The fever dream that was the bull run of 2021 clearly led to 2022. As we are actually again within the depths of a bear, it’s price revisiting a number of the narratives we accepted as reality and questioning if these are actually the phrases we need to carry ahead into the following cycle.
Certainly one of these mantras that has frequently been a degree of discomfort for me was the framing of Web3 put ahead by buyers Packy McCormick and Chris Dixon:
Web1: learn
Web2: learn/write
Web3: learn/write/personal
Possession is unquestionably part of Web3 — however is it actually its defining high quality? If the first worth proposition of Web3 was possession, absolutely we might all simply go purchase shares of Amazon, Google or JPMorgan? We will simply personal items of the Web2 web or monetary infrastructure immediately, so this can’t be the defining high quality that makes this house distinctive.
Possession is the unsuitable body for Web3 and incorrectly facilities the dialogue. By specializing in possession, it implicitly introduces a notion of worth or monetization, relatively than a extra nuanced deal with management and a consumer’s rights inside a system. The 2 are solely not directly associated. You possibly can have one thing invaluable over which you haven’t any management (corresponding to proudly owning a share of a megacorp). You too can have management over one thing that has no worth (for instance, POAPs — that are digital badges commemorating your attendance at an occasion). Implicitly, the argument Web3 makes is that by higher enshrining consumer rights at a technical stage, we create the substrate for higher-order worth creation that’s returned extra equitably to the contributors of the system.
By beginning the dialogue round possession, the form of exterior discourse has develop into misaligned (see: information retailers conflating the failures of centralized establishments with blockchains), limiting the body of what falls underneath the Web3 dialogue and what these applied sciences can doubtlessly allow.
The previous 12 months has been a painful reset in some ways, however hopefully the 12 months forward shall be a possibility to recenter the dialogue about what we’re doing and why.
What does possession miss?
First, “possession” has a distinct that means on this house. If we’re speaking about an L1, certain, there may be possession of a token, however what that token represents is essentially tied to those that take part in governance (e.g., EIP processes), those that implement, and people who finally run the code on their nodes. The distinctive side of Web3 is the flexibility to know that your rights — as enshrined by the system itself — can’t be simply infringed upon, participation in these programs is open, and you keep the flexibility to vote together with your toes in case your values diverge.
Second, possession is a limiting body for blockchains and the worth they carry. Balaji’s ledger of record doesn’t hinge on any particular person’s capacity to personal a supply of reality, however that this ledger will be transparently inspected and verified. It’s the transparency of those programs that permit on-chain sleuths like ZachXBT to hint hacks and frauds, and the crowdsourced risk-modeling in instances of systemic stress.
Third, the deal with possession limits the scope of what falls underneath Web3. There are many instruments which are or are more and more turning into crucial elements of Web3, corresponding to zero-knowledge proofs and InterPlanetary File System (IPFS) that indicate nothing about possession. Each, nevertheless, enshrine additional rights at a technical layer — such with no consideration to privateness and the flexibility to exit — for broader swaths of the interactions we’d have on the internet.
If not possession, then what?
Verifiability is the clear throughline in all of those contexts. With out the flexibility to confirm, you as a consumer are unable to voice your opinion.
With blockchains, we’ve verifiability of state by way of consensus and the flexibility to run our personal nodes. It’s this verifiability of state that enables anybody to examine the identical shared ledger, and arrive at a shared settlement about what the present model of the world is. Once we add in cryptography with user-owned keys, we implicitly get possession, as we will confirm on our shared ledger who controls which property.
This implied model of possession is way more restricted — the ledger may very well be forked, and another person could mint a non-fungible token with similar metadata — however highly effective. The substrate of possession sits upon a basis that’s considerably extra resilient. This resilience comes from the checks and balances inherent to the operation of those public ledgers and finally from the truth that customers can all the time fork. (Notice: This doesn’t imply voting together with your toes will all the time be acknowledged by others, however your proper to take action is retained — see: Ethereum proof of labor).
This theme of verifiability extends to a broader set of non-blockchain applied sciences as effectively. With IPFS, you may confirm (by way of CAR recordsdata) that the info we request is verifiably the identical as the info we obtain — that means, we don’t should depend on a trusted server to make sure the fitting bytes are being handed round. This uncouples knowledge from particular servers, permitting customers to port storing knowledge between particular person service suppliers, their very own computer systems, and even throughout incentivized storage networks. This provides resilience from the union of those applied sciences relatively than any particular person stack. With zero-knowledge proofs, we will confirm that the output of some non-public computation was certainly accurately carried out — the idea for enabling privateness (e.g. ZCash) in addition to for enabling off-chain scaling (e.g., ZK rollups).
With the entire above, none of them require a notion of possession. All of them depend on verifiability.
Why verifiability shall be crucial for the long run
For these of us who imagine deeply on this house, it might really feel extra apparent why verifiability issues.
When you’ve got this permissionless, open, substrate for constructing, it might result in better composability, which may snowball right into a system better than the sum of its elements. Take decentralized finance (DeFi) sharing interoperable protocols that permit for extra highly effective interactions. The transparency of those programs may end up in higher threat administration, as we’ve seen throughout each unstable interval over the previous few years, the on-chain solvency of positions and liquidations will be each noticed and acted in opposition to. Distinction this with FTX, the place consumer property weren’t held 1:1 and customers solely found the hurt after it was too late.
However more and more it turns into apparent that these worth propositions aren’t going to be important only for the programs we construct for ourselves however for the web at giant.
With Dall-E and ChatGPT, we see that high-quality and convincing synthetic intelligence shall be right here inside our lifetimes. With the act of creation turning into commoditized, verifiability will develop into a crucial software for enabling authenticity. With Dall-E, anybody can create a likeness of a creator’s work with just a few phrases, however with an NFT, we will a minimum of confirm if it was generated by the unique artist. With ChatGPT, anybody can create a believable rip-off to persuade a consumer to provide away cash, however with cryptographic instruments, we will a minimum of depend on a supply of reality to find out whether or not a counterparty on the internet is actually a member of the group that they declare to be.
Lastly, as religion in establishments continues to degrade, verifiability will develop into a vital think about rebuilding belief in our programs. For example, the current change in management at Twitter has highlighted a undeniable fact that has been true since its inception: Having a central actor with the ability to spice up, deboost, platform or deplatform content material provides that actor important management over public discourse.
Whereas one can hope that the central actor in cost is benevolent, there isn’t any assure, and customers haven’t any express technique to categorical their disagreement. In distinction, having a technical basis that enshrines primary rights (regardless of the central actor in cost) in a verifiable manner, and constructing layers of subjective decision-making on prime of that basis, feels extra aligned with a social contract based mostly on consumer consent. Web3 natively has these properties constructed into it. Methods like Bluesky, Farcaster and Lens permit for credible alternate options to present centralized variations, and so they embody consumer rights as a default and permit for a market of subjective values to be opted into on prime.
Conclusion
Possession is only one property of Web3, and whereas attention-grabbing, it isn’t the most attention-grabbing nor essentially the most invaluable side of those applied sciences. Web3 allows a technical enforcement of a social contract, and that’s solely doable due to verifiability. Whereas we’re nonetheless within the depths of a bear market, we’ve the house to reassess our values. Personally, I’d wish to see a imaginative and prescient of Web3 that’s much less about fiefdoms and extra about freedom.
