- James Hall
- Mar 27, 2023
The Inevitability of Web3: What the Future Could Hold
The internet is decentralizing. Of the many ways web3 could materialize, some paths yield sweeter fruit than others. It’s up to its users to ensure and maximize its positive impact on the future.
Back in 1995, Bill Gates appeared on David Letterman’s Late Show. During the interview (which I highly recommend watching), Dave shows healthy skepticism about the potential applications of the internet. Letterman mentions hearing that the internet provides the means of listening to a baseball game, and he asks “does radio ring a bell?” When Gates counters that you can listen to the game whenever you want through the internet, Letterman questions “Do tape recorders ring a bell?” The audience has a good laugh and Gates awkwardly smiles.
Web3 builders are often in a similar position to Gates. I’ve had conversations with friends or acquaintances about what the fruits of web3 might be, and sometimes encounter the dismissive skepticism of Letterman. It’s easy to point to banks, social media platforms, corporations, and governments and say “look, we already have all that, and it works fine…” just like tape recorders and the radio. Bill Gates and other early internet supporters would never have been able to predict the advent and broad adoption of smart mobile devices. We are able to do so much on today’s internet-powered devices, it seems absurd even to compare them to the radio or tape recorder. To set the stage for what web3 might bring, let’s review the fruits and shortcomings of its predecessor–web2.
The Fruits of web2 (aka “The Social Web”)
Web2 brought the advent of social media networks and an exponential increase in user-generated content – a stark contrast to web1, or the “read-only” era of the internet. With the creation of new digital gathering spaces, and an increase in the distribution and visibility of content published by people the world over, the internet witnessed some major new benefits:
Improved User Experience
New interaction methods and patterns have made the internet much more approachable. It is easier to have meaningful interactions with each other and communicate with larger organizations, like companies.
Networking and messaging apps have made it easy, cheap, and frictionless to communicate with anyone on the planet.
Widely accessible information
Wikipedia and free online classes have made humanity’s collective knowledge easily accessible to anyone with an internet connection.
Pervasive connectivity has allowed new business models to emerge and flourish, often disrupting legacy industries through vastly better user experiences.
New tools enable faster and more efficient collaboration, creating a way for people to work from anywhere.
Platforms make it very easy to create and share content.
Shortcomings of web2:
While much of the innovation in web2 led to improvements for everyone, it was not without some significant downsides. Here is a sampling:
You are the product
Your personal usage data is monetized by corporations that maximize shareholder value by selling advertisements.
We’re all unpaid interns
We are creating content for free (with only a small group of compensated creators) and the vast majority of the value is captured by the platforms we publish content onto.
Social algorithms maximize visibility of controversial and potentially untrue information, optimizing for engagement over truth. The cost of debunking bullshit is much greater than the cost to produce it.
The majority of the internet is run by a small number of very powerful corporations. They can make unilateral decisions with no input from users.
Profit over people
Despite the evident dangers of social media on mental health, web2 corporations exploit addictive dopamine hits to keep the revenue flowing in. Pleasing shareholders is prioritized over society’s well being.
Data is created and stored in silos, and users are typically locked in. Switching costs are very high, often forcing customers to settle for subpar service or high prices.
Fraud, grift, and scams
Including but not limited to Nigerian princes, phishing attacks and credit card fraud. Most web2 scams are old news and we don’t hear about them much. The FBI estimates that in 2020, internet crime cost Americans (and only Americans) over 4 billion USD.
The shortcomings of web2 are exacerbated by how difficult the technical nature of the internet is to fully understand. Today, very few people can give a comprehensive explanation of how the internet actually functions; from DNS routing to server architecture, to API permissions and data formats. I’ve worked in the infrastructure space for almost a decade and feel like I only understand a slice of what powers the modern internet. But it’s important to recognize that we don’t need to understand how the internet works to benefit from it on a constant basis.
I would argue the same rules apply to web3. We don’t need to have a deep understanding of blockchain functions, MEV, SNARKs, or quadratic voting to experience the benefits of web3. I won’t get into how web3 works, however I’d like to channel my inner circa-95 Bill Gates and prognosticate about what some of the potential benefits of web3 might include. My guesses will be neither exhaustive nor based on strength of prediction, as I’m certain the future will look nothing like what I outline, but I’d like to share what I hope web3 yields.
My vision for the fruits of web3:
Currently, data is held and protected by corporations who have little or no incentive to share it. Blockchains are always publicly visible, so data would always be available to the public. Informed consumers, citizens, and investors could make much better decisions with open and transparent data.
Because data isn’t currently transparent, it is difficult to know how profitable a new venture might be (for example: selling knit blankets on Etsy). You might have price data available, but no sense of sales or market size. Increased data availability makes it easier for new entrants to choose which markets to participate in. New entrants increase competition which generally results in better prices and service for consumers.
Profit sharing for content creators
While web2 does reward creators in certain instances (YouTube’s AdSense revenue for example) it also locks them into specific platforms. A YouTube creator may not be able to move their content or audience to another platform, which limits their bargaining ability. Creators could also potentially embed ownership metadata in their content, which could potentially allow browsers to charge a small amount per view and give consumers an easy way to reward creators that they appreciate. Details are hazy on how this will work, but I personally think creators will have strong incentives to drive audiences to web3 platforms in the future.
Open participation and rewards for contributions
DAOs are forging new ways of working, with open participation to all who want to contribute. For example, The Graph AdvocatesDAO allows anyone to apply and pitch ways they can contribute to The Graph ecosystem. DAO members are able to vote and allocate treasury resources in ways they feel will accomplish the DAO’s mandate. This allows DAO members to contribute as much or as little as desired, with compensation flowing to the most helpful contributors. It also isn’t difficult to imagine this flexible way of working disrupting the web2 “platform of contractors” (like Uber or Instacart). If a decentralized “food delivery” marketplace existed I could post a job/bounty to get my dinner delivered. Contractors could choose to ignore, accept outright, or negotiate. Removing the web2 corporate overhead would allow prices to be more competitive and could lead to repeat customers and stronger relationships.
Software enforced contracts
This is often framed as “Code as law”, which gets criticized because software often includes bugs. While buggy contracts are a real risk, I am quite confident that the UX of understanding and accepting the terms of a contract will get much easier in web3. I also think the web3 ecosystem has many challenges to create robust security and trust-gates for large transactions. I envision everyone running a personal multisig consisting of trusted people and institutions, which requires approval for large transactions or certain smart contract interactions.
Smart contract customization
I also hope that software powered contracts usher in a new era of “mass negotiation” between vendors and consumers. In web2 you have two choices when using a company’s products: fully accept the terms of service as defined by the company, or don’t use the product. I’d love to treat my software relationships with more customization and flexibility, granting greater power to products I trust and withholding from those I don’t.
This is the fruit I am personally most excited about. To set the stage: in 2021, an estimated 297 billion USD was spent pushing ads at consumers. Often the ads are for things that a consumer isn’t interested in buying at the time. Car manufacturers advertise non-stop in the hopes that when you are actually ready to purchase a car, they might connect with you and consider purchasing from them. This is the status quo for the “attention economy,” where ads are pushed upon consumers regardless of need or interest. Through data collected by Google and Facebook, advertisers can do some segmenting of who sees their ads, but it still is an equation where consumer need/intention is totally missing.
I hold strong hope that through web3 data portability and transparency, we can reorient our consumption around a “pull” model (or an “Intention Economy”, a term coined by Doc Searls).
Let’s play out a quick example of how it might work: Let’s imagine my trusty Toyota finally bites the dust, and I am ready to purchase a new car. Rather than the current approach of visiting several dealers or looking at online classifieds, I would go to the “car dealer’s guild” website and signal my intention to buy a car. Both dealers and selling owners could see my raised hand and know that I intend to purchase a car. I could provide preferences on new vs used, electric vs gasoline, and the size and features I want. Using new cryptographic methods called zero knowledge proofs I could reveal personal details (that I choose) including my current financial situation, my on-time payment history, and details about my age and interests, all without revealing my name or contact information. Sellers could then compete by preparing targeted offers that appeal to my expressed preferences. I would be in the proverbial driver’s seat, able to compare offers at my leisure. Sellers would greatly benefit from being able to invest time and effort on people who intend to purchase, rather than push ads to uninterested people or bots. I believe the economy will function more efficiently and conveniently when businesses engage with free autonomous customers through intention-based transactions. I also hope that it could help curb the unintentional, impulse-driven consumption that is rampant today.
Room to improve in web3
Web3 could be pretty great, right? “Could” is the operative word, and I think it is helpful to also think about the current shortcomings of web3.
Web3 is currently filled with unfamiliar and at times frightening interaction models. Ask a web2 denizen about how they treat their physical wallet, and if they are willing to hand it over to any random application that asks for it. I predict they will react adversely and claim they don’t want to give their cash, cards, and identity to an apparent stranger without strong assurance that it will remain safe and untampered.
Asking this person to use a web3 wallet in the same way will likely require some hand-holding and reassuring. Gas costs, contract signing, wallet networks, bridges, confirmation periods and the lack of a global “undo action” button create immense user friction that in my opinion, is currently hampering adoption. Web3 won’t be ready for mass adoption until the value of participating exceeds the fear and friction.
Education and enablement
Along with improved designs and low-friction workflows, much greater education is needed to help web3 scale. Building learning resources to help onboard future users will be important to paving the way for exponential growth.
Building a truly decentralized application (or dapp) today is a challenging prospect. How and where do you store necessary data? How do you protect API keys or authentication tokens when the code can be inspected by anyone? Web3 infrastructure has come a long way in the past 5 years, but there are still lots of opportunities for further improvement.
I am immensely grateful for the chance to work on The Graph Network, as it plays an integral role in today’s web3 infrastructure. I recognize that I have a responsibility to make The Graph easier to use so people building on top of the data it provides can have greater success, faster.
Cost and scalability
Deeply tied to infrastructure, the cost of using web3 still needs to come down significantly for broad application and adoption. In my role at Edge & Node I have spoken with people who want to help secure The Graph Network by delegating. They haven’t been able to do so thus far because the Ethereum gas cost would take too long to recoup as their delegation would be relatively small.
The Graph Network has begun scaling on Arbitrum (a layer 2 chain) which dramatically reduces the cost of delegation and other network actions. The Graph isn’t unique in this regard–all web3 applications will need cheaper infrastructure and blockchains that can handle substantial scale before mainstream adoption will be possible.
Fraud, grift, and scams
Following in the footsteps of web2, there are bad actors who will attempt to exploit and harm others. Web3 is no different, and caution is required to avoid the inevitable risks. Just as you wouldn’t provide your login details in response to a suspicious email, you should avoid interacting with unknown contracts or trusting in behavior or returns that seem too good to be true.
Too many opportunists, not enough builders
Lots of the noise and eyeballs in web3 are directed toward hype, and not toward value creation. I love working at Edge & Node because we are builders, identifying difficult problems and working hard to create solutions. Many other projects and protocols are being driven forward by builders, and we are seeing great progress as a result. I would encourage all who read to start or continue building, there is room in web3 for all of us!
There are many other challenges ahead for web3. To quote David Letterman, “It’s easy to criticize something that you don’t fully understand.” Rather than default to criticism, let us find ways that we can help web3 reach the desired outcome of creating an open, permissionless internet. Support the teams and use cases that align with the future you want to see.
To conclude, web3 holds immense possibilities in spite of current shortcomings. As time progresses and web3 matures, we will see incredible innovation that will change our lives in profound ways. Just as Bill Gates wasn’t able to predict or describe the massive impact of the internet over the past 30 years, we have no idea today what massive changes are in store. I only know that I want to be a part of building it, doing my best to guide the intention and innovation in a fair, equitable direction.
There is so much to build and always a need for helping hands. The space also needs constructive criticism, please participate in the ongoing dialog to make web3 the best it can be for everybody. Are you ready to get involved? Feel free to check out open roles in The Graph ecosystem and follow along on our journey.
About Edge & Node
Edge & Node is a core development team behind The Graph, working to build a vibrant decentralized future. The team is dedicated to the proliferation of web3 applications that share value, utilize dynamic incentives, and build for human coordination. Founded by the initial team and developers behind The Graph, the team has extensive experience in developing and maintaining open-source software, tools, and protocols as well as building and launching unstoppable applications.
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