As mentioned, web3 apps are based on cryptocurrencies, or digital tokens, that are tracked on blockchains. These digital tokens are distributed to early investors and can be traded on cryptocurrency exchanges. Theoretically, these tokens can appreciate in value as an app takes off. To believers, web3 offers opportunities to participate in, what Bloomberg calls, a utopian project, while simultaneously profiteering on a crypto boom. To detractors, web3 is yet another branding exercise that is designed to preserve the mania for cryptocurrencies. Moreover, the latter point out that people who back up
web3 are the same people who backed web2 years earlier. Reid Hoffman, for example, the founder of LinkedIn, describes the wild idealism of web2 creators, who essentially wanted the same thing – to create decentralized networks with peer-to-peer interaction. However, as the system reached maturity, the output was, quite predictably, the system’s centralization. Hoffman continues, “You have this pattern, where you get a decentralized platform and then recentralize key features that work better technologically, or as businesses, as infrastructure.”
While business giants were struggling to find the right arguments, Tim O’Reilly published a fantastic essay in December 2021 titled ‘Why it’s too early to get excited about web3’, where he argues that for web3 to become a general-purpose financial system, it needs to develop interfaces with the real world, is operating economy, and legal systems:
‘The failure to think through and build interfaces to existing legal and commercial mechanisms is in stark contrast to previous generations of the web, which quickly became a digital shadow of everything in the physical world—people, objects, locations, businesses—with interconnections that made it easy to create economically valuable new services in the existing economy. As of now, crypto is well-suited for digital-only assets that can be valued and used in a self-contained world, like a computer game or the longed-for metaverse. But we’re a long way from the birth of an entirely new economic system.’
So far, it seems, that the predominant way to participate in web3 is betting on tokens and NFT, but the social networks of the future look like a long shot and are mostly hypothetical.