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By tante <tante@tante.cc>
Version 1.1
Date: Dec 29th 2021
License: CC-BY-SA 4.0
audio version by Satya (https://twitter.com/mondvollmond)
I had hoped that I wouldn’t have to write this thing, that blockchains and NFTs and all that would just go away and become a chapter in a book about weird economic scams. But if 2021 taught us anything it’s that we can’t have nice things so here we are.
You are here because you are somehow interested in what the “Web3” or “NFT” thing is about. Maybe someone gave you this link, maybe you follow me somewhere. In this document I’ll try to explain what those terms mean, what ideas and politics they are based on and what I think about them. I will do my best to represent the Web3/NFT ideas as fairly as possible but for transparency’s sake I should note that I am not a fan.
So why would you listen to me? What are my “credentials”? I am a computer scientist and have been working in IT for years now, doing projects as a programmer and conceptualizing and running large automation and IT transformation projects for different clients. I have a lot of experience not just with software but also hardware-software combinations as well as with designing the social and organizational processes around the software systems in question. I’ve been an expert for the German Bundestag on the topic of Blockchains and their value and regulation. I also have written quite extensively about them for different publications and have commented on the whole blockchain/web3 movement publicly basically since it has gained any traction. I don’t hold any form of cryptocurrency.
This text is intended for a general audience. For anyone that wants to know what all the fuss is about and why they should care. Any artist who heard that NFTs are the future or art and any gamer who heard the same about video games. For anyone who got some lecture about how the future of the web would be built on this new tech that feels hard to grasp. For anyone who’s being bombarded with investment opportunities in NFTs that sound way too good to be true.
That’s why I will go through some things that you might already have heard of or know. I will explain certain technological aspects just to be sure everyone is on the same page, the chapter headings should allow you to skip the parts you don’t need to read though. This document is intended to cover most of what you need to know – with a few added remarks and thoughts from my end. But I will be transparent about what is opinion and what is just an attempt to describe what’s there.
I tried to give the sections very descriptive headings so you can skip to the parts you find the most interesting. This document is also a living document meaning that there might be updates should the need emerge. There is a version tag at the top of the document.
So let’s dive in, shall we?
Tim Berners-Lee coined the term WorldWideWeb in 1990 and build the foundation of what is now seen as “Web1.0” (and still can be felt in most technologies we use today on the Internet). Web1.0 was still a very niche thing with very limited forms of visual expressiveness and design options. It was very much focused on allowing people (mostly scientists) to publish about their work but people with access (that meant mostly people at universities) quickly got very much into it and started having web pages about their random interests, web pages that experimented with the format as artistic material etc.
But publishing to the web still was somewhat hard to do. You needed to know or at least rudimentary understand a lot of the tech and markup to produce anything that people would be able to see and use. Access to “web space” that could host your data also was usually limited to people working at universities and students. It took a while till other providers came to be. In the middle of the 1990ies the first online shops emerged and the commercialization of the Internet started.
In 1999 the term “Web2.0” was coined. This was not a distinct update like you’d update a software on your computer but the crystallization of many different social and technological developments that were summarized under that umbrella term. Web2.0 was defined by easier access to publishing with visual tools that allowed you to create a website without knowing a lot of tech. Which is why it was also called the “social web” or the “participatory web”. Advancements in technology made it cheap (or free through advertising) to have your own web space that you could use to build a community of peers. Web forums were a big thing, blogs had their heyday with networks of blogs writing and commenting on each other’s work forming connections that sometimes last till today. Web2.0 is also what brought us many of the big platforms we know today: Facebook/Meta only exists because of that move towards user generated content and while Google (the search engine) could have lived in mere Web1.0 worlds, most of Google’s current offerings also are integrally connected to data that it’s users provide either explicitly or through usage.
Somewhat directly as response to the term Web2.0, the idea of a “Web3.0”, a so-called “semantic web”, was developed (mostly in academic circles) that was supposed to make the data of the web readable and therefore usable for machines and software. But that one never really took off, and while some ideas survived and found their way into current technologies, the semantic web basically failed as an idea, mostly because the benefits were in no relation to the massive efforts required to get it off the ground and because most big players had very little interest in interoperable technologies that could help their competition.
So the “Web2.0” (even though that term has fallen out of use a little bit) is where we are still at. It’s what you probably use throughout every day even if it’s through apps on your phone. But while it has been a massive success not everything is great.
Recently the term Web3 has gained some traction. Not because people rediscovered the ideas and technologies of the semantic web but as a new follower of the “Web2.0”.
While the term spawned mostly from a community based around a specific database technology called “blockchain” (we’ll get to what that is later) it’s not just one motivation driving the move to a Web3 but a set of different and sometimes conflicting motivations. Nobody can list all of them but I’ll try to outline a few very influential ones.
1. One motivation is the analysis of the current web as taken over by a handful of powerful corporations (think Facebook/Meta, Google, Amazon, etc). For many this corporate, capitalist power that increasingly feels untethered to laws and beyond regulations is a betrayal of the values and promises they saw in the Internet. When Facebook recently changed their name to “Meta” to build the “Metaverse” they just took the Instagram handle “Metaverse” that was used by someone else (Instagram is owned by Meta/Facebook). This kind of total power that people feel every day leads to many wanting to “fix the web”.
2. The very techy blockchain crowd has been looking for new use cases for their technology for a while and building a new web with structures based on blockchain ideas and technology would prove the value and general usefulness of their technology beyond any doubt.
3. Artists and creatives in that space saw Web3 as an opportunity to build a sociotechnical system that would make it easier to live off of creative works. The way that digital technologies work has made making money off of one’s creative work not always as straightforward as things might be in the analogue world: Selling CDs is just conceptually easier than trying to somehow get people to pay for an MP3 file that they can stream everywhere for free. Generating a stable income as a creative online can be a challenge when the artifacts of your labor can be copied, shared and stored basically without any cost.
4. Venture capitalists and investors had been looking for the next big thing for a while. The “Uber for X” wave of investments had run its course and is not delivering the kinds of returns that it used to but there currently is an unprecedented amount of capital looking for investment opportunities. Web3 is that. A new world where one can be the first investor in the next Google, a new world that one can set up in a way that makes generating the returns one is looking for easier than the current one.
5. Finally there’s also the wish for many people to be part of “the future”, to be the avant-garde. Claiming to build the next web, the version after the one that the boring mainstream is using gives one not just feelings of being the smartest person in the room but of shaping the future of mankind. The Internet isn’t any tech and being part of the movement creating the next version is inherently motivating.
Again: There are more motivations and you’ll rarely see only one motivation being the driver for one person. A venture capitalist might see an opportunity to make money while also believing to actually be part of building the future. And artist might be fed up with Facebook/Meta and Amazon and Google while also wanting to be able to live off of their creative work. But I think the five motivations I outlined cover a lot of what drives people in that space.
We can already see that these motivations are of very different qualities: Some are very concrete about making money while others are very abstract and fuzzy. Some can be very easily connected to analyses of the current situation that many people would agree with (whether they are Web3 proponents or not) while others are very much about belief and identity. When these motivations meet and mix and entangle we get the very vocal, very outspoken and very confident movement of people that subscribe to Web3.
But it’s quite obvious to see that some of these motivations don’t align too well: Wanting to build a Web that’s no longer in the chokehold of a few big corporations feels very much like a contradiction to the goals of the venture capitalists funding Web3, who often are coincidentally the same people who already funded the behemoths of the old web. When your goal is to find a way to use blockchain technology, you might not really care too much if some artist really can make money from their work. You just want the thing to be built based on blockchain, no matter what it materially achieves.
Web3 is still a very loosely defined set of ideas, so it is hard to precisely say what it is and what it isn’t, but we’ll try to approximate it as good as possible. But in order to do this, we’ll have to understand the technologies used first.
One could write whole encyclopedias on the many different stacks of technologies that have been built on top of one another under the Web3 umbrella. Some Web3 people probably have. But for this piece we’ll focus on three technologies: First blockchain data structures, second a very specific artifact on blockchains called a non-fungible token (NFT) and third an organizational structure called a DAO. We’ll limit ourselves to this in order to keep this text somewhat brief and somewhat comprehensible for everyone. If you already know what those two things are or do you can skip this part, if you are not 100% sure it’s not too long, we’ll both get through it together.
Blockchains are a way to store data, they are a very specific kind of database. Traditional databases tend to run on one (or more, but let’s keep it simple for clarity’s sake) server with clients wanting to store or read data connecting to it. Blockchains store data in a decentralized way that means that every node in the participating network has all the data locally. When a traditional database server goes down, nobody can access the stored data, decentralized approaches (of which blockchain is just one among many) do not have that problem.
What makes blockchains special is the way they organize data: Data is put into blocks with each block connecting to its predecessor forming the “chain”. The special property that blockchains adapted from an older idea called Merkle Trees is that the connection of the blocks makes the blocks themselves immutable. Here’s how that works.
Say you have a block with 10 names you want to store in a blockchain. After having gathered the data for the block (that does include its metadata like when the block was created for example and the identifier of its predecessor) you “hash” it. Hashing in computer science means to take a text, putting it through a program that creates a new, usually shorter string of text that can be used to check if the text has been changed. See, a hash function always creates the same output given the same text but if you change the text just a tiny bit like adding a whitespace somewhere, the result of the hash function will look completely different.
An example: The string “tante” hashed with sha256 (which is a well known hash function) is eb4e5ad707b9c63725fdcb1fa645ec5cfdb284884ee3841eef274ed37fcc3c75. The string “tante!” with an added exclamation mark hashes to ead36ca04a4d325c493e3871274efef1c02aa1cfc2f00667e61d560734485a15. Small changes in the text lead to massive changes in the hash so if someone tampered with the contents of the block one could instantly see it and because the results of the hash are so unpredictable it’s almost impossible to find a way around it – if you use a good hash function. Generating a hash is also very fast, so checking a hash for correctness is very easy to do.
Blockchains use those hashes of the blocks to create the connections forming the chain: The newest block links to its predecessor by its hash which in turn links to its predecessor with its hash etc. And because hashing is so cheap, it’s very easy to guarantee that blocks can’t be changed in a blockchain: Because the link to the previous block is the hash, you can’t manipulate the chain. Even if you tried pointing the link to another manipulated block, it would change the hash of the block in hand. This neat trick makes it very hard if not for all intents and purposes impossible to manipulate the contents of a blockchain: When something’s in, it’s in, and you can’t change it. You also probably already know now why you can’t delete data: Removing data would change a block which would have to change the hashes of basically every block after it. This is also the reason why you can never undo a transaction (because that would be changing a block). The only way to reverse a transaction is to have the receiver send the transferred object back.
This is all fine and dandy. Many non-blockchain tools use the same concept (maybe you’ve heard of git which is a tool programmers use to store their code in). What makes blockchains special is that they want to guarantee consistency while being decentralized meaning: Every node in the network (eventually) has the same data, the same blocks. This is a hard problem, especially since in a truly decentralized system without any ruler or admin you don’t have anyone to solve conflicts. So people had to come up with strategies to generate consensus within the network.
This consensus problem is where blockchain gets a lot of its problematic reputation from. This is why some blockchains need as much energy as a medium sized country.
So the problem blockchains face is actually quite hard: How do you make sure that you have a consistent data structure when you have neither a referee nor do all nodes know or trust each other? How can you protect the system against manipulation? And very basically: How do you decide who gets to create the next block?
The approach most currently popular blockchains (like Bitcoin or Ethereum) use is called “Proof of Work”: In order to add the next block to the chain, you have to solve a somewhat hard problem whose solution everyone can easily verify.
In Bitcoin for example, when creating a block you can add some extra text to it, think of it like a “comment”: It doesn’t functionally change the transactions included in the block, but it is used when calculating the hash for the block. That text/comment changes the hash (see above) massively. And gives the chanin enough room to create riddles that are complex enough.
Say you give people the job to “find a hash that starts with 123”. Even by selecting different sets of transactions or shifting around their sequence you might not be able to match the task, maybe you can’t find a block that creates that kind of hash. The extra “comment” does give you enough wiggle room to try for more different options. People still will have to try a whole lot of times to guess the right text to create a block with that property but it will always be possible.
After having found a text/comment that created the right kind of hash everyone else can easily see that the solution is correct and everyone can start the race towards creating the next block. If you ever heard about “mining”, that’s what that is: Appending a new block to the chain and getting the attached reward. (In Bitcoin you get a few coins “out of thin air” for mining a block and people who really want their transactions added to blocks quickly can add a bitcoin reward [don’t call it bribe!] as well.)
So Proof of Work is really just guessing words and numbers really quick. Because creating the next block is rewarded in most chains there is a motivation to invest a lot of power into finding it which is why the more a Bitcoin for example is worth, the more energy it makes sense to burn in order to create the next block and get rewarded with coins.
There are other strategies. The other popular one is called “Proof of Stake” and allows the person who has the most “tokens” (we’ll get to what that is later) to decide what the next block is gonna be and if they abuse that power their tokens might be gone. This one needs less energy but has other problems (for example the inherent power imbalance between those with few and those with many tokens: A person who’s rich will always win in a conflict with a person with fewer tokens).
Traditional databases don’t face that challenge because clients log in and the database server can just – like a referee – decide who gets to have their data written first. The decentralized architecture of blockchains requires building consensus though because otherwise the “chain” would break into unlimited different strands of blocks with nobody knowing whose truth to believe in. If my chain says that I have 1000 Bitcoins and yours says I have zero, we have a problem.
You can store basically any data in blockchains. But most blockchains currently in use store transactions, meaning the movement of tokens or values from one account to another. Let’s talk tokens.
We know how blockchains work but it’s still unclear what exactly for example a Bitcoin is. Not on a theoretical level, let’s not get into the theories of value and money here but on a technical level.
Blocks on the Bitcoin blockchain store transactions between accounts. An account is created by generating the secret cryptographic keys for it and starts out with 0 Bitcoin. Through creating a new block or by getting Bitcoins sent your way your account changes its balance. Bitcoins are not “things”, not even “digital things”, but rather an abstraction for the thing the ledger of accounts tracks. You “have” a Bitcoin if your account says you have >1 BC in it. But you could not take it out as an object like you could get cash from your bank. Bitcoins are just a narrative shorthand for talking about numbers moving between accounts.
But not all blockchains have a data model as simple as Bitcoin. Ethereum for example – the other big blockchain people use – has a concept called “Smart Contracts”. The name is kind of misleading because they are not contracts really but just pieces of code that run under certain conditions. These bits of code can do all kinds of stuff, even create new kinds of digital objects.
In a way, the Bitcoin blockchain supports exactly one smart contract, and that is bitcoin and how to send it around. On Ethereum, you can create new contracts and functionality by deploying it into the chain itself. So you could create a new token called “Testcoin” on the Ethereum blockchain that is handled by your smart contract.
Most tokens are what’s called “fungible”: That means that it doesn’t matter which token you have, they are all the same. It also means you can cut them up, send pieces of them somewhere and then “put them together” with other pieces from other tokens. They are basically like traditional money: It doesn’t matter which 10 EUR note you have (unless you used one as a notepad but that’s beyond the point here) and you can take only 0.50 EUR of your 10 EUR and give them away.
At some point, people figured out that you could create tokens that are different, “non-fungible”. This means that you cannot just cut them up and that it matters if you have the token with the number 1 or 13. This is most often used to represent either a physical good or something else that’s supposed to be unique: That’s what NFTs are. NFTs are special because they do in a certain way go against an essential truth of the digital: Costless reproducibility. Only one person can have one specific NFT in their account, it cannot be reasonably cloned. You could create a different token with the same content but it would be a different object on a blockchain. The fake would be instantly visible basically.
Otherwise NFTs are like other tokens on a blockchain. They can be moved between accounts and the smart contract governing them can for example enforce that they only move when the required conditions on the blockchain are met: The transfer would only trigger when the payment went through for example.
DAOs or “decentralized autonomous organizations” are basically smart contracts with a mission. When we usually think about an organization we think of people with some form of common goal and a set of rules that govern how the organization runs. That usually includes some form of hierarchical power structure or other forms of making common decisions. DAOs try to take the human out of the equation by basically implementing the “code is law” ideology.
A DAO is a smart contract that makes decisions about something based on information and events. A common idea is for example to write code that decides when and where to invest money. People can invest their tokens in the DAO which then makes decisions about those funds according to the code in the contract. But DAOs can basically be implemented for anything you can think of.
DAOs are relevant because while technologically they are just smart contracts they are a form of organization (which one could consider a form of a social technology) that wasn’t really used in that way before blockchains.
This was the very basic part about the technology. There’s a lot more detail of course and blockchains with some other properties and claims but for the general idea I think we got you covered. Let’s try to get into what Web3 actually is.
Let’s talk Web3. If you skipped the Technology part, welcome back. Let’s try to summarize what Web3 actually is. Web3 isn’t a clearly defined set of technologies or protocols or workflows, but Web2.0 wasn’t either really. Just like Web2.0, Web3 has certain technological foundations and assumptions but is just as much an aspirational term, a set of overlapping visions, ideologies and goals. In a lot of ways Web3 is doing something and calling it Web3. But with all the contradictions and unclarity a few things are foundational to Web3.
Let’s try a quick first attempt of a description:
Web3 is a blockchain-based backend and infrastructure layer on top of existing network technologies that aims at restructuring the internet in a radically decentralized and individual way. Services required for individuals to be able to act within that new infrastructure (like identity management, content storage, etc.) are provided by decentralized smart contracts or services built on them. While frontends to use the Web3 Internet still look similar to current ones (browser based apps) they no longer get their content from centralized servers but from blockchain-based content providers giving individuals enforceable ownership of the data and content they create or buy.
Web3 is not intended for you to throw your browser away. In fact many things are not supposed to change: You can for example write a comment under someone’s blog article. But that comment will not live on the server of that person but is stored in a blockchain and attached to one of your identities meaning that it can never be fully deleted. The original post might no longer show it but it’s still out there and linked to the original content.
Identity is quite important for that concept. Not in a legal ID kind of way, but in a “you have a set of identities you use that can have content/tokens attached to them” because tokens are only really useful when they have an owner. But Web3 kinda allows everyone to provide as many identities as they want, attach tokens to them and act on the Web, it’s not a “one person, one identity” system.
Web3 also is very invested in tokens (pardon that pun, I couldn’t let it go): Everything should be a token. A domain? Should be a token. A blog post? Should be a token. Your account on some form of Twitter-like service? Should be a token. Web3 turns everything possible into tokens because that’s what works well on blockchains but also to enable “real” ownership. When a domain is an NFT that someone owns there can never be a dispute about who owns the domain. It’s obviously who holds the token currently. Who can delete or modify (as in upload a new version) of some content? Obviously the person who holds the respective token. (There are also setups where through a smart contract multiple people hold a token and the contract defines the rules for how they achieve consensus about transferring the token.)
All of that sounds maybe a little weird but some things sound good, don’t they? Let’s dive into the beliefs and politics a little bit before I dive into some more opinionated remarks.
Every technology, every artifact has politics. Some artifacts have political views built deeply into their structure and essence (a gun has the politics of violence built in for example). Other artifacts inherit their politics from the people and communities designing and using them. Both of these kinds of politics are very obvious with Web3. Web3 is not a mere technological update of the current web, a patch to bring in some new features and maybe fix some bugs but a complete technical but even more so a social and political redesign.
Sometimes that’s harder to see because Web3 services still look like the old services we know but underneath a new or at least a way, way more radical form of an already present ideology has shaped the structure of things.
As with everything the list of important beliefs isn’t complete, I picked the most important ones.
The Web3 community values decentralization a lot. Blockchains were developed in the aftermath of the recent global financial crisis when “too big to fail” banks almost dragged the global economy down to hell with them. That’s what blockchains were fundamentally built to avoid, and that’s an ideology that Web3 fully embraced. When you look at Web3 project websites you will almost always see “decentralized” as one of the key features.
Decentralization is used as somewhat of a stand-in, or maybe more precisely a precondition, to fairness and/or equality. Centralized systems are seen as not only untrustworthy and corrupt but also as a danger to Freedom because they allow removing or blocking content for whatever reason.
In addition to the decentralized approach Web3 loves transparency: Everyone can look at the blockchains and see what the truth is. There is no debate about the truth and no hidden information. Everybody knows the same and can therefore act accordingly. Transparency is the other building block for the Web3 that in connection with Decentralization is supposed to protect people and the integrity of the network.
Web3 is based on a negative definition of freedom. That’s not a value judgment but a statement about how the concept of freedom is structured: In Web3, freedom means mostly freedom from restriction. The idea of (possible) censorship ties into a lot of Web3 thinking, and content deletion or restriction is one of the main cases Web3 proponents put forward to argue that the current Web needs to be replaced.
This very libertarian understanding of freedom also bleeds into a lot of the social and political construction of the Web3 services: “The State” or “The Government” is basically seen as clueless and evil with their “politics”. Continuing the conceptual path that J.P. Barlow’s “Declaration of the Independence of Cyberspace” outlined Web3 does not see governments as key players in their spaces: Governments are seen as a threat to freedom and while Web3 obviously can’t directly replace states and governments the idea of DAOs is often put forward as a better way of organizing people instead of the giant and slow structures of the political apparatus. Web3 sees rules as something to “buy into” by agreeing to a smart contract basically.
In Web3 there is no room for “politics” as in spaces where people debate something and try to find a decision. Instead structures are set up in ways that remove that human element by codifying what a structure does in its smart contract.
Our current web is built around many social and political systems. When for example someone squats on a domain that someone else has the registered trademark to, there are processes to “free” that domain from the squatter. But these processes are complex, not always fair or equal and usually a little messy. In Web3 it’s all about the ownership of the correct token. That’s the law. And there is no debate about how the law should be or could be applied. You own the token, you own the thing it references.
This belief removes the need for a lot of support that traditional systems have: If whatever the contract says is right and you did send your tokens somewhere they are no longer yours if you made that trade willingly or not.
Finally, as I already hinted at: Web3 is a web of ownership. Every object is owned by someone, every object can be traded to someone else.
Now we already have rules for who owns intellectual artifacts through law but Web3 makes these structures of ownership solid, transparent and unbreakable. Ownership can be sold or given and other forms of access are possible, too (I don’t need to sell you the token to my blog post for you to read it). But the ownership structure forms the basis for many new forms of economic activity that so far have not been reasonably possible: One could for example implement smart contracts that pay you something when some company wants to use your personal data – a thing some privacy activists have been arguing for for a while.
So these are key political ideas and beliefs that structure Web3 just as much as the technology blockchain it’s built upon. In fact blockchain itself shares many of the same leanings. This concludes the descriptive part. Let’s move to the final act.
Okay so you made it this far. Let’s finally get to why I spend all this time writing this long article. Why can’t I just let people who want it build the thing they want? Why do I keep warning and criticizing Web3 vocally and publicly?
Here are my main criticisms, not in any particular order. Depending on the case at hand and the perspective, a different set of arguments might apply the most, but in the end they all apply to basically everything Web3-ish.
Also be warned. This is the part where I leave the pseudo “try to present things somewhat neutrally” stance.
As I outlined in the beginning of the document: I am a studied computer scientist with a nontrivial amount of experience. One main issue I have with Web3 from that perspective is that it’s just bad engineering.
Ethereum – the blockchain a lot of that stuff is using – has the computational power of an old Apple II box. It uses as much electricity as the Netherlands for it but from a purely processing power standpoint that thing is slooooooooow. Like: An old Raspberry Pi computer can do more computation. And it’s not just processing power: Given that the network needs time to build consensus for every block, adding transactions is just ridiculously slow. Bitcoin currently can do about 4.5 transactions a second. FOR ALL OF BITCOIN. Ethereum is a little better and can do about 30 transactions a second. That is ridiculously low. The VISA network to process credit cards can do up to 24000 transactions a second (they currently do about 1740 a second). Try that number on for size.
Currently the Web3 services in existence might work because it’s mostly just a few nerds using them. They are architecturally not suitable to run anything at scale.
There are ways to speed them up of course. If you remove the requirement to form a consensus for example by defining one arbiter things get a lot faster but now you have a centralized database that’s just annoying to use.
Credit card data gets stolen and if yours is that’s very annoying. You have to get a new card and call the credit card company that a bunch of transactions were fraudulent. It’s a hassle. But there are systems in place to protect you. They are not perfect but they work reasonably well.
With a blockchain based system all these protections go away because there is no “undo”. If you have your life’s savings in Bitcoin and someone gains access to your key, those coins are gone and you are shit out of luck. Given how easy it is to accidentally click on a wrong button, have people clicking on a phishing mail or just have people get their computer infected with a virus that risk is completely indefensible. If one virus can wipe out all your assets with no way to correct that mistake, that’s not a world we should ever want. We need more protections for people, not fewer.
When an engineer looks into a problem, they will at first gather the requirements. What does the system they need to build need to do and how and for whom etc. Afterwards they will look at existing technologies and see which technology and platform fits best to the requirements. With Web3 it’s the other way around. People had blockchain which was really only useful to run unregulated security trading without paying taxes (“Bitcoin”) but really wanted to use it somewhere. Since in the 10 years blockchains have existed no real use case has emerged they just basically reshaped a problem (the web is centralized and controlled by a few companies) forced blockchain into it and claimed to have a solution. They do not and this marks another year where blockchain has not found a use case aside from tax fraud.
Web3 wants to model even real world things or at least things outside of the blockchain through tokens, especially NFTs. But just because I created an NFT that claims I own the Mona Lisa (which someone of course did) I don’t own the Mona Lisa. Regardless of what the token says.
NFTs also don’t carry any legal rights to anything. You might own an NFT that has a link pointing at some crappy artwork of a monkey but you don’t automatically have a license to the artwork or are the actual owner. You own a thing that says you own the other thing. But has no authority over it. There are a whole bunch of competing blockchains and NFT contracts that all claim ownership to the same object. I can just create an NFT that points to “your” monkey and claim to own it. Why should your NFT be better than mine?
NFTs are very sexy because they feel so easy: You make a thing and now you can sell the thing – like it used to be. But people can still right-click the image and download it and use it. So what does “ownership” even mean in that context? What is ownership that basically gives you no enforceable rights? A great opportunity to be the laughing stock of Twitter when you yell at people for displaying “your” monkey?
NFTs are a strange grift and they are not even necessary for anything. If it really was about selling digital art we’ve been doing that for ages. Fortnite and all kinds of free to play games sell you cosmetic items for real money. People also have been selling digital art for a while. The game Diablo even had a marketplace to sell the digital objects you earned to other players. NFTs are not a revolution but a cumbersome reimplementation of things we already did or are already doing better and more efficiently.
This is true for a lot of the Web3 (and blockchain) stuff that is supposed to say something about things and relationships in the physical world or about abstract or legal things. The problem is what we in computer science call the “Oracle Problem”.
Stated simply the Oracle Problem says that from within a system you cannot determine the truth of statements about the outside of that system. If your system is a computer program it cannot say anything about the weather outside because that is not within the computer. You can build sensors or interfaces that translate the weather into the computer but now everything depends on that sensor: Is it good enough? Trustworthy? Is it working correctly?
Web3 wants to nail all kinds of stuff onto some blockchain but a lot of that (like ownership of a physical object) could only be integrated through oracles you’d need to trust. There goes the “no authority”/”decentralized” approach. And if people pass the object around in the physical world without updating the blockchain? It all falls apart.
The belief that you can control the world if you just put references to things and relations in an immutable, append-only data structure is not just naive, it goes against any computer science 101 course.
I gotta bring this one up. Currently Ethereum, the blockchain most people use for Web3 stuff uses about the amount of electricity that the Netherlands use because of its Proof of Work consensus algorithm. This is indefensible. This “world computer” that can do less than a 5 year old cheap smartphone creates CO2 pollution like a medium sized state. Even if we were in danger to lose the best writing on this planet to censorship (we are not) and even if only a blockchain could save the writing from deletion (it’s not) it wouldn’t be easy to argue that that amount of destruction of the environment would be worth it.
There is the claim that especially Bitcoin mostly uses renewable energy (it does not). But even if it did: Should we spend that medium sized country’s worth of energy on a casino for nerds or should we use it to power hospitals, transportation or heating houses?
Now I know Ethereum will switch to a more sustainable consensus algorithm in a few months. It has been switching in a few months for years now.
Let’s not even talk about all the e-waste that cryptocurrency mining does.
The blockchain and Web3 crowd talks big about human rights. But the right to a habitable planet with breathable air and no floods or droughts drowning and starving the poorest people on the planet is also a human right that is fundamentally opposed to using blockchains.
Cryptocurrencies are a so-called zero-sum game: That means all the money that someone takes out, someone else has to put in. One person’s gains are another person’s losses. That’s an issue if you hold a bunch of those very highly valued cryptocoins but have no mark to sell them to for actual money. Which is one of the reasons why NFTs were made so big: They brought more people into the system who had to buy Ether (the Ethereum token) to create or buy their NFTs. And that’s money the people holding the coins can use to cash out. (Some people even call blockchains “negative-sum games” because while financially nobody can win without others losing the whole game destroys the environment while doing so, leaving the world worse off than it was before regardless of wealth distribution).
Knowing that, it’s morally wrong to bring more people into those spaces. Even if there were massively useful Web3 services (which there really aren’t) you are exposing people to extreme risks. It’s convenient to argue people’s free choice but I as a technologist feel a moral obligation to protect people from risks stemming from the use of certain dangerous technologies.
A system’s purpose is what it does and if what a system does is scams and pyramid schemes then that’s what its purpose is. And that is one system that needs to die.
Web3 promises a lot of stuff under the umbrella term “decentralization”. But it uses that term as an empty fetish replacing the required debates about fairness and equality and stake. Just yelling “it’s decentralized” doesn’t necessarily change power relations: Email is decentralized and my email server has the same protocols and shit that Google’s has, but they are not in any way the same. If Google blocks my mail server, I can no longer reach most of the internet. Decentralization is a hollow idea, a smoke screen to hide that the Web3 community has no answers to questions of fairness or even monopolies.
I do believe that some people came to Web3 for good reasons: They hate that the web is controlled by a few companies, basically monopolies. And they are right. But their new structure has no guards in place against that same dynamic happening again. The Web isn’t centralized because the technology is, our current web is also technologically capable to run decentralized. But the economics and social structures work for centralization. And they will with a Web3.
Their whole stack right now is already very centralized. There are only a few exchanges to buy and sell tokens, there are only very few NFT markets. Web3 hardly exists but it’s already centralized.
Transparency is just as hollow: What use is seeing that your tokens got stolen when you can’t do anything to get them back? Transparency without power to act is just cruelty.
The Web3 crowd loves to claim to be apolitical meaning “everyone is welcome, we are neutral”. Aside from the question whether everyone wants to join a community that’s largely based on reactionary and right-wing libertarian ideas that’s factually untrue.
Web3 wants to take politics as we know out of many things but not to be “neutral” but to take democratic rights and rules for participation away. When only the code decides and there is no place for debate and political struggle, how do the disenfranchised get heard? How do the powerless organize and revolt?
Politics is about struggles. About people having different interests and fighting for them and often against their political opponents. Web3 doesn’t want to “stay out of it”, it wants it to stop. The world as organized by the smart contracts those with resources and skills deploy and you might be allowed to use.
There is a reason that so many VC people are into Web3. That investors like Andreesen Horowitz are pushing Web3 so hard: It’s a new space for accumulation. Things that currently are not fully monetized and financialized can finally become vehicles of capital accumulation, can finally make VCs even richer.
There are parts of your digital life that currently you can’t really sell, but that’s what they want to change. Everything needs to be bought and sold, everything is just a vehicle for more speculation. The reason they want you to be able to resell your access token to some service (instead of buying or renting it like today) is to create even more markets for speculation and the smart contracts can be set up in a way that at every corner they profit.
It also is a political project: Teaching people that everything is property to be bought and sold is a right-wing idea that has very much fallen out of favour. Web3 is here to change that notion and after having all those pesky human rights challenged digitally challenging them in the analog will be that much easier: Why can’t you sell your kidney if you can sell all your data after all?
I understand a lot of the motivations driving people to wanting to rethink the web. The monopolies and power imbalances, the inequality and unfairness.
I understand that especially creative people are desperately looking for ways to make a decent living and selling NFTs looks like a very simple way to make some serious cash. I get it. We need to find a mode of life that allows people to work on their art or whatever else they want to do and still be clothed, fed, sheltered and otherwise taken care of. Comfortably.
But as much as those problems need solutions, Web3 is not it.
It’s not the solution because it just doesn’t do what it wants to do, it wouldn’t stop a new centralized entity from emerging, it wouldn’t distribute power in any meaningful way and it would actually take away important mechanisms that we currently have.
But there’s more. Web3 is a deeply morally offensive project.
The promise of the Internet of giving people access to information and potentially the power of publication is supposed to be replaced with an unregulated casino that literally burns our planet to the ground. I can hardly come up with anything this despicable.
Nobody is an island but the Web3 crowd wants to further individualize us, turn everything about our digital and ideally analog selves into objects for speculation with semi-automated trading of assets replacing politics. The full financialization and depoliticization of life with no regard for the ecological consequences.
This is not a utopian vision. This is a declaration of war against a lot of the political and social progress of the last decades. And I’m not willing to wave a white flag.
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This text took me a whole day to write. If you got anything from it I’d be happy about any support you want to throw my way via PayPal.