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The race for “Web3”

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One of the advertising spaces sold by the American network that broadcast the Super Bowl last Sunday was purchased for the first time by Coinbase, one of the largest and most important sites for buying cryptocurrencies. The spot, which lasted one minute, showed for most of the time only a moving QR code that led to a promotional page with an offer dedicated to the Californian company's new customers. The popularity of the spot and the extension of the public that saw it were such as to make the app temporarily unavailable.

Other advertising spaces were purchased by companies similar to Coinbase such as FTX and Crypto, which provides digital wallets for storing or paying in cryptocurrencies. At the beginning of 2020, one Bitcoin – the most popular cryptocurrency in the world – was worth around 6,500 euros. Today it is trading at around 38,000 euros, and the estimated value of all cryptocurrencies is around 2,000 billion euros.

Together with NFT (Non-Fungible Token) – special digital certificates of authenticity traced through a sort of digital register, the blockchain, and even sold for tens of millions of euros – cryptocurrencies are considered one of the hallmarks of a new Internet era called Web3. By adding new elements to an increasing amount of signs of this evolution, for some weeks Twitter has become one of the first platforms of large social networks to promote the use of NFTs, allowing them to be used as a profile picture.

With largely theoretical connotations, similar but a little less literary and smoky than those of the “metaverse”, “Web3” is a word increasingly present in the debate on digital transformations and on the possible, and according to some imminent, evolution of the Internet. Evolution that, in the terms of the people in the sector who have been talking and writing about it for several months, should be based on blockchain, that is the technology of cryptocurrencies, and fully implement a series of phenomena such as the decentralization of networks – to the detriment of the current large Internet companies – and the NFT-based economy.

In a letter published on January 25 on the company blog about plans for 2022, YouTube CEO Susan Wojcicki wrote that the company sees the Web3 as a “previously unimaginable” opportunity to increase connections between content creators and their audiences. On the same day, a prominent executive, YouTube gaming chief Ryan Wyatt, speaking of his passion for blockchain and Web3 developments, announced his decision to leave his post later this month to become the CEO of a company. del Web3, Polygon Studios.

According to the American market analysis firm PitchBook, from the beginning of 2021 to November 24, venture capitalists (entrepreneurs who invest in very risky but potentially very promising projects) have invested in cryptocurrency start-ups for a total of around 24 billion euros: an amount greater than that of the previous 10 years combined.

Although surrounded by the great optimism of a niche audience, in Consisting largely of techno-enthusiasts and large investors, the Web3 is also a phenomenon that many other people consider almost like a big scam. Like the Ponzi scheme and pyramid marketing. Or, at best, as a plan to make already rich people even richer.

However, net of the most extreme reactions, the idea that the Web3 is always a phenomenon more concrete and impossible to ignore, as recently argued in Re / code by technology expert Peter Kafka, usually well informed on the markets of the digital economy and on the evolution of the Internet. “That technological optimism it may sound like a fairy tale in the press. But in the world in which I live, or at least in the one close to me, it is increasingly the rule “, writes Kafka, pointing to that optimism as the reason why so many people who work in technology at high levels -” and who are already very well rewarded “- are leaving their current positions in established Web 2.0 companies to hold roles in Web3 companies.

– Read also: NFTs, explained

One of the first definitions of Web3 is attributed to the co-founder of the Ethereum blockchain Gavin Wood, who in 2014 used this word to indicate a “decentralized online ecosystem based on blockchain”. The popularity of this concept has grown a lot over the course of the second half of 2021, mainly due to the interest aroused among cryptocurrency enthusiasts and influential investment firms such as Andreessen Horowitz, who pointed to the technologies, protocols and digital assets of the Web3. also as a possible solution to the problem of Internet regulation.

The number 3, according to the analysis of the theorists of the new Internet paradigm, would be a reference to the two previous “eras” of the Internet. The Web1 is now considered the computer model used during the first diffusion of the Internet in the 1990s, largely made up of corporate or amateur sites and essentially based on a one-sided interaction between user and content provider. Web2 (or even Web 2.0), widespread since the early 2000s, is instead the paradigm based on so-called user-generated content and, in general, on greater ease of use of interaction and sharing tools.

The Web3 should be the model that according to its supporters, “through consensus mechanisms such as the blockchain”, will allow people to organize themselves online without having to resort to the services and infrastructures of large Internet companies such as Facebook , Amazon or Google, dominant in the Web2. That is, it will use a technology based on a worldwide network of computers that communicate with each other and validate and record transactions without human intervention and without centralized supervision. This same principle but in a broader sense – thus leaving out its hitherto prevalent application: the trading of digital assets – is at the basis of the so-called decentralized autonomous organizations (DAOs), a sort of Internet collectives in which automated blockchain technology should make simple to establish the divisions of ownership and decision-making power among the members.

In many respects, the interest in the Web3 shown by investment firms or public figures with long experience in the sector such as former Twitter CEO Jack Dorsey is not a surprising fact. Many of these people, according to Kafka, are the ones who have the most to lose or gain depending on how the Web3 develops.

the joylessness of this conversation is really quite affecting. i'll be thinking about it for a while. https://t.co/om2nkniKe2

— Carl Kinsella (@TVsCarlKinsella) January 25, 2022

– Read also: Celebrities are getting hooked on NFTs

There is a possibility, according to some people, that the Web3, in one of the worst predictions, ends up being just a new dot-com bubble (the 2000 bankruptcy of many internet companies, caused by an excessive increase in the price of their shares due, in part, to an overvaluation of analysts). But even in that case, Kafka emphasizes, it does not mean that something of value will not remain that will become part of our daily life, such as the web browsers still used today, which emerged precisely during a technological bubble and survived when the bubble

Part of the growing interest in the Web3, according to experts consulted by Kafka, is also linked to political fears. According to them, as much as it may please some that Donald Trump was denied access to major social media a year ago, they should be concerned that “a handful of companies may oust the former president of the United States.” In Web3, theoretically, Donald Trump would be expelled from a social network only if the users of the social network wanted to. Users who would also be the owners of that social network, as owners – through the blockchain – of the services needed to build and use it. And even if they did, there would still be other platforms on Web3 available to Trump.

The fact that Web3 does not yet exist fully, according to Kafka, is another reason for the fascination that exercises among many people eager for new assets not dominated by large technology companies. As well as among those nostalgic for the early days of the Internet, “when no one knew what could or could not be done because no one had tried it yet”. Advocates of Web3 see decentralization, for example, as a way of getting groups of people to work together quickly and fairly and efficiently – even but not only in financial contexts – without many of the intermediaries currently needed, especially when people live in different countries.

However, according to Kafka, if there is anything we have learned from Web2 it is that “even the most exciting technology has complications and unwanted consequences”. And he gives the example of Twitter, which initially seemed to some a fun way of letting people know what we ate for lunch and then, for a short time, “a useful tool for the liberation of oppressed peoples”, before it became clear that it could also being “a cesspool of hatred and lies”.

One of the most well-known criticisms concerns the impact of cryptocurrency “extraction” activities, the so-called mining, considered by many to be a waste of energy. more irresponsible in a historical moment characterized by the climate emergency. Other people object to these criticisms, judging them exaggerated and arguing that the future development of cryptocurrencies would lead to more energy-efficient mining processes.

Another widespread concern concerns security issues and current ones. practical difficulties related to the operations required to use the tools of the Web3. Kafka related an experience of his recent attempt to purchase an NFT.

I downloaded MetaMask, a popular cryptocurrency “wallet” – a place to store the keys to your cryptocurrency assets – which works like a Chrome browser extension. Then I carefully recorded the 12-word “seed phrase”, which is the only way to log into your account if you forget your password, and which MetaMask advises to keep extremely safe (they suggest, among other techniques, to put it in a safe, and they tell you that if you lose it you will not be able to access your account, ever again).

At that point I needed to buy ethereum to put in my account, which MetaMask suggested that I do using services like Wyre, which I had never heard of before. And it turns out I can't use it in New York, because it's not licensed here. At that point I gave up because I was not in the least ready to link my savings account to a cryptocurrency service I had never heard of before. Maybe it's safe. But what happens if it is not?

The absence of centralized management, a concept underlying the Web3, is also considered by many to be the reason for the absence of great guarantees in terms of consumer protection. For supporters of the Web3 there would be no need, since the system of connected computers creates an economy in which every transaction is recorded and verifiable, in which no supervision is necessary. Yet, Kafka points out, there are already numerous examples of ineptitude and imperfections exploited by opportunists in the Web3, as well as genuine scams, as in the case of creators of fake cryptocurrencies who collect the money and then disappear.

“New technology doesn't mean we're a new species,” Kafka argues, concluding that “even the most optimistic version of Web3 can recreate some of the problems that exist in Web2 or the rest of the world.” And it also seems a bit suspicious, in his opinion, that some of the people enthusiastic about the possible prospects in the Web3 tend in public to proselytize or take on defensive tones.

Finally, they seem to There are also two principles that some of the rhetoric on the Web3 sometimes seems to take for granted: that there is such an extensive willingness on the part of people to “own” digital goods, rather than limit themselves to using services and platforms; and that the ability of large Internet companies to decide who to admit and who to exclude from their platforms is necessarily perceived by people as a danger. In a sense, the power of exclusion exercised by future decentralized systems of the Web3 would perhaps be more frightening, an exclusion that Kafka compares to ending out of a club by “pogando” rather than by the hand of a bouncer.

Concerns similar to these have recently also been expressed by Kaitlyn Tiffany, who mainly deals with technology and pop culture on the Atlantic. Tiffany spoke to some of the Web3 conversation moderators on the most active and frequented specific Reddit channels, where the most enthusiastic attendees are sometimes teased and likened to “the young, fit male who sell diet shakes via multilevel marketing on Facebook,” and at other times they are described as people who explicitly aim to provoke and coordinate collapses in the financial markets.

– Read also: What history has taught by GameStop

During the pandemic, in parallel with the enthusiasm – and profits – of many people about certain financial and marketing tools, according to Tiffany, a certain public sensitivity has also grown about the risk of scams and a tendency to see them easily in many behaviors. A circumstance that would have led to the current very polarized situation even in the case of the prevailing feelings towards cryptocurrencies and NFTs, and consequently the Web3. On social networks, both supporters and movements against these tools are constantly growing.

In general, movements and groups that warn against scams have gained great popularity, giving the impression of collecting a widespread “frustration with the way things work” and a shared feeling by many people that they are not taken into consideration enough. With the Web3, likewise, a certain collective anger seems to be linked to “the realization that normal people may not be able to escape the possible tragic repercussions of something they have neither pursued nor supported”. And resentment of this feeling of being dragged into something in spite of themselves, according to Tiffany, is becoming an increasingly common feeling among people. 'American University in Washington, the risk of so many speculative and contrived investments in the market is mainly related to the potential ripple effects. “If it's just a dot-com bubble, it's only a rip-off for the people who invested, but if it's like the 2008 crisis then we're all screwed, and that's not fair,” Allen said.

– Read also: The “collapse of the context” on social media

According to the American computer scientist Ian Bogost, another well-known author of the Atlantic and video game developer, lecturer at Washington University in St. Louis, regardless of the more or less enthusiastic or more or less adverse reactions, it is still wrong to conceive the Web3 in terms of absolute novelty. “From the beginning, Internet companies presented themselves as creators of culture, even if their real goal was to create financial value,” Bogost wrote. Now, from this point of visit, the idea of ​​a financial market of digital data – data explicitly transformed into financial instruments through NFTs – would be, if nothing else, a less hypocritical turn.

Already the Web1, according to Bogost, it was in fact a form of commercialization: tools previously used by researchers and nerds to communicate with each other became in the 1990s an opportunity for companies to move their retail activities from the physical to the online world. Subsequently, the Web 2.0 companies, which simplified the publication and sharing of content, became famous for offering their services in an apparently free way.

What they did was accumulate data on user behavior, previously millions and then billions, to make big profits through advertisements: “The act of monetizing, once the esoteric goal of moralistic bankers, had become a daily activity and a natural goal for stable content 'creators'.” Bankers and financiers, who had always had a somewhat opaque reputation, became for technologists “indolent parasites that produced nothing and preyed on other people's inventions.” Unlike the web entrepreneurs, who instead created work tools and made completely new ways of living online possible.

But also to want to talk about it with the apparent usefulness of their products, according to Bogost, those entrepreneurs optimized their work for wealth and power just as bankers and hedge funds had done. “The only difference was that they said they were changing the world for the better.” Bogost sees Web3 as a return from Web2's “saintly idealism” to “Wall Street's brazen greed.”

No doubt NFTs have allowed some people to make their art very profitable, but overall, both the people responsible for building these platforms and tools and the investors are just trying to generate wealth through speculation. As with any stock in the financial market, Bogost argues, an NFT's value “has less to do with what it is than it has to do with what it might be worth.”

– Read also: Why NFT art is so cheap

Also, as much as Web3 theorists insist on decentralization, a form of centralized control is already partly exercised by large cryptocurrency wallet companies such as MetaMask and by major NFT markets such as OpenSea, one of the largest as well as the one used by Twitter as a reference for NFTs to be used as a profile photo.

The “golden promise” of the Web3, Bogost concludes, is that everything we own or do – not just tweets, text messages, photographs and emails, but every aspect of human life – has a digital correlation. And that that correlate will have a value guaranteed by a computer network. “You may find these new digital assets exciting or terrifying. In any case, the absurdity will only grow “.