The founders of OReilly talk about Web 3.0: we are going back to the era of the Internet bubble of 1999

There has been a lot of talk about Web3 lately, and as a 'Web 2.0' translator 17 years ago, I have talked a lot about Web3. But I usually avoid this because most predictions about the future turn out to be incorrect. But all we can do is ask a few questions to better understand the soils of today and tomorrow that are starting to take hold. As William Gibson said, "The future is here, but not equal."

We can also use Mark Twain's observations (“History is not repeatable, but fortunately”) as a lens we see for business, relationships, and cycles.

What can you say about Web3 with these filters?

Decentralization and centralization

Time Web 3.0 was first developed in 2006 by Tim Berners-Lee, founder of the World Wide Web, and saw it as a vision for the next phase of networking beyond Web 2.0. He said the “Semantic Web” was the basis for this change, but the results did not change as needed. The next-generation network people are thinking of now is cryptocurrency-based.

The “Web3” concept discussed today was requested in 2014 by Gavin Wood, one of the founders of Ethereum. As Gavin Wood mentioned in a recent interview with "Wired", his concept for Web3 is simple. , more truths. "(Less faith, more truth.)

In making this request, Gavin Wood compared Web3 to the original Internet Protocol. Jon Postel's "roughness principle" will best describe the spirit of the original Internet Protocol. “The implementation of TCP must respect the principle of strength: robustness and the freedom to accept others. This spirit has become the basis of the distributed global computer network. No one is responsible until everyone has followed the same consensus and done their best to accommodate the differences. Then the system quickly overtook all vendors and changed the world. Unfortunately, time has proven that the developers of the system are the best. He doesn't think about the bad guys. Perhaps more importantly, although the size of the data is based on the distribution, we have yet to see a significant increase in energy. on the network.

Wood's point of view is that blockchain replaces trust with others with the transparency and inaccessibility of technology. As described on Ethereum.org:

“The crypto process ensures that once a company is recognized and added to the blockchain, it cannot interfere. The same strategy also ensures that each company is signed and complete with the necessary 'design rules' (to l (except Alice herself) Capable of delivering assets.

Information on Ethereum.org continues:

"Web2 refers to the Internet of Things we know best today. It is the Internet operated by companies that provide services for exchanging your personal information. Ethereum, Web3 refers to the working Internet on the blockchain. Application. This application allows anyone to join without having to pay for their own data.

Crypto enthusiast Sal Delle Palm says a lot of courage:

“We are witnessing the birth of a new industry which has been developed and improved with the attitude and goal of transparency by millions of people around the world. Web3 is looking forward to it. Welcome all participants. "

I love the purpose of the Web3 vision, but we've had this dream before. In my work, we have gone through many cycles of "distribution" and "reproduction". Personal computers have reached computing by providing an enterprise PC architecture that anyone can create and no one can control, but Microsoft has been thinking about how to redesign it. Open source software, the Internet, and the World Wide Web have used free software and open source processes to destroy proprietary software, but in recent years Google, Amazon, and other companies have grown to a new size based on them. big data.

Clayton Christensen wrote these models as an attractive rule of thumb.

“Once a product becomes a model and a product, causing aesthetic benefits to vanish at some level of the product, there is an opportunity to benefit from the product. Copying usually occurs in adjacent stages. "

I think blockchain developers have seen the answer to 'recentralization' this time around, but I'm inclined to be skeptical. An interesting question is what might be the next subject of centralization and control. The rapid consolidation of Bitcoin mining for a small number of people by reducing electricity prices is a form of recovery, and there will be other alternatives to the recovery.

hype

Early work by the Ethereum community on this topic carefully examined the trade-offs and problems with Web3 going forward, but today the most popular money has shifted to hype and financial considerations. :

“Venture capitalists are betting thousands of dollars on the Internet to create another world of finance, economics, communications and entertainment. It could change the basic business landscape. trade around the world.

The article also notes that cryptocurrency sponsor Andreessen Horowitz (A16Z) has made a number of investments in games, money management, NFTs, and joint ventures. Not all of the examples in the article focus on the usefulness of content development, only the potential for wealthy entrepreneurs and producers.

Moreover, it's not just the breaking news that makes the suffocating warnings of recipients as if the real gains are in vain. The story of people falling into the "crypto rabbit hole" is an allusion to the meaning of wealth.

“One of the great things about cryptocurrencies is how they democratize investing. For example, people already have easy access to 95 proven crypto assets from Kraken. If you're tech-savvy, there are some. over 1150 or so. You can invest directly in cryptocurrency. Assets, world, and all crypto assets worth more than $ 10 million (at the time of writing) ...

Earning an early investment in the tech industry has always required recognition and connectivity in Silicon Valley. Theoretically, the only real problem for entry into cryptocurrencies should be remembered ... "

Talk to me again. Not being an investment or easy access to high risk assets, potentially large assets can predict the continued and impactful success of a business or technology. . Remember the Internet boom and bust that followed? Legendary Berkshire Hathaway entrepreneur Charlie Munger recently pointed out that we live in a 'crazy age rather than the internet age'.

Cryptocurrency may be the future of the financial industry, but right now it's unclear what really works and how much smoke. Yes, exchanges like Coinbase make a lot of money, but unlike traditional financial exchanges, they don't trade in fiat, but are an asset class that can be generated for huge benefits. Blockchain hasn't changed trust as Gavin Wood had hoped. Binance, the world's largest cryptocurrency asset exchange by volume, is exploring tax evasion and money laundering. A recent article titled "Little Insiders Reap Most Benefits of NFT".

For Web3 to become a global financial system, or a decentralized and trusted universal system, it must establish strong interfaces with the real world, legal systems and economic processes. The story of ConstitutionDAO shows how difficult it is to build a bridge between the world of Web3 crypto assets and the world of non-Web3 products. When the Commonwealth of Independent States (DAO) completed the bidding process for the rare articles of the United States Legislature, its members had no legal title to real estate property, or even a clear indication of what will happen in the future. It will be the responsibility of the company created by the project sponsor, and when the DAO fails to finalize the offer, the company will endeavor to return the money to the sponsor.

The inability to think through existing legal and business processes and create conflict is inconsistent for previous generations of the Internet. The last generation of the Internet has become the digital shadow of everyone, products, space and business in the physical world. It's easy to create new services with the financial value of an existing business. Because cryptocurrency devices are so easy to make money, they seem to distract developers and investors from trying to create real world services.

That's not to say that there isn't real time for Web3 financially. Crypto is a powerful digital asset that is profitable and used in a self-sustaining world like computer games or waiting metaverse. There may be opportunities in the digital art and athletics industry. Sal delle Palme said: “New Crypto applications are being developed including industry NFT, DAO, DeFi and DEX, CeFi, GameFi, DeSo etc. They are being supported, developed and promoted at a pace incredible. "

However, we still have a long way to go before a new business is born.

Of course, crypto and Web3 are just microcosms of modern overspeculation. The metric for many startups is also naturally high, and it is uncertain whether these metrics measure the actual value at which they are produced. Like the financial instruments that made the wealth of millions of Wall Street millionaires before the global recession of 2009, this is believed to be a scam that benefited the three insiders at the same time. So Matt Stoller recently wrote, “Web3 is bullshit. The question is, what does it compare to?

The current business is also fraudulent and promotes internal governance! Web3's vision behind the Celo project is clear. We really need a new economic system.

two types of foam

The Dutch tulip craze from 1634 to 1637 is a classic example of the big difference between the face value and the intrinsic value of furniture. When the bubble burst, the tulips exploded again, and although beautiful, the tulips were unprofitable and had no long-term impact on the success of the Dutch industry. Since then, there has been a lot of speculation about the bubble, most of which has disappeared as its history.

But economist Carlotta Perez pointed to other bubbles in her book Technological Revolution and Capitalism. He noted that almost all of the major changes in the industry (primary industry, age of the part, age of steel, electricity and heavy machinery, automobiles, gas) and big things, and the Internet age) are due to the financial bubble. . . .

Perez identified four stages of each cycle in the 50-60 cycle. The first step is to capitalize on the use of new technologies. This has paved the way for an unrealistic view of oversupply in a fast growing economy where capital is starting to consolidate. After the notion of the bubble bursting, further integration and market reforms (including oversight of stronger products) followed, following the 'hot age' tasks when new technologies are incorporated. in the community. Eventually, technology will mature, capital will be shifted to fund future technological changes, and the cycle will repeat itself.

An important aspect of Perez's analysis is that a real technological change must be made with the improvement of many new features. The first industrial revolution was canals and railways, the second industrial revolution was railways, ports and post offices, the third trade was electricity, water and transmission connections, and the weekly fuel consumption. Highways, airports, oil refineries and distribution centers, hotels and motels, chip factories in the information age, ubiquitous communication and information centers.

Most of the funding for infrastructure construction comes from the bubble stage. As Perez puts it:

“Maybe the main role of the financial bubble is to support the investment that is unable to be in the new process. The problem with these networks is that they cannot provide the benefits.” Enough services to get benefits unless they reach enough resources for general use. They need and can expect to get funding even without benefits or allowances. "

So in history there have been channel bubbles, train bubbles and of course online bubbles. Dedication to unprofitable investments has abandoned dark fibers, ssssssssssssssssssssssssssssssssssssss

In Perez's description, several small circles are grouped into a single circle. Considering the history of modern digital computing, it has gone through many stages, each stage being governed by the new generation of technologies: mainframes, personal computers, the Internet and the World Wide Web, smartphones. , and now cryptocurrencies and meta. - Edge. Each has its own cycle of innovation, speculation, disillusionment and maturation.

So, is Web3 the capital of the new cycle or the bubble of the previous cycle? In my opinion, a decision is the most important investment. Does the wealth of capital generate value as we have seen in previous cycles?

I don't know if the NFT meets your needs. But just as the internet has affected the media and the economy, there is no doubt that the financial impact will be the next major step in the technology reform cycle. This will be important first, especially if we can distribute the funds effectively without the trust and authority of the major central business owners ("Wall Street"). . In this regard, what I am looking for is not proof of capital allocation for virtual assets, but proof of capital allocation for investments in the cryptocurrency market. If you have any good models let me know.

To do what I'm talking about more clearly, let's put encryption and Web3 aside and look at another technological change: the change of green energy. Clearly, bubble testing is already funding sustainable construction. Elon Musk was president of Tesla (Tesla shares were once valued by the company's profits of 1,500 a year or two ago!), And he turned it into a global electric vehicle charging network powerhouse. , battery factory and autonomous driving capability. Lead the entire business in pursuit of its future. Jeff Bezos has also used the large sum of money from Amazon to start a new business at this time. They have all invested in building the aerospace industry.

As we measure the progress of Web3, which is currently in the spotlight in the market, we will compare it to other functions of the financial system (transactions, remittances, etc.) with cryptocurrencies. and traditional banking networks and other new technologies. Are Ripple and Stellar's cross-border remittance platforms outperforming bank transfers, credit cards or PayPal, say Google Maps, better than first-generation GPS pioneers like Rand McNally or Garmin? Although the management issues have been slow, there is evidence that crypto has emerged as a major player in this industry. Are we talking about paying more than by transfer? What kind of growth compares to an unregistered payments startup like Melio, which focuses on small business development? Considering the popularity of cryptocurrencies by companies such as Square (now Block) and Stripe, they can give you a good indication of how crypto is advancing as well as how well it pays to pay more money.

Likewise, if Web3 is the future of personal or social media, it is worth considering whether there is any evidence to show that using Web3 is best for past generations of Internet technology. Current reports in this area, in my opinion, rarely contain such information.

Where are we in the circle?

One might wonder if the current level of Web3 is close to 1995 or 1999 (ie the beginning or the end of the bubble)? Considering current crypto assets (compared to high tech devices), it's hard to argue with the past.

Five years after the dot-com bubble burst, I wish the people I mentioned in the article "What is Web 2.0" that the clear goal is to explain why some businesses survive and others don't. Likewise, I don't think you'll really understand the properties of Web3 (if any) until the next bubble bursts.

Starting with the last bubble, on top of the technological and industrial changes we were trying to capture in "What is Web 2.0?" I can offer a few observations.

Every business survives to receive money and profits, but is supported by a model appropriate to future profits and cash flows.

By modern standards, no one needs to collect a lot of money. (Total capital before Yahoo's IPO is $ 6.8 million, Google $ 36 million, and Amazon $ 108 million.) If you see a company that is looking for more money for investors but no, it's not really a business. . We recommend that you treat it as a financial tool.

They all have millions, then tens of millions, and hundreds of millions (and ultimately billions) of modern users working on updated services around the world.

They are uniquely designed, visible and efficient in the form of different materials, architectural and industrial designs.

Not all companies that manage tech continue to be a rising star, and Apple and Microsoft are easily moving to the next generation, and Apple is leading the way.

Remember. The dot-com bubble bursts early. Google Maps has never been redesigned, neither iPhone nor Android. Online payment is still in its infancy. No Twitter or Facebook. No AWS and cloud computing. Most of the content we rely on today doesn't exist.

I think the cryptocurrency is the same and there is more to be done. Let's focus on the areas of Web3's vision that are not just getting rich quick, but solving issues of trust, privacy, and financial management. Most importantly, it focuses on the interaction between cryptocurrency and the real world people live in. As Matthew Yglesias said of housing inequalities: “In the past people collected things for a long time and got rich.

As Sal Delle Palm said, if Web3 were to announce the birth of a new business, we would create a system that would make real money, not paper money. They will make everyone's life better.