I have recently read a couple news articles and position papers about the emergence of Web3. The advocates claim is the fulfillment of the original promise of an open and egalitarian Internet. I am sure some of the advocates are pure-of-heart and believe this, but the bulk of the Web3 wave is driven by those seeking power (influence) and money, especially money. Let us peel the smelly onion that is Web3.
If we roll back the clock to the original web, what some call Web 1.0 in retrospect, we can look at the basic technologies. Let us skip the original World Wide Web or Internet - WebZero - because it was limited to military, academics, and a few commercial researchers. The main part of the world did not become aware of the web or the Internet until around 1995 or so. Bill Gates wrote his famous "internet everywhere" memo about that time, and injected the web technologies into Win95 where the world discovered "the web". Wired Magazine places the Bill Gates memo on 26 May 1995 - see this link to Bill Gates memo. At the time, there were two kinds of connections to the newly visible web; at a major corporation, there was high-speed internet (perhaps a megabit/second or so) and from home there was dial-up at speeds from 1200-56Kbit/sec. For home users, the connection was provided by AOL or the like for a monthly fee and used the telephone system. I think the three main applications (or uses) of the web were e-mail, BBS systems, and limited web browsing, all text based with very limited graphics. The graphics were so limited, that even GIFs were rare, and a 1 megapixel photo was a luxury. I will ignore porn, the "killer app" that drives so many advances in technology. Even the limited gaming was text based. Not sure about that? Does this ring a bell? “You are standing in an open field west of a white house, with a boarded front door. There is a small mailbox here.” Zork. In the midst of all this technological glory came a new application that would fund major expansions of the web. In summary, Web 1.0 brought us spam.
We now proceed to examine Web 2.0.
The demand for a "more immersive experience" drove the expansion of e-mail, BBS, the nascent Web, porn, and primitive gaming, and this was often driven by spam. The emergence of GIFs, animated GIFs (amazing!), higher-quality images with more colors (hint: porn), and multi-player gaming drove an increasing demand for web services and capacity. High-speed internet became available in more homes (but still not fast enough for gamers who held game nights that spawned tech wizards fluent in routers and Ethernet). In a serendipitous alignment, these technologies allowed for full-on advertising. Older players like AOL and new players like Google and Yahoo could collect data on users to feed them advertisements targeted to their interests. Amazon came along and brought this to a fine art with the original patents on recommendations and collecting reviews to share with other customers. Where companies used to pay Madison Avenue to create stories about obviously wonderful products, Amazon shared recommendations and reviews are simply advertising supplied by the users instead of Madison Avenue. Amazon could pay a few reviewers to create a few reviews that would generate buzz, but they could collect hundreds of volunteer reviewers and assemble their submissions into gigantic, endless reviews that would generate massive buzz. All this cost Amazon a few cents of computing and storage to collect and present the data, and a few employees to get the ball started rolling. This is now ubiquitous in any on-line retail outlet, and pretty common on manufacturers' sites with consumer products. Along the way, images and videos got better in Web 2.0, and while that helped consumers, it helped the sellers sell better. Ultimately, Apple turned it into the music streaming business (big revenue), YouTube turned it into a video-streaming business (funded by advertising), and Netflix turned it into movie-streaming (funded by subscription fees). Google search and GMAIL are funded by advertiser fees as are Facebook and Twitter. FAANG and all the vampires driven by advertising brought to use by Web 2.0.
We now welcome Web3.
As with all self-described disruptions, there must be some icon-bashing, and so the numbering changes: we lose the space and the "0" to give the radical-looking "Web3" moniker. We are early in the transition to post-Web 2.0 technologies, but the leading contenders seem to be bitcoin (in the general sense, although Bitcoin is the premier example) and Non-Fungible Tokens (NFTs), both built on the blockchain technology. Bitcoin (lower-case) has become so popular that there are hundreds, if not thousands of bitcoin types.
NFTs are still struggling to emerge, but there are a handful of NFT exchanges (like auction houses more than anything). (As a foreshadow, I wrote recently that one can tell the NFT business is rotten because a Trump has entered the business; Melania, to be specific, but it would not surprise me if Ivanka, Jared, Don, Don Jr., and Eric were to shortly issue NFTs; I am not sure that Baron or Tiffany are allowed to participate with the big scammers in the family business entering first). To finish up quickly on NFTs, there are no reputable participants and none of the active participants can state any coherent value or benefit to NFTs; an NFT is a con by definition, so let us return to the fabled bitcoin marketplace.
The original Bitcoin was invented or described by someone with the name Natoshi Sakamoto, but no one knows who this is and no one has come forward with a credible claim to be this inventor who holds large amounts of the earliest Bitcoins. These original Bitcoins are presently worth millions of dollars (USD). Although any reasonable (living) person would come forward with a demonstrable, valid claim and own that money, no one has, so let us put the identify question aside for the moment and turn to the technology that underpins bitcoin.
There are lots of people in the world who think bitcoin is pretty cool and have invested their money in Bitcoin. there are other people who think the idea is cool, so cool that they have created new bitcoin types with different attributes. One of the most famous alternative bitcoin types is called Dogecoin, named after an Internet meme (the Doge, a dog) and created originally as a parody of Bitcoin - which promptly made it a desired type of bitcoin now worth real money. (See "icon bashing" mentioned earlier - must be an iconoclast to be a distrupter). A particular problem with Bitcoin (original) is that it does not scale - transactions in Bitcoin using the proverbial blockchain ledger are costing about $5, which makes many transactions too expansive (buy a gallon of milk and it costs more to pay for the payment than for the milk, itself). This is a serious problem for a "currency". The shopkeeper does not charge you $5 every time you buy something at the store, and Bitcoin looks pretty expensive such that there are now subsidiary "bitcoin" types that have a lower transaction costs and are bundled into larger Bitcoin transactions. The other problem is that Bitcoin transactions are slow - the Bitcoin blockchain can handle something like 10 transactions per second across the entire world. Ten transactions/second shared across seven billion people is, well, a long wait. This is not a good sign for the adoption of Bitcoin.
After Dogecoin, another alternative coin is Ethereum. Like Bitcoin, Ethereum is based on a block-chain technology but it uses something Proof Of Stake (POS) rather than Bitcoin's Proof Of Work (POW), and Ethereum has the ability to attach a "smart contract" to a coin or a transaction. According to the Coinbase website, "Smart contracts, like regular paper contracts, establish the terms of an arrangement between parties. But unlike an old-fashioned contract, smart contracts automatically execute when the terms are met without the need for either participating party to know who is on the other side of the deal — and without the need for any kind of intermediary." While many people consider "smart contracts" to be a major advance of technology, I view them as a pending disaster, but let us do a brief digression on POS and POW. I must confess that I love the irony of Bitcoin being closely associated with "POS", but where was I? Back to Proof Of Work. To make a long story short, POW takes a tedious computing problem and shares it with anyone who wants to try to solve it. These potential solvers are called "miners". The miners race to find a solution to the tedious problem and the first one to find a solution reports the solution. If all the other miners agree the solution is correct, that first miner gets a prize - a newly created ("minted") Bitcoin. The tedious problem is useless - it is difficult to solve, true, but the solution is the answer to a question that no one will ever ask. There are miners out in the world who have built specialized supercomputers that use vast amounts of electricity to "mine" the Bitcoin tokens (various words are used: bitcoin, coin, and token are common phrases). This is POW - to solve a tedious, useless math problem. Proof of Stake, or POS, recognizes this waste of energy and apportions winnings (new Ethereum coins) to anyone who can show they have a lot of Ethereum coins already and are willing to do the tedious calculation. The difference is that one Stakeholder does the useless computation instead of all the miners doing similar, useless computations at the same time in a race. In short, POS declares that only the rich can be miners; the rich get richer. That screams "con" to me, but let us return to the "smart contracts".
The idea of a "smart contract" is appealing. One writes up a great contract that encodes all the important criteria and conditions into the contract - in other words, one writes a program that is to be run in association with the Ethereum coin. This removes all the overhead of people handling the transaction and places it in a piece of programming code; the disrupters "disintermediate" all those unnecessary business people, bankers, and lawyers who would otherwise gum up the works. But this is based on a curious assumption, the assumption that someone, somewhere can write a program that can handle all possible circumstances and resolve all possible errors, including circumstances and errors that have not yet been encountered or imagined, then it assumes that program can be written perfectly to capture the intent and spirit of every thought of both parties to the contract. We know this is not possible for two obvious reasons. First, we know programs are littered with errors. Anyone who has ever had to "restart, reboot, reinstall" knows that software is fallible. Some will argue that software got people to the moon, but the programmers at NASA spent years writing and laboriously checking that code - only to have it fail at the last minute so that Neil Armstrong had to turn off the computer so that he could land the LEM safely (roughly summarized). Even if the resulting software were perfect, no one wants to wait years and spend millions of dollars for a "smart contract". The other assumption is that those "unnecessary business people, bankers, and lawyers" are, in fact, unnecessary. Anyone who has dealt with a bureaucracy knows that they routinely fail to operate correctly. I can think of dozens of times that I have had to call the bank, the credit card company, the insurance company, the airline, the hotel company, or the government to get a problem resolved by a person instead of a website or an automated calling system. Each of those was a contract with governing terms and conditions and something went wrong such that the automated systems could not resolve the problem. Placing all that complexity into "smart contract" software invites disaster and problems, and if the "smart contract" runs automatically with no chance of human override, then the consumers will need lawyers and judges to sort out the problems. Large companies pay talented lawyers to write air-tight contracts, but we read the news about company-suing-company to resolve some million-dollar issue that the contract did not cover. Smart contracts? No thank you.
Finally, let us ask what bitcoin transactions are used for. the most common examples are to purchase porn, to purchase illegal products such as guns and drugs, and to evade tax and financial laws. Someone asserted that most of the NFT purchases were done in bitcoin so that bitcoin could be converted out of bitcoin for investment diversification; this is almost a form of money laundering. In any event, when you take the transaction costs into account, bitcoin has no identifiable purpose that might be legitimate.
Summarizing, if Web3 is the grand world of bitcoin and NFTs, then Web3 brings only fraud and evasion.
I am left only with the conclusion that Web3 is something to be avoided and it needs government intervention and regulation.
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