Skip to content Skip to footer

How decentralized is the decentralized web really?

Loading player In 1999 the author and web designer Darcy DiNucci published in the Print Magazine an article on “Web 2.0”, a term she coined with which she indicated a new phase of the Internet in which users would produce content without going through traditional intermediaries. According to some observers, today we are approaching a new turning point of this type which is called “Web3”, a concept with vague outlines but which among other things would include all the innovations related to the blockchain, the technology on which cryptocurrencies are based but also NFT (Non-Fungible Token), smart contracts, i.e. agreements in which compliance with terms and clauses is controlled by software, eliminating the need for an intermediary, and DAOs, organizations structured and managed precisely through smart contract.

The Web3 includes the “crypto” sector, as the set of technologies based on blockchain is defined, but also technologies such as the metaverse and virtual reality: at its base is the transformation of the Web that we know in a series of environments digital to live in and interact with cryptocurrencies, NFTs and other tools based on the blockchain. The term was coined in 2014 by Gavin Wood, co-founder of the cryptocurrency Ethereum, to indicate a “blockchain-based decentralized online ecosystem”. The Web3 is proposed as an alternative to the current network model, the centralized one in which the devices connect to a website through a specific remote server managed by one of the few companies that control the sector, and instead theorising the use of databases distributed between users, none of whom are individually essential for the functioning of the system.

The first model of “decentralized network” was proposed in 1964 by engineer Paul Baran, one of the pioneers of computer science, with the aim of providing the US government with a method of communication capable of resisting a possible nuclear conflict with the Soviet Union. A centralized network would have been vulnerable to attack while a decentralized and distributed network would have had a better chance of surviving.

Baran's words have profoundly influenced the cryptocurrency industry. The same document with which the creator of Bitcoin, Satoshi Nakamoto, presented his invention in 2008, focused on the importance of this structure “without central authority” for money transactions. Web3 theorists argue that the centralized nature of today's web is also reflected in the centralization of digital companies in the hands of a few properties. Also for this reason the Web3 is proposed as an alternative to the overwhelming power of “Big Tech”, understood as the set of that handful of companies that control a large part of the technology and internet sector, such as Meta, Google, Microsoft and Apple.

– Read also: The race to the “Web3”

Decentralizations that were not
Recent developments in the sector, which in recent years has been enriched with countless cryptocurrencies and applications such as NFTs, certificates of ownership digital associated with images, videos and documents of various types, however, have changed things by questioning the very nature of the decentralized web.

As Microsoft programmer Neel Chauhan noted, “many Web3 platforms are effectively centralized.” Some of the best-known services in this sector (such as MetaMask, OpenSea, Alchemy) are to all intents and purposes “central platforms,” ​​writes Chauhan. In fact, for a given service, it is not enough to use a distributed database (the blockchain) to define itself as decentralized, because traditional, and therefore centralized, applications can hide under the blockchain.

Also criticizing the ambiguous definition of decentralization proposed by the Web3 was Moxie Marlinspike, an entrepreneur expert in cryptography and founder of Signal, an instant messaging application very attentive to the privacy of its users. Last January she posted a blog post about him in which he recounted his troubled experience with the Web3, particularly with the creation and sale of an NFT.

To do this, it used special services called “Dapp” (decentralized application), designed to work on the blockchain. However, these Dapps end up needing an intermediary between the user and the blockchain itself, “because the blockchain cannot run on the mobile device (or on your desktop browser)”. The only way to do this, therefore, is to interact with it “through an active node on a remote server somewhere”, in full Web 2.0 style.

A problematic nonsense, according to Marlinspike, because “when a distributed ecosystem centralizes for convenience around a platform, it becomes the worst of both worlds: control is centralized but still distributed enough to become bogged down over time.” One of the limitations of decentralized systems, in fact, is the lower efficiency compared to those managed centrally by the largest and most reliable companies. Some of these services are already essentially platforms around which the sector is consolidating, replicating the centralization of power and users typical of the previous conception of the Internet.

– Read also: Celebrities are getting hooked on NFTs

In his response to Marlinspike's post, Vitalik Buterin, programmer and co-founder of Ethereum, one of the most used blockchains, seems to agree with some of the points raised by critics of the Web3. In his opinion, however, it is laziness, not inherent defects in technology: «In most cases there are limits in the technical resources and funds available. It is easier to build things in a centralized and lazy way, you have to really commit to 'doing everything right' “.

The trend towards centralization of resources is also recorded in investments in the “crypto”. According to an estimate made by Bloomberg last November, the sector is worth about 3 trillion dollars, a turnover that has attracted the attention of many investment funds and venture capitalists, specialized in financing nascent companies in high-potential sectors. of development. Among the most active is Andreessen Horowitz (known as a16z) who since 2009 has invested in Instagram, Slack, Airbnb but also in Coinbase (the most used service to manage cryptocurrency wallets), and launched at the end of 2021 a $ 2.2 billion investment fund dedicated to the crypto sector.

Centralization has also done good things
The gold rush that has affected the sector was also denounced by Jack Dorsey, co-founder and former CEO of Twitter, which left the social network last December to focus on the Square digital payment service (immediately renamed Block in honor of the blockchain). Dorsey is neither a skeptic nor a “no-coiner” (as the harshest critics of cryptocurrencies are defined), but from his Twitter account he has repeatedly stressed that the main services of the Web3 are now in the hands of a handful of companies and venture capitalists, including a16z.

A similar phenomenon is also recorded in cryptocurrencies, where the concept of scarcity is fundamental. In the case of Bitcoin, a significant portion of the existing currency is owned by a minority of users (called whales). In 2017, 40% of the available units were in the hands of just one thousand people; today they have increased even if, according to an estimate, one thousand wallets still own 3 million bitcoins, about one sixth of the total. An accumulation of resources that can lead to market manipulation by some investors, especially in currencies with less fame and prestige than Bitcoin.

You don't own “web3.”

The VCs and their LPs do. It will never escape their incentives. It's ultimately a centralized entity with a different label.

Know what you're getting into …

– jack⚡️ (@jack) December 21, 2021

According to Chris Dixon, one of the partners of the a16z fund, this type of criticism of Web3 is based on a “misunderstanding” of the concept of decentralization: “There will be centralized services in Web3 as there were in Web1”, a term with which indicates the first version of the web, in which users had a more passive role. The future would lie in the so-called “network effects”, or how much a product increases in value with the increase of people who use it. According to Dixon, “the key question for Web3 is whether these network effects will mature into private (as in Web2) or public (as in Web1) goods”.

As reporter David Pierce noted on the Protocol site, the main problem is that centralization is not bad in itself. Indeed, “it has many advantages”. Marlinspike, whose critique of Web3 contains a proposal to improve the experience on OpenSea, the main platform for selling NFTs, also argues: «OpenSea would be much better if all its Web3-related parts disappeared. It would be faster, cheaper for everyone, easier ». As for the blockchain, the soul of the entire sector, OpenSea could do without it “by simply publishing an account of all the transitions, offers, bets”.

– Read also: Why NFT art is so cheap

There are also those who argue that the Web3 has already been with us, and for several years. Sites like Wikipedia or file-sharing services like BitTorrent are well-established companies that are based on decentralized and distributed systems and communities. One of the most ferocious criticisms of Web3, however, comes from a Wikipedia veteran, Molly White, long-time programmer and editor of the online encyclopedia, who at the end of 2021 presented the blog “Web3 is going Great”, where she collects news on thefts , hacker attacks and industry scandals.

It was precisely his experience with Wikipedia that formed his views on this field. In an interview with The Verge he explained that Wikipedia contributors are volunteers united by the desire to make the best encyclopedia possible, while in Web3 the goals are different, ranging from the desire to participate in a community to that of making a lot of money, and quickly. As White has discovered over the years, “these are things that can very often conflict.”