum amount required for something to exist, and that if not very consciously accounted for, these forces will push us further from rather than closer to the ideal outcome as the days become less early.

The people at the end of the line who are flipping NFTs do not fundamentally care about distributed trust models or payment mechanics, but they care about where the money is. So the money draws people into OpenSea, they improve the experience by building a platform that iterates on the underlying web3 protocols in web2 space, they eventually offer the ability to “mint” NFTs through OpenSea itself instead of through your own smart contract, and eventually this all opens the door for Coinbase to offer access to the validated NFT market with their own platform via your debit card.

The project can’t start as a web2 platform because of the market dynamics, but the same market dynamics and the fundamental forces of centralization will likely drive it to end up there.

NFT is so far the use case to lead web3 to widest adoption, but also the created the craziest fad.

If we do want to change our relationship to technology, I think we’d have to do it intentionally. My basic thoughts are roughly:

1. We should accept the premise that people will not run their own servers by designing systems that can distribute trust without having to distribute infrastructure.

2. We should try to reduce the burden of building software.
Unfortunately, I think distributed systems have a tendency to exacerbate this trend by making things more complicated and more difficult, not less complicated and less difficult.

Closing Comments

In my opinion, the point of web3 is to bring the economy to the internet, natively. This makes all the difference. The economy means super low-friction money transactions and ownership.

Lacking the economy is the original sin of today's internet, and it led us to the prevalent business model of harvesting users' attention for sale.

Some level of decentralization is necessary to build an economy on web3, just like the economy in the real world.

With the direct economy incentives and ownership, new business models with better externality can replace the problematic ones we currently rely on.