Over the past year, I’ve desperately tried to turn "Web3 is..." into a full sentence. I brainstormed and debated with my peers, I studied Web3’s history (which is really cryptography’s history), and followed community discourse. But nothing stuck. However, it was abundantly clear people wanted “it”, whatever it was.
My goal was to develop a mental model to understand how and why Web3 would happen. The hope was, equipped with this model, I could be a better investor in and advocate-for the technology I want to see in the world.
Today, I offer my model:
“Web3 is the internet's cultural renaissance. It marks the beginning of a digitally-enabled paradigm for global institutions and is a direct consequence of a maturing internet native user base. In order to meet the expectations of modern-day internet users, Web3 technology strives to protect user self-sovereignty and privacy with a commitment to credible neutrality and accountability.”
Like the last one, empirical evidence for a renaissance only exists years after completion (though this time will be much faster). Even still, there appears to be some pattern matching merit. The Renaissance was a period for cultural, artistic, political and economic rebirth, and similarly, Web3 has begun permeating these facets of our society; some more than others.
Culturally, Web3 blends the spirit of cypherpunks, internet cultures, and open-source software communities. All of these were once niche subcultures, and they now dominate Culture. The internet is the breeding ground for cultural influence and a new generation of online creators are equipped with tools to flourish. In 2019, 76% of all internet users engaged in an online community and healthier online spaces will only bolster this behavior.
Artistically, Web3 technology enables a new generation of digitally native artists to produce own-able Art for the first time via NFTs. We’ve all read the headlines of record breaking sales and volumes, and we’ve all been hyper critical of PFPs (and rightfully so). The impact digital ownership will have on provenance within the art world cannot be understated, though this too will take decades to mature.
Politically, Web3 has entered the arena - well tokens, DeFi, and blockchains have. Even Gary couldn’t resist getting in bed with us. Other politicians are educating themselves and speaking up. More grandiosely, code is law has evolved into code is code; a meaningful step towards working with legislators, which ironically is the only chance of code becoming law.
Economically, Web3 has empowered degens and underserved demographics with weapons of open finance. In the coming years, I hope to see more emphasis on the latter group. Despite my net change in grey hairs, we are still so early.
“[Web3] marks the beginning of a digitally-enabled paradigm for global institutions and is a direct consequence of a maturing internet native user base. In order to meet the expectations of modern-day internet users, Web3 technology strives to protect user self-sovereignty and privacy with a commitment to credible neutrality and accountability.”
Crypto has crossed the consumer mindshare membrane. Its Cypherpunk ideology has infected over 100m hosts and counting. Legacy financial institutions are in and crypto products sit side-by-side with fiat payments on most fintech applications (Venmo, Paypal, Stripe, etc). Billions, once-upon-a-time trillions, of dollars permissionlessly moved from one address to the next, facilitated by code alone. No man, woman or bot could conquer this new world. To those who tried, thank you. You have been faithful guinea pigs for our magic internet money experiment.
But the age of crypto experimentation is coming to a close and there is an unimaginable amount of work to be done in order for Web3 to be “Web3”.
So how does this mental model help in understanding how and why Web3 might happen?
The reason I find this mental model useful is because it goes beyond blockchains and tokens - what I think of as “crypto”. Crypto is Web3’s economic backbone and without it we revert to the systems and failures of the past. However, it’s a mistake to conflate Web3’s reliance on Crypto as a limitation to its scope. Let’s look at a few examples:
Urbit - UrbitIDs are NFTs but literally everything else operates as a separate network.
IPFS - P2P file storage, also known as “the hard drive for blockchains”.
Farcaster - a social network that uses an on-chain registry for identities AND is on the path to “sufficient decentralization” via a federated network.
Note, all of these projects are infrastructure for emerging app ecosystems. How will we categorize these new apps?
My point is there is a growing movement of technologies that may feel like “crypto” but they aren’t quite crypto. They are Web3.
Web3 will be differentiated from (and deeply inspired by) crypto, but we’ll need to rethink business models and value capture, understand new users, and challenge our pre-existing assumptions.
My small role in this future is as an investor and my mission is to enable optimistic founders to take action towards the future. I truly believe there is more potential energy in Web3 (and crypto) today than there ever has been. If you’re reading this and have something to share, holla.
Five good reads…