Why Isn’t Web3 Everything It Claims To Be?

We've been told now that Web3 will revolutionise the internet. Why hasn't it happened??

I see a lot of chatter about decentralisation, direct connections to creators, and better data ownership. Blah, blah, blah.?

Big Tech Bad?

The core basis of Web3 is supposed to be based on the principle that big tech is terrible, and we need to hinder the dominance of power controlled by a small number of gigantic companies who all profit mainly from sharing our data. I get it, I really do. I have to work with Big Tech platforms every day, and they cause me frustration. I wish there were a better way to develop the web in a new, improved way. But I’m not sure what we call Web3 in its current guise is the answer.??

The term Web3 was coined in 2014 by Gavin Wood, the founder of Ethereum. He has talked about how the internet as we know it is broken, and Web3 is the saviour. He talks about trust, transparency, and a new future (one where we all need to be software engineers, too, apparently: The Father of Web3 Wants You to Trust Less).

With such a bold goal as to essentially tear down the shackles of the everyday internet user, what have these Web3 Knights in Shining Armour done to progress their noble mission??

The Heros of Web3 We Didn’t Know We Needed?

For the everyday user, coins and NFTs are what they know as Web3, based on groundbreaking Blockchain technology. From where I'm sitting currently, Web3 has given us two things: it allows you to transfer real money into Internet money. Given your luck, you may win or lose said real money when you sell off the Internet money. Secondly, it's created a new way to show you paid too much for your Twitter/X profile picture by buying an AI-generated image of a monkey with questionable value. It’s exceptionally clear that early adopters have consolidated all the power and money (sound familiar?!)?

I see conferences about Web3 all over the world. I see massive Web3-related promotion by those apparently in the know (ironically, always on a big-tech-owned Web2 platform). However, I'm yet to see how it will change our everyday online lives in any meaningful way for the majority.?

So, is Web3 actually what it's meant to be, or is it some niche field now so impenetrable that only the 'experts' and snake-oil salespeople and their delusional and willing snake-oil consumers care??

What is Web3??

Let's look at what the core functions of Web3 are supposed to be, and I'm hoping to steelman this argument so no one accuses me of misrepresentation!?

The key components that make up Web3:

• Decentralisation
• Blockchain technologies
• Decentralised finance (DeFi - or crypto currency)
• Non-fungible tokens (NFTs)
• decentralised autonomous organisations (DAOs)
• Self-sovereign online identity, such as OAuth
• Smart contracts
• Verifiable computing?

Essentially, these are all supposed to improve data security, scalability, and privacy beyond currently possible. Removing the need for giant, exploitative players like Google and Amazon while potentially allowing for broader online and real-world self-governance and engagement in spheres of influence by the everyday person in the face of both financial and political silos of power.?

Laudable, I'm sure you'll agree. But what's the reality? Well, nearly ten years after the term Web3 was coined (not intentionally), I've yet to see if it does anything other than make a few people wealthy, confuse everyone else, and open itself up for ridicule while people who love the idea fly around the world trying to explain its benefits with literally zero success.?

Breaking it down, bit by bit

Finding a reputable expert source of information on the real-world benefits of Web3 took some work. However, I found the Blockchain Council, which sounds relatively respectable, and they have a .org, so that's enough for me. Let's look at what they outline as (I'm assuming) the absolute best use cases of Web 3, and I'll explain why I still think they're selling snake oil.?

https://www.blockchain-council.org/web-3/top-web3-real-world-use-cases/

They list:

• Metaverse
• Blockchain Games
• Decentralised Autonomous Organisations
• Decentralised Finance
• Creator Economy
• Cryptocurrency
• Privacy and Security

Let's get rid of a few of these things quickly.?

Metaverse?

Metaverse doesn't require Web3. It's essentially it's own thing. And guess what? The leading players in this faltering industry are all Web2 giants. Probably because they're the only ones willing to take the financial risk to invest in such a vast undertaking. I see no real benefit to linking the metaverse to Web3.

Gaming?

Blockchain games, I mean, come on. Try harder. Sure, a few cool things are happening with brands and massive online games, but if anything, all the blockchain will do is replace microtransactions and push up prices for unique outfits. It’s hardly revolutionary.??

We'll come to the creator economy last, as it's my biggest bugbear.?

DOAs

So, Decentralized Autonomous Organisations (DAOs) are the one area that has the potential to be the most effective use of Web3 technology. Imagine a world where all elections and companies are run by people, all with an influential and equal voice: no fraud, no security issues, just the perfect representation of democracy. DAOs have a real potential to make this a reality. They could revolutionise the company as we know it (i.e. the idea of a company), they could be used to hold free, fair, proportional elections everywhere in the world, local communities could be decentralised, and the need for federal governments or elected local officials to be in charge of local affairs could be eradicated, giving the people real power. However, as yet, it seems the concept of a DAO has only been used for financial, fundraising or creator economy projects, all of which I'll come on to, so currently, the concept is great, but in reality, it's execution is pretty self-serving to said snake oil salespeople. I hold out hope for the DAO.?

DeFi?

Decentralised Finance carries with it the murk that surrounds all of Web3. Google it and the first two or three pages are basically 'What is it?', which is never a good sign. It shows that something needs to be better understood or it’s doing nothing interesting that ranks highly on search. And let's be realistic: fiat currency carries weight because of the protection levied against it by a stable state. When a state breaks down, you look at what happens to fiat currency, and we already know what DeFi's future looks like. There used to be a time when currency was pegged to physical holdings of precision metals. The concept of currency is a bit of a fallacy, but it allows society to function. As much as people hate banks and centralised control by organisations like the Fed or the BoE, they guarantee that the dollar or pound in your pocket is a feasible method of exchange for goods or services. I just can't see how decentralisation can or will replace that. Call me old fashioned, but I don't want to think that the value of the money I own is somehow reliant on a random person on the other side of the world that I've never met. I can't understand how it'll ever replace cold, hard cash.?

Crypto

Cryptocurrency is still basically gambling. I can pay online with my Visa card. I don't need you to accept Bitcoin. The complexity and security vulnerability of crypto also means getting involved as a layman is like panhandling in the Wild West. I'll let you Google FTX as an example of what I'm talking about. Yet again, it is a Ponzi scheme.?

Privacy?

Privacy and Security would be great for Web3 to lead on. But the litany of hacks, people losing money, and the sheer shady practices of many of the Web3 world means that 99% of people would still much rather rely on Web2 security than get involved. Several high-profile hacks have been seen in the Web3 world, such as the Wormhole hack in February 2022, which resulted in the loss of $320 million worth of cryptocurrency. These hacks have led to concerns about the security of Web3. In addition to the security risks, there are concerns about the shady practices of some of the players in the Web3 world. For example, there have been reports of rug pulls, where developers abandon a project after raising money from investors. As a result of these concerns, many people are still hesitant to get involved with Web3. They are happy to rely on the security of Web2, even if it means giving up some privacy.

Now, the final flourish… The Fabled Creator Economy.

Let's start by acknowledging something we all feel: creators should be paid fairly for their work. But has this been happening? Big tech companies are raking in billions, capitalising on people’s content and data. In perspective, Google made $224 billion in advertising revenue in 2022, and Facebook wasn't too far behind with about $114 billion. And what did creators get out of this deal? Certainly not an equitable share of that pie. Web2 has not been a shining beacon in this regard. Big tech is making a lot of money from both creators and users.?

This needs to change, and the market seems to sense this imbalance. Platforms like YouTube, OnlyFans, Gumroad, Etsy, Ko-Fi, Fiverr and Twitter/X are introducing features to compensate creators better. YouTube, for example, has rolled out features like Super Chat and Channel Memberships, which allow creators to earn directly from their audience. It's a step in the right direction, but is it enough?

Web3 aims to develop a direct relationship between creators and their customers but ignores one critical element that is the purest driver of Web2’s success: scale. Web3 has a problem with scale. YouTube has over 2.7 billion active users, around 34% of the World’s population. That scale is unbeatable when you're trying to get your content in front of as many eyeballs as possible to pay for your content. Web3 creators suggest that Web3 lives side-by-side with Web2, but then they’ll make their services so confusing, obscure, and complex that it’s challenging to see how they’ll ever bring that many people into the fold. So, it’s no surprise that the top-earning creators globally all use Web2 platforms; that’s where the audience is. Even in a post-Web2 world, you still need people to see and engage with your content before purchasing to make money from content creation.?

Ask any business owner about their marketing expenses, and you'll quickly realise the value of a built-in audience. According to Gartner, companies spend 11% of their revenue on marketing. Web2 platforms currently do a lot of that heavy lifting for creators. They provide the audience, the analytics, and sometimes even the promotional tools. The first wave of craziness around NFTs delivered much exposure for those creators. Still, it wasn’t potentially visible to 2.7 billion people, and it hasn’t been sustained. it’s questionable if most of them could be classified as ‘creators’ anyway, but that’s a different story. The creator economy is based on the marketing funnel: awareness, consideration, conversion, loyalty, and fame. Web3 won’t be able to compete until it can transparently bring these steps to the table for creators.?

Web3 creators will still primarily use Web2 platforms to promote their content, and most will still likely make more money from brands asking them for features on their Web2 platforms than whatever they’re doing in Web3. But they’ll spend the rest of their time telling us Web3 is the future and railing against it while using AI to create a new collection of NFTs and fleecing people for stuff worth nothing. It’s not that I don’t see a place for better ownership now we live in such a tech-dominated world. However, people who keep beating the drum about Web3 being the saviours of content creation need to consider some basic questions: Can you imagine creating content and not using Web2 to promote it? And who will fund the exposure part when we all have a direct connection between creator and consumer? Because, from what I’ve seen, Web3 funds Web3, not making it more accessible to all. It only strikes me as going against the core aim it’s meant to achieve.?

To top it all off, there’s the burgeoning role of AI, which is becoming increasingly capable of generating content, analysing data, and automating processes far beyond what anyone expected. It’s gaining colossal momentum already in its early development stages. It's worth questioning whether the decentralised world of Web3 can integrate these advancements successfully. Or could the rise of AI make Web3 obsolete before it even truly begins? Especially if those shouting loudest about Web3 continue to foster the narrative that it’s a niche little club that has shown itself to be closed off from the outside world deliberately to maintain its allure, roping in the less fortunate to make the most money out of them possible.?

I’d be interested in a response to this from Web3 folk who disagree. I’d love to see it as a valuable addition to the digital world. I just don’t.