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Web3’s chaotic vision of a technical future – Crypto News

What does it take for an online revolution? As the year 2022 rolls around, a new movement under the banner of Web3 has become one of the most discussed – and least understood – forces in technology. But it is not at all clear what practical problems it will solve in order to become part of everyday life.

Every iteration of the web is based on new technical possibilities. In the first version it was the ability to navigate between static web pages. With Web 2.0, the Web became a more interactive, real-time medium, and users themselves became content.

These developments, building on the open protocols of the Internet, were radical enough to support new forms of online mass behavior. So what about the supposed move from Web3 to a more decentralized online world?

Its core innovation is based on the distributed consensus enabled by blockchains – the ability to reach binding agreements with complete strangers without having to rely on an intermediary or central authority. Imagine if large groups of people could conduct transactions on the fly: what new wonders of human coordination might be possible? The crypto boom has carried this idea over to money, but Web3’s full promise comes from using the same technical fundamentals to convey many other forms of human interaction.

The rhetoric behind it corresponds to the mood of the times with its distrust of elites and institutional authority. Plus, there seems to be a simple answer to the power of big tech: you too can regain control of your data and your online life while getting a chance to share in the insane profits of big tech.

It’s a tempting pitch. But behind the decentralization rhetoric, it is not clear what practical applications would actually divert people from the current online services, which are still very popular.

The first eruptions were in decentralized finance, where individuals do business with no middlemen, and digital collectibles known as NFTs. These hardly show the way to other uses. Much of the attraction of the former comes from circumventing financial regulation, while the latter has been the excuse for a speculative mania.

There are other reasons to be careful. Tear away the institutional supports that frame mass human interaction and what is left? As some regulators have warned, the current system of regulating financial markets relies on the supervision of banks, brokers and market authorities.

It’s true that regulators don’t have to find a way to curb today’s giant tech companies just yet. But would Web3’s promise – to leave everything to the rules anchored in software, backed up by supposedly bulletproof cryptography – make ordinary people feel that their interests are being protected?

Using new digital currencies to spin the wheels of this decentralized online world – a process known as tokenization – would have other implications. It would turn online activity into markets where every interaction is instantly monetized. As such, it would represent a form of hyperfinancing with unpredictable effects on people’s online behavior.

At least this may seem like a fair starting point for building a more equitable system that puts the individual in control. But the results of revolutions usually don’t align with the rhetoric of launch.

Bypassing the old intermediaries usually opens the way to a new set of intermediaries – as the first web did. The blockchain dream has its limits. It is not possible to put everything in an open, distributed database where all nodes can be instantly updated to reflect each new set of transactions. This leaves a lot of room for new intermediaries who grow up on the margins and translate the promise into practical services.

The wild speculation that has accompanied the crypto boom is also a reminder that an orderly distribution of profits is unlikely.

This does not mean that the central technology behind Web3 has no radical potential or that – like the first dotcom boom – today’s speculative mania will not found the next major tech companies. So far, however, proponents of the new technology are still struggling with an overarching challenge: developing practical applications that meet the everyday demands of millions of users. Silicon Valley operates on the principle that if you put enough technical intelligence and capital into a problem, a better path will emerge. We will see. Web revolutions have been chaotic in the past. This one looks like it’s going to be more messy than most.

richard.waters@ft.com

Source: Crypto News Austria

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