?? DANGER >> WEB3 RED FLAGS

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?? #DANGER >> #WEB3 #RED #FLAGS

??? As you know, I am a pragmatic optimist. But I am also a realist. There is far too much hype about Web3 and the Metaverse – both of which are simple evolutions from a 2D to a 3D Internet based on mixed reality immersion.

??? In my view, Web3 is over-hyped by people who act and talk like they are on hallucinating drugs. It could easily become a huge cult, the next opium of the masses, and a corrupt Dark Web.

NOTE: If the content of this Article in any way offends the adherents of CryptoCrap, NFTs, DAO, and DEFI, so be it. Feel free to disconnect.

??? As the analyst firm Forrester Research warns, Web3 currently is a mix of scammers and conflicting priorities, outlined in a document titled "Web3 Promises a Better Online Future but Contains the Seeds of a Dystopian Nightmare" (link below).

??? I have condensed and combined this report into 5 main red flag technology issues (there are other social issues that I may address another day):

?? 1. DECENTRALIZATION HYPE

??? The utopian dream of complete decentralization is neither possible nor desirable in practice. Societies need centralized governance of various kinds, from infrastructure services to garbage collection.

??? Hype around so-called Decentralized Autonomous Organizations (#DAOs) -- which mainly exist as a collection of smart contracts (item 2 below) -- have no legal basis and work on an assumption that all possibilities can be coded.

??? Similarly, Decentralized Finance (#DeFi) is a nice idea, but it lacks consumer protection, while risk management requires the code inspection (item 2 below) that few humans can perform.

??? And anyway, as a former bank executive, let me clearly state that banking and finance are already digital, and bank accounts are securely carried on cellphones – i.e., decentralized. You have your banker literally in your pocket.

??? In any event, Central Banks are in process of issuing Central Bank Digital Currency (#CBDC) to get rid of obsolete coins and paper money.

?? 2. CODE and CONTRACTS

??? There is a naive belief that a DAO's #smart #contracts naturally encode and enforce its rules. In fact, smart contracts are neither "smart" nor legal. So why trust them?

??? And in terms of using Open and Transparent Code, that doesn't stop monopolies forming, and it relies on a small pool of technical people to assess.

??? A related myth is that users will control the apps and networks they use, which won't happen beyond a few tech-savvy types.

??? Also, many online communities have soured or become fractious. If those community problems emerge as disputes among those who run the apps and networks that people have trusted -- like managing their finances -- we get the dystopian scenario in the document's main title.

?? 3. COMPLEX DATA PRIVACY

??? Web3 idealism claims that users own and control their Data and Content. But the concept of "ownership" is vague and most users are simply not willing or able to make constant decisions about their data.

??? Likewise, most will not manage their own identity and credentials, because it is hard. In reality, users prefer simplicity on the individual control of their data and identity.

??? Considerable tech challenges remain, including: Preventing harassment; Maintaining blockchain privacy and confidentiality; Establishing blockchain interconnectivity; and Network scaling and security.

?? 4. SECURITY and CONTROL

??? Trust and security is a related barrier. With decentralized identity and the formalization of speculatively valued and fictitious #NFTs comes the need for strong digital identities. Remote identity validation solutions, enabling users to securely sign documents from anywhere, on any device, will be crucial.

??? Web3's main idea is putting the individual in control, but again that’s where it falls down. Managing data and identity in a decentralized, self-regulating community is possible, but it requires a level of effort that most people won't make.

??? Instead of memorizing public and private security keys, and putting a seed phrase in a physical lockbox, people want that to be easy to use.

?? 5. CRYPTO ECONOMICS

??? The document also warns that Web3 is currently dominated by speculators in #cryptocurrencies and other digital (yet virtual) assets like NFTs. In reality, it is an unregulated environment where scammers and fraudsters wreck the best of intentions.

??? Systems are supposedly designed to benefit all participants. But in reality they favor the wealthy and grow monopolies -- as shown by crypto projects centering around usually large actors, and the number of frauds and scams, never mind the absurd speculation on crypto values.

??? A real dollar is a real dollar. Besides, private cryptocurrencies are illegal. Only a Central Bank can issue a nation's currency. Currently there is no recourse for people who lose cryptocurrency either accidentally or because of scams.

?? IN SUM …

??? Navigating Web3 projects requires a high level of skepticism and the ability to "follow the money." The report is stark and honest:

• Scammers are mainly running the show.
• The guiding principles are contradictory and confounding.
• People who lose money in DAOs need help from outside authorities.

??? To evaluate Web3, companies and individuals should proceed with extreme caution and should:

• Check whether an enterprise blockchain project is a fake in disguise.
• Develop a governance model if one doesn’t exist.
• Expect and propose strict regulation of all aspects.
• Stay away from all elements of the Dark Web.
• Do not use any private cryptocurrency other than loyalty points.
• Be very wary of getting into NFTs.

(Condensed, Adapted, and Modified from Source Link) https://www.forrester.com/report/web3-promises-a-better-online-future-but-contains-the-seeds-of-a-dystopian-nightmare/RES177246

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