today is Dec 03, 2022

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A lot of thoughts on web3, many of them demoralising

You’ve all heard of it, web3 is a culmination of late capitalist grift, ironic meming, libertarianism and mansplaining, all resting on bad tech that is damaging the planet.

I’ve spent the past few months from my vantage point in Miami poisoning my brain on web3 so you don’t need to. This is the first of several posts unpicking this mess.

At the start of my web3 journey I was earnestly seeking something, there are some interesting computer science concepts and who doesn’t want to bring down the plutocratical inequalities of #crapitalism… In the end I came to the same conclusion as Stephen Diehl :

…those of us who […] look into alleged engineering details they’re always either complete hand wavy woo woo or dreams overleveraged on perpetually-over-the-horizon blockchain tech searching for tomorrow’s problem to justify an investment today. Just buy my token today to secure your stake in a better tomorrow. It’s the age-old pitch of charlatans and snake oil salesmen, except this time around it’s being pushed by world’s largest investors who have deep bags of tokens to dump.

If you’re reading this I am going to assume you have some grounding in the main terms and ideas. Let’s take a closer look.

Crypto

Bitcoin was immaculately conceived in the sense that a load of nerds built and ran mining rigs for several years before BTC was worth anything. Satoshi effectively invented ‘digital currency’ once and as the OG currency, BTC is the most valuable. It relies on the eternal dream of BTC replacing fiat currencies issued by governments, known as Bitcoin Maximalism. The idea is that you get in early so that you own a valuable chunk of this new economy and everyone will have to catch up later. Of course this creates immense amounts of FOMO and FUD, which powers crypto.

Many Bitcoiners hate on Dogecoin, which is a currency based on a meme-dog called Shiba Inu. The market caps of Doge and sister coin Shibu are today around $70 billon dollars, yes 70,000,000,000 USD. About enough to build one thousand hospitals in the US. This is a coin based on the meme of a dog.

A dog that become a meme that became a currency

I actually think Doge might be the ‘truest’ crypto-currency in the sense that it’s a total asset speculation pump and dump scheme with little utility, few true believers and an immense amount of grift. Any hate toward is a psychological projection of Bitcoiners fears about themselves.

The cult of BTC which can be summed up by the laser eyes.

The idea is that BTC believers with ‘laser eyes’ believe BTC will reach 100k. BTC has seen uses as a store of value and as a currency for trading. But most people own it as a pure speculation, FOMO that they’ll miss out on being a bitcoin millionare when the new cryptocurrencies replace real (or ‘fiat’) currencies like USD and GBP.

Laser eyes mean you believe BTC will reach 100k USD

Usually these crypto-nihilists claim that ‘money is made up’. This is only kind of true.

First of all, try seeing how ‘real’ crypto is when you try pay your taxes in it (if you see state press releases saying they accept BTC, read the article, it’s always converted to USD). USD is backed by a government, an army, an air force, a police force in every city, and an IRS that ensures you pay taxes, or else…. in other words, a nation state.

Secondly, yes banks can magic money out of thin air but they create it as a liability e.g. when they give out loans like mortgages. This is totally different to bitcoin mining where the currency is created as an asset to the miner i.e it truly means nothing

The problem with the laser-eyes BTC-will-reach-100k-one-day-and-replace-USD speculation strategy (called HODL in crypto-slang) is that…

1) It’s classic greater fool investing: what happens when BTC does reach 100k? — presumably most will sell including the grifters in Miami, Dubai and so on.

2) No one spends BTC: the actual ‘users’ of BTC are few and far between — they are the ones that bought (what would become) the most expensive goods in history in the 2010–2014 era. Imagine buying LSD on Silk Road for what would today be perhaps a hundred million dollars. Drug purchases like that were a major use case for BTC in the early days and these early believers left potentially hundreds of millions of dollars on the table by earnestly using this new technology. Most Bitcoiners don’t have the conviction to actually spend BTC. The patron saints like Laszlo Hanyecz, who bought two papa john’s pizzas in 2010 for what would be worth today roughly $400,000,000, are the heroes (see the Footnotes at the end for more).

A crypto hero

A legend — but BTC laser eyes folks won’t ever see their currency adopted, because none of them want to spend it. That would defeat the point of buying it and HODLing.

For the actual tech, Bitcoin is actually quite old now and its shortcomings were improved by a fork of the codebase called Ethereum (ETH), which has around 2,300 active developers versus Bitcoin’s 400.

Bitcoiners believe the ETH community is the ‘woke’ alternative to their strange breed of grift and toxic masculinity. ETH does seem slightly less bonkers, under the direction of its demi-god Vitalik Buterin. One reason for the woke accusation is the ETH community’s switch to Proof of Stake over Proof of Work. Proof of Stake is an alternative to validating transactions that doesn’t involve setting fire to the earth slowly. Instead, Proof-of-Stake is yet another plutocratic scheme where you can lend your ETH to the network for interest, it is staked (or put up as collateral) by nodes so that they follow the rules, else they lose their borrowed stake.

Even with the so-called improvements of ETH over BTC, as Stephen Diehl points out we have taken a massive step backwards.

The Ethereum virtual machine has the equivalent computational power of an Atari 2600 from the 1970s except it runs on casino chips that cost $500 a pop and every few minutes we have to reload it like a slot machine to buy a few more cycles. That anyone could consider this to be the computational backbone to the new global internet is beyond laughable. We’ve gone from the world of abundance in cloud computing where the cost of compute time per person was nearly at post-scarcity levels, to the reverse of trying to enforce artificial scarcity on the most abundant resource humanity has ever created. This is regression, not progress. — Stephen Diehl (full post here)

Each different crypto coin functions as a pump-and-dump of some kind. But for the believers, it’s a religion. The most fanatical are called Bitcoin Maximalists, who believe BTC will become the single world currency at some point. They denigrate outsiders and other currencies. Part of the duty of the ‘community’ in BTC, like any religion, is to protect the community’s interests and to act as missionaries by selling the dream, hence the continual comparison of crypto to a pyramid scheme, which is unfair because there’s actually a diversity of shams in crypto.

What’s absurd is how quickly this new ‘alt finance’ world resembles the old one, with headlines like ‘Why Dogecoin Is Edging Higher Today’ and conferences like Bitcoin Miami that are even worse than normal trade shows.

Blockchain.com is a centralised VC-backed corporation with a very 2000s conference stand

Blockchains

Blockchains are the big promise of web3. A public writable but permanent record that can be used for everything from transactions to buying expensive JPEGs. Some people believe one day we’ll buy houses on the blockchain.

Blockchain tech today is held back by what is known as the trilemma. It is today impossible to maintain the three requirements of the technology — security, scalability and decentralization — which makes you question if it is fit for purpose

For example, whilst the main blockchain of BTC is very decentralised and safe, it doesn’t scale very well. So a blockchain on top of the ‘layer 1’ blockchain was created, called Bitcoin Lightening, which is very fast but runs on far fewer servers and is therefore much more vulnerable to attack (i.e. it’s fast at scale but not secure or decentralised).

Binance Smart Chain is another example of the same thing, a ‘layer 2’ protocol that runs on top of the main Ethereum blockchain because the main chain is too inefficient to use.

Alternatives like Algorand are interesting but I am continually searching for a reason this technology is better than what Visa, Mastercard, Paypal etc achieved, which is derided in the crypto community as the 1949 Boomer Network.

As with a lot of web3, the need to improve remittances (cheaper, faster, fairer) might be true, but web3 is not the solution.

DAOs

A DAO is a sort of flat organisation that no one controls and everyone member owns. I have to do some more digging but for now one main drawback is that today for any practical purpose legally DAOs need to be wrapped in a ‘real’ construct like a corporation, which has an owner and shareholders, I would be very dubious about joining one of these schemes other than for a laugh.

Some people are actually talking about using these for property. i.e. for significant assets, the idea is to allow fractional ownership to a group of people. Of course that can be achieved by mechanisms that exist today. Again — a bit of a hoot, I don’t mind so long as no one gets hurt.

NFTs

NFTs are a unique token that is a digital reference to an underlying asset that only exists once. Here is a legendary explanation of how they work.

imagine if you went up to the mona lisa and you were like “i’d like to own this” and someone nearby went “give me 65 million dollars and i’ll burn down an unspecified amount of the amazon rainforest in order to give you this receipt of purchase” so you paid them and they went “here’s your receipt, thank you for your purchase” and went to an unmarked supply closet in the back of the museum and posted a handmade label inside it behind the brooms that said “mona lisa currently owned by jacobgalapagos” so if anyone wants to know who owns it they’d have to find this specific closet in this specific hallway and look behind the correct brooms. and you went “can i take the mona lisa home now” and they went “oh god no are you stupid? you only bought the receipt that says you own it, you didn’t actually buy the mona lisa itself, you can’t take the real mona lisa you idiot. you CAN take this though.” and gave you the replica print in a cardboard tube that’s sold in the gift shop. also the person selling you the receipt of purchase has at no point in time ever owned the mona lisa. unfortunately, if this doesnt really make sense or seem like any logical person would be happy about this exchange, then you’ve understood it perfectly — user queersamus

Living in Miami, I have actually been to IRL web3 events and I have to say it’s an odd mix of attendees. Hot real estate moms who are ‘into NFTs’, psycho-crypto bros explaining that ‘USD is dead by NYE next year’ and web2 boomers like myself wondering wtf is going on. None of them can explain how an NFT works.

The ERC721 Metadata JSON Schema aka an NFT

NFTs are a JSON file that sits on the Ethereum blockchain and references an underlying digital asset. Because they sit on the blockchain they are there forever, in theory, and always link to an owner. The thing here is that NFTs reference an asset. They are not the asset. The expensive JPEGs you’ve seen in the news actually sit somewhere else in file storage on the http protocol i.e. on a normal web server. In theory, the underlying asset should stored on the Ethereum blockchain. But because that costs a lot, usually only the NFT pointer file above is stored on the blockchain… and the actual asset is stored elsewhere. That’s a problem because unless you’re using a decentralised filesystem, this tech is very flimsy. For the premise of ownership that NFTs provide to work, the asset needs to be stored somewhere decentralised i.e. you can’t just stick it on AWS or Dropbox. The main contender here for a decentralised filesystem is IPFS (The InterPlanetary File System) which shards the file across multiple users’ devices i.e. it is a distributed file system similar to a torrent from the web1 days. If that underlying network disappears — so does the asset, even if the NFT pointer survives. And if you’re not old enough to remember, most of the torrents from back in the day, which were supposedly indestructible like IPFS, are now dead and buried.

The main ‘use case’ for an NFT now is speculation — caveat emptor, the buyer of ‘new Mona Lisa’ wasn’t able to flip it for anything more than six grand after $2.9m spending on it.

Other organisations have issued NFTs to function as a sort of membership card, giving access to special events or some other future benefit, often very vaguely defined. It’s a sort of collecting game, which can be fun, just remember to do it responsibly.

I do think there are are legit uses for NFTs in luxury because they are a Veblen good. The rarity of the NFTs gives rich people something they crave: relevancy. The mechanisms and underlying benefits of the asset you own (the JPEG, the club membership etc) don’t matter so much as the fact that… you own it and very few do.

It’s unusable for most people (except when centralised)

People want a brand to trust (why do banks still exist) and someone to go to when it all goes wrong. They also need an interface with which to interact with the system. All of this technology lacks security and UX that make it dangerous. To actually use this stuff is quite difficult, even the most simple thing, like buying something.

It doesn’t scale (except when centralised)

When Yuga Labs, the creators behind Bored Ape Yacht Club created a new drop called Otherside, they clogged up the ETH network to such a degree that buyers were paying $3000 upwards in transaction fees (called ‘gas fees’ in crypto-land) to the network. Wasn’t this technology meant to eliminate the evil fees and middlemen of our current system?

In their response Yuga Labs suggested running their own dedicated blockchain, again, this problem of high-scale tech has been solved for at least 20 years.

As I mentioned above, Blockchains are only useful when the network is small or centrally owned and controlled, which defeats the whole point. At that point why not use databases capable of thousands of transactions a second like Oracle and MySQL that have existed for over 50 years?

The Oracle problem is unsolved

A smart contract is a a self-executing agreement written in code and stored on the Ethereum blockchain. The logic is purely code, within the contract i.e. if their is a bug… you end up with huge losses and remember we are talking about the ‘internet of money’… these bugs cost billions in lost funds.

The moment a smart contract interacts with the ‘real world’ they require something to tell them what’s going on i.e. inputs and outputs that can represent things like legal actions or changes in state on the Internet of Things (e.g. detecting a shipping container has moved, the temperature of a room, controlling a door lock, allowing a car to be started). The first problem is that those end points are prone to abuse, fraud and hacking e.g. hot-wiring a car. And because ‘code is law’, there’s no way to recover what you lost.

Imagine a DAO that provides credit for car purchases. How do you know the car has been delivered, and what do you do when the buyer stops paying off their loan, can you lock the car, take legal action? The network edges are a vulnerability because they aren’t bound by the same pure logic as the actual purely digital smart contracts themselves. This is called the Oracle problem and it still hasn’t been solved, in fact perhaps conceptually it can’t be. Eventually you need a lawyer to resolve disputes, better the devil you know.

It’s so easy to lose your money

Back in web1, when you had a bug your image wouldn’t load or you got a http 500 error.

In web3, if you have a bug in your smart contract you can lose half a billion dollars (technical breakdown here). Pretty much everyday there is a major hack costing millions of (real) dollars.

Sometimes you just wire half a million dollars worth of a currency to the wrong smart contract and lose it forever. Or maybe you fall prey to a phishing attack and lose your $500,000 NFT collection.

(What’s strange is for many when these things happen it seems to re-affirm belief. Many of the gaming companies that have lost 100m+ USD plus each have vowed to continue and presumably their communities too, a psychological phenomenon documented in 1956 in When Prophecy Fails)

Let’s think about this practically: how will ‘normal’ people access this tech? Who makes sure it’s conforming to our laws? What happens when there are bugs? What happens when you lose your wallet seed phrase? Or get phished?

If a sophisticated crypto-nerd like cockwaffles3000 can so easily lose access to their entire crypto net-worth… maybe this tech is not fit for purpose.

It’s speeding up climate change

Bitcoin alone uses as much electricity as Finland and perhaps Spain. To mine one coin today takes about 13 years of typical household energy use. All the emission benefits of moving toward electric vehicles has been outweighed by bitcoin mining.

Mining energy usage compared to several countries. And equivalent computing hardware to create one bitcoin.

Wikimedia Foundation has decided to stop accepting crypto donations for this reason. (Interestingly, Wikimedia is the best example I can think of a successful DAO-like construct… built entirely in pre-web3 tech)

You need to understand that the way Bitcoin is designed is to demand higher and higher energy

A key argument in the crypto community is that moving from Proof-of-Work (PoW) to Proof-of-Stake (PoS) will solve this issue. ETH will make this switch this year. PoS is definitely more energy efficient but introduces another problem: it is plutocratic. Already wealthy people can loan their crypto to miners/nodes, which offer it as collateral for being honest. Kind of like how the current economy works with stocks and bonds but even more unfair, and creating far less real value in the meantime.

Web3 has a dystopian dream

Crypto-nuts rightly point out that our capitalist society is deeply inequitable. The housing ladder, wealth-creation, true equality, social mobility and fair employee rights are a dream for most people. Rather than resolving to improve these issues, the crypto-bro has chosen to become the equivalent of a feudal baron in this new web3 utopia.

They have realised that the blockchain is an opportunity to permanently cement inequality by getting in early with the promise of being a powerful part of the capital class in the new web3 world.

It’s not virtuous, and in fact web3 is even more unequal than today’s society. As Scott points out in his web3 takedown,

Every member of Forbes’s 2021 crypto-billionaires list is a man. A third of them attended Stanford or Harvard. Out of the 12 listed, only one isn’t white.

Many of the steps forward that we have taken in tech with sexism and racism are steps backward in web3.

And the economic inequality is even worse in crypto than it is in the real world, and that’s saying something.

0.01% of bitcoin holders own 27% of the currency. Most new token offerings give around 40% or more of tokens to their creators (compare that with the $ a founder owns of a typical IPO stage company, usually around 15% and that’s for taking significant risk and making life-consuming effort for several years. Creating a coin offering can be done in about 2 hours.)

How this new world is meant to be better than the current one is a mystery.

It confuses web2.0 with #crapitalism

This decentralized and deterministic schema stands in contrast to the status quo ante (web 2.0), where much of our tech infrastructure and culture is trapped inside highly centralized corporate walled gardens that retain most of the monetary value produced by their network of users. — @networked

@networked is right that proponents of web3 will not just improve the web but change the very nature of our economy. This is the central category error of the web3 dream. It is capitalism that isolates value within walled gardens, not web2. Legal ownership, the power of capital and societal issues are not problems that can be solved with technology alone.

In fact — as a civilisation we have come a long way with centralised structures like companies, countries and universities.

And anyone can buy shares in Facebook or Google, in fact most people have an exposure to these companies via pensions and the public markets.

It is true that big companies hold too much power, often unfairly distribute profits and exploit workers. These are political and economic problems that need to be solved ‘offline’. Changing the tools and the tech isn’t going to change anything, in fact an amoral, anonymous and ‘decentralised’ world would probably make everything even worse.

web3.0 will end up like web2.0

What will happen in web3 is what has happened with each previous tech wave.

The early days of silicon valley (let’s call it web0) were in the sunny haze of post-60s San Francisco where counter-culture, American capitalism, Eastern thought and Stanford university melded in a vortex that created immense leaps forward in technology and its applications. But very quickly, a handful of companies became dominant: IBM, Sun, Hewlett Packard, Intel and so on.

Web 1 was the promise of a free internet, synonymous with the American West where everyone would have their own blog and website on their own servers in a peer to peer architecture that would be impossible to censor or exploit. Of course, that became AOL, CompuServe, e-bay, Amazon, webMD and so

With web 2, services were way more interactive and cheaper access made them more freely available. So this wave was premised on ‘user generated content’ and from that we got the social media of today, we got Google, Airbnb, Shopify.

With web3 you can already see this consolidation in companies like Coinbase and OpenSea. Coinbase does its own trades internally without using the main blockchains unless absolutely necessary — where did the decentralized dream go? This sounds much like dark pools, again not a web3 invention.

It’s the old saying “it’s easier to imagine the end of the world than the end of capitalism”.

Web3.0 will be no challenge for this old beast.

Crypto is a negative-sum game

Crypto bro is the new Avon lady

Crypto is at best an MLM and at worst a ‘ponzi scheme’ . That phrase gets thrown around a lot so let’s think about it. One of the best regarded MLMs in the history of business is the Avon Lady. Basically a sales exec (male obviously) realised that housewives would buy from each other. This was in the 1890s and the company still exists today.

Here is a report recently about Avon — sound familiar?

The problem with the MLM “income opportunity” model is that the product (the “unlimited” income opportunity) is bogus. It does not exist. And, “unlimited” expansion, the foundational principle of MLM, is impossible. The promise offered to consumers is illusory. The pyramid model in which each person recruits more “below” must always place the vast majority in the lower ranks where a recruitment-based income — by design — can’t be possible. For a very few to be profitable, nearly all others cannot be. As the limits of the falsely advertised “unlimited” expansion are reached, those in the bottom lose their investments. They quit the schemes in large numbers usually within a year and then are replaced with new hopefuls. The “business” continues as long as the schemes can find new recruits (investors). Bad economic times produce many new potential recruits. Bad times for products are good times for sellers of hopes and dreams and purveyors of “independence, be-your-own-boss, can’t-get-fired, 20-hours-a-week-for-financial-security, anyone-can-do-it” income schemes. [….] Without relentless recruitment of new salespeople, the MLM company would collapse quickly for lack of capital, the salespeople being the source of that capital. The “profit” of the company and of those recruiters at the top of the sales pyramid depends upon the lost investments of those below, hundreds of thousands of “failed” salespeople.

The dream of unlimited opportunity

In reality web3 is worse than the Avon style of MLM. At the end of a day , in Avon land, a real exchange of value happened where the customer would buy a good. The losers were the salespeople at the bottom of the pyramid. Value was created but it went to the top.

Crypto is worse — there isn’t any positive value or economic externality, only environmental damage.

web3 is just so ugly

The content is ugly. The assets are ugly. The idea, is ugly . This is not an ethical argument, but we must acknowledge that beyond being useless and expensive, web3’s ugly aesthetic appeals to a certain type of crypto-psycho.

…This person is extremely happy with the future as Elon Musk and Mark Zuckerberg and Bored Ape Yacht Club have imagined it, a future of personalized avatars and people all around the globe competing for status in a virtual world where we have finally solved the problem of how to create scarcity when nothing is real. This person cannot wait to fire up the old smartphone and check the price of Ethereum every morning. He knows the future is in good hands, and it will look exactly like the contents of his imagination, i.e. Travis Scott’s Instagram, pornography, and Assassin’s Creed. The future belongs to him, because he is willing to pay for it, and so are a million other bored apes in human clothes who are just like him. (read this article from Dan Brooks in full)

The Australian Open and a disco, in the ‘metaverse’

If you stare long enough at crypto-slang like WAGMI and HODL, you begin to believe that a certain portion of millennials and gen Z have damaged their brains through so much gaming, porn and social media that this is the result. I don’t want to live in this future. And we need to help those that co-opted it already.

Category leaders on OpenSea

If you’re with me so far, you’re probably wondering why anyone believes in this stuff.

I’ve just mentioned why I think people under 30 are susceptible but it’s important to talk about two other groups.

Why people over 30 believe

There are earnest believers like Alexis Ohanian, who came of age at the same time as me, who learned to code on web1 like me, whilst at high school in my early teens.

It’s not (just) for my ego that I compare myself to Alexis. I too remember that visceral excitement of building my first website, for my band (ska punk obviously), uploading our crappy digital camera photos (back then getting rich content on the web like photo and music was a pain, video was unthinkable) and making ‘our space’ on the web. Writing code… made something that could be seen anywhere by anyone.

That of course gave way to the ‘my space’ era which hailed the web2 era where companies figured out how to make websites dynamic with ‘user generated content’ and from that we got the social media age. It wasn’t just media though, Google took a god-like view of the internet to create their own view of the data that allowed anything to be findable immediately and advertised upon, creating the most lucrative ad network in history. The upload and download of information related to commerce laid the foundation for e-commerce, notably Amazon and Shopify. Finally the improvement in bandwidth and front-end technologies allowed for Netflix. FAANG was the result, an oligopoly of massively wealthy ‘big tech’ companies that control vast amounts of the web. The Silicon Valley of today has moved so far from the ‘counter culture’ infused Grateful Dead meets Stanford meets John Kabot Ziin school of boomers that created Apple, HP, Intel and Sun.

I think we want to believe that we may be at that moment again. But we’re not. I don’t want to demoralise those building this tech, it’s fun, and I love developing in new languages and so on. But let’s not get ahead of ourselves.

There are also particularly aggressive pushers like Michael Saylor who made millions in web0 and web1. He claims that BTC is ‘perfect for retirement’. I think it’s important to mention that he personally holds 17,732 BTC bitcoin, worth roughly a billion dollars, and his company owns 114,042 coins valued at billions.

Does BTC look like a stable retirement asset compared to gold or bonds? Even in a year like this.

It would be a nerve-wracking year for a retiree

Why Bitcoin Maximalists want to believe

Just like the Migos, a lot of these guys in crypto are ‘doing it for the culture’. For the Migos this meant driving fast cars, sleeping with lots of women and generally having a care-free goodtime that would net them a lot of the money — the bitcoin version is different (certainly less women) but the general philosophy is the same: a solipsism where your own goals are achieved by shilling the movement onto other people that buy in and further shore up your position.

The BTC advocates always claim that the moment is coming…. adoption by Venezuela, adoption by El Salvador, rising inflation, war in Ukraine… and yet we wait.

But why do they want this so badly? As I said — getting in now assures your position as a feudal landlord in the new economy. It’s the Gamestop strategy for getting out of your dead end job or inability to get on the housing ladder. And for those at the top, it’s an opportunity to be an aristocrat in the real world.

I believe there is a moral imperative to destroy web3 and to protect those that have been infected. Newer revisions of the tech, such as Algorand, may have promise and deal with some of the issues I mentioned. But until then…

All the useful stuff can be done on the current ‘boomer’ internet

Decentralised file systems and networks like IPFS are interesting but have been around since the birth of the internet e.g Tor (network). And Tor totally free.

Fractional ownership of assets (e.g. of property) can be achieved with legal constructs under a slick web2.0 UI.

Authentication e.g. of luxury goods, this can be done with a centralised database. e.g. if LVMH want to authenticate goods using ‘the blockchain’… they could do it much better using a conventional database, which is way safer and harder to authenticate. In fact savvy NFT collectors are duped all the time with scams like this from frauds.

World-wide payment rails today are superior to those touted by crypto-botherers in that they are more accessible, cheaper, more widely supported and safer than crypto.

If you want to create a meta-verse -such as of British memes- to wonder around in, that’s already possible too.

Centralisation is underrated

When you press a crypto-advocate on how bad this technology is — they will repeat this back to you: “but decentralisation”

Decentralisation is cool but has been around for decades and is by no means a panacea. Pushing a crypto-nut to explain what they want to do on web3 without mentioning “decentralisation” is a fun game because most of the time they end up describing: a credit card issuer (a bank), a payment network processor (Visa, paypal etc), a legal construct like an LLC, a database of some kind. Whatever it is, it was possible to do before web3 but better.

As a species, we achieved huge amounts by creating centralised entities like companies, charities, universities and countries. We thank hierarchies everyday for how they deliver value to our lives… through the companies we use and the countries we live in. Humans are a species that need hierarchies to organise and progress. Whether or not the right people are at the top of those hierarchies is a different question, a political one, and web3 is not a solution to this and is in fact often worse than the status quo.

The efficiency of this construct can be seen in the performance of the Visa network (~2000 transactions per second on average) vs Bitcoin (~4.6 transactions per second) vs ETH (transactions can cost $15k to process at peak times). Not only is it faster, it’s cheaper. And you have someone to go to when it goes wrong or your account gets drained.

Having someone to complain to when things go wrong, to look at the servers, ensure compliance with the law and have governance… is a crucial part of how the economy interacts with our society and we need to be very careful what we wish for.

If you want to make money in web3

If you read all this and still want to get in on the action, either as a founder or an investor, I do think there is money to be made:

  • Sell picks and shovels — OpenSea, Coinbase and Chainanalysis are all incredible startups that have only existed for 5 years or so.
  • NFTs have an application in luxury where their ‘dopeness’ fits perfectly with a luxury brand strategy
  • The gaming industry has already used a lot of these technologies
  • Some tech could break through, keep an eye on chains and coins that could have real world applications.
  • Day trading — crypto’s massive volatility creates interesting algorithmic trading opportunities
  • Not being the greater fool — get out before the end there’s money to be made.
  • As an employee, there are plenty of (web2 style) VC-backed punts in the space that are paying well for product, design and development folks.

The apotheosis of #crapitalism

I leave you with a thought inspired by a paragraph I wrote in honour of Joel Stein’s recent piece on How Miami became the most important city in America

Crypto didn’t become the most important tech trend right now because it’s an individualistic, libertarian pyramid scheme that combines spectacle hype with mass YOLO/FOMO…. it’s because the US economy became an individualistic, libertarian pyramid scheme that combines spectacle hype with mass YOLO/FOMO.

This poisonous winner-takes-all mentality is more poetically expressed by Stephen Diehl.

The shortcomings of the web3 narrative are easy to deconstruct from a technology perspective, but to play devil’s advocate — what does it succeed at? It’s very possible it truly is a paradigm shift in financial deregulation, and will usher in a new anarcho-casino-capitalism world where every fourteen year old kid can launch a fly-by-night Ponzi scheme and pump it on social media all from the comfort and anonymity of their parent’s basement. A hustlers’ paradise with a 24/7 non-stop casino built on a Cambrian explosion of slot machines, with each machine grown out of a different facet of human culture whose likeness has been co-opted to seduce you into gambling more. It’s the apotheosis of capitalism where the market now provides a financial token game for every meme, every celebrity, every political movement, and every bit of art and culture — with each tribe competing against each other in a war of all against all for the hyperfinancialization of all human existence. Is that the world we want to live in?

There is a moral imperative to stop web3, especially from those most vulnerable to it, the young.

We are putting the planet in peril already without the existence of this pointless technology, which represents the first net-negative invention of Computer Science. As a discipline we must apply an ethical lens to what we do, just as other sciences have had to do with time.

I am writing more on this topic so follow along to be freed from the poison.

Signing off — Namaste, web2 boomer

Lazlo went on to buy around 100,000 Bitcoin on pizza that summer — now worth about $4billion. The day of the first purchase was May 22 2010, today known as Bitcoin Pizza Day.

Lazlo didn’t purchase from Papa Join’s directly, he transferred the BTC to another community member Jeremy Sturdivant, who made the purchase in USD. He sold the BTC at around $400 per coin to fund a road trip, about 1% of its value today. Heroes.

Lazlo’s fave topping is Supreme, Jeremy’s is Hawaiian.