Whenever someone mentions the word Metamask, one image instantly comes to mind: the face of a friendly fox that has been my companion for the past few years. For those who might not be familiar with it, Metamask is a browser extension that acts as a cryptocurrency wallet, enabling users to interact with Ethereum-based decentralized applications (DAPPS) directly from their browser. In short, if you want to explore services in the Web 3.0 world, Metamask (or, to be more precise, the Metamask fox) is the ideal adventure companion.

And this is one cornerstone of Web 3.0. Unlike the fragmented login systems of today, Web 3.0 introduces a single, unified identity for users, likely linked to their cryptocurrency wallets, facilitating seamless integration of personal data across various platforms. This advancement not only streamlines access but also grants users increased influence on the platforms they engage with. By obtaining or earning tokens, people can take part in decision-making signaling a revolutionary shift towards decentralized and user-centric online experiences.

Web 3.0 is the third generation of the internet, and represents a significant evolution in how the web operates, underpinned by blockchain technology. Unlike its predecessors, Web 1.0, which was primarily about read-only content and Web 2.0, which introduced interactivity and social media, creating platforms dominated by centralized entities controlling data and user interaction, decentralization characterizes Web 3.0.

It leverages blockchain to create a permissionless, open web where users and builders have ownership and control over their data, assets, and interactions. This shift promises to democratize the web, making it more secure, transparent, and efficient by facilitating peer-to-peer transactions with no intermediaries, reducing the power of big tech monopolies. Web 3.0 is a radical reimagining of how the internet can function, emphasizing user sovereignty, data privacy, and financial inclusivity through technologies like cryptocurrencies, NFTs (Non-Fungible Tokens), DAOs (Decentralized Autonomous Organizations), and decentralized finance (DeFi), setting the stage for new economies, products, and services online.

The next era of the internet

This weekend I was reading the latest book from Chris Dixon - Read Write Own: Building the Next Era of the Internet, released on January 30. Chris Dixon is a well-known entrepreneur and venture capitalist. He is a general partner at Andreessen Horowitz (a16z), a private venture capital firm and, above all, one of Web3’s foremost advocates and investors.

Dixon explores the transformative power of blockchains beyond cryptocurrencies, leveraging his experience as entrepreneur and venture capitalist (he placed early bets on Kickstarter, Pinterest, Stack Overflow, and Stripe, products we all know and use). He shows blockchains are crucial for reviving the internet’s original ethos as an open platform that fosters creativity and entrepreneurship.

Throughout the book, Dixon not only shares frameworks for innovation applicable across software and internet technologies but also emphasizes the power of community-driven platforms. He suggests that when people have the agency to co-create, control, and own the digital platforms they use daily, it unleashes a wave of creativity and innovation. 

“Read Write Own” also traces the evolution of internet innovation, from the early days of open-source networks to the current landscape dominated by corporate-owned networks. Dixon inspects the long-term implications of early design decisions in software and network architecture, demonstrating how these choices can significantly affect the control and economics of digital services.

Dixon argues blockchains represent the most viable way to sustain the internet's original vision and envisions a future where social networks, marketplaces, and virtual worlds build on a foundation that ensures openness, creativity, and shared ownership. 

It's certainly not the first time I've reflected on Blockchain and Web 3.0, but I must admit that this reading has pushed me to reorganize a series of thoughts that I've had in mind for some time and that I can now write.

Models, Models, Models

At university, I studied economics and I can confidently say that economics is based on two fundamental concepts: it is a social science, naturally imprecise (unlike mathematics, physics, or chemistry, to clarify) and it is based on models. From a practical standpoint, the world is too complex to comprehensively explain because of the multitude of variables and their unpredictable interactions. Economists have mastered the art of constructing simplified models that capture the essential elements while ignoring the unnecessary details.

It is possible that because of this, I approached this book with the firm belief that it presents a paradigm, a comprehensive framework that enables us to articulate our understanding, while anticipating an uncertain future.

And it is precisely in this aspect of modeling the Web 3.0 that my reflections take root. As Chris Nixon states in an article on the Financial Times to present the book, a concept that is echoed throughout the entire volume:

According to Nixon, the creation of a new internet, based on blockchain, should follow a model based on these three pillars: openness, trust, and decentralised ownership. What I think is that outside of this model, there are considerations to be made that, while not undermining the foundational model, have a great potential to influence it. I have outlined these thoughts in two points:

• The incentives of a blockchain-based internet are significant, but I am convinced they differ from the capitalist ones on which our economy is based.

• Blockchain distances us from technological polarization, effectively creating a decentralized society. However, it is important to remember that blockchain is merely a technology, a means used by humans. And humans, by nature, are prone to polarization.

In the next two paragraphs, I will explain more clearly what I mean. With these reflections, I want to clarify that I do not intend to criticize the model itself. Instead, they are considerations I felt compelled to write about in relation to its development and applicability.

Network incentives and capitalist incentives

Blockchain technology, by design, encourages a model of openness, collaboration, and shared ownership. Its incentive structures, notably through tokenization, aim to distribute rewards and governance across a broad community of contributors, rather than concentrating power and profit within a single entity. This model has the potential to democratize access to technology, empower users, and spur innovation through collective effort.

However, the capitalist drive, the pursuit of profit and market dominance, remains a powerful force. Business owners and companies operating within a capitalist system are always looking for ways to gain a competitive edge. The pursuit of profit and market dominance drives entrepreneurs and businesses operating within a capitalist framework to innovate, not just for the collective good, but to capture value, differentiate their offerings, and secure a dominant market position (at the end to create value for the community of shareholders). In the blockchain context too, this drive can lead a single entity or a closed group to develop proprietary platforms that leverage the underlying technology of blockchain networks. 

These platforms may provide improved features, better user experiences, or more efficient services to attract users, essentially pulling them away from decentralized networks and towards centralized alternatives owned by corporations. These proprietary platforms might offer immediate utility or efficiency gains, appealing to users’ and developers’ needs, starting from the foundations of blockchain but also considering a centralized model.

An example that illustrates this concept is the use of newsletters. To send them, I rely on emails, and more specifically, on an underlying protocol. In theory, I could attempt to leverage this protocol directly, sidestepping any service associated with Web 2.0 logic, and it would still work. However, I choose not to go this route because leveraging this protocol directly would not be time-efficient. It would be extremely burdensome, and I would face many frictions and obstacles to ensure the successful delivery of my emails. Instead, I opt to use a service that, building on that protocol, simplifies the process. This allows me to focus solely on what truly matters for sending these newsletters, composing the text, without wasting time on technical details.

Thus, the challenge should lie in balancing the benefits of decentralized innovation with the realities of market competition and individual ambition, ensuring that blockchain networks can thrive without being overshadowed by proprietary counterparts but this would be only possible by forbidding capitalistic thinking, and this must not be the choice of a modern society.

Humans love polarization

Humans love polarization. It's true, in any argument or debate, there is always a scale of grays between black and white, but if you pay attention, most people will always choose either black or white. I'm not making this a matter of ideas or beliefs, but in business, it's mostly a matter of utility and convenience. We can't focus on everything, so if someone offers us a solution at a good price, we appreciate that solution and convince ourselves that it's the best for what we need to do.

This happens in the technological context as well. We tend to be where our peers are. At the beginning of the social networking era, people definitely gathered on the large squares of Facebook or Twitter, and now also on various smaller, more private, more niche areas of the web; on this topic I suggest reading this article from The Economist.

Blockchain offers a solution to counter centralization by promoting decentralization and, in theory, mitigating polarization. But blockchain is nothing more than a technology, a means humans could use to carry out activities on the internet. Even though technology encourages decentralization and minimizes polarization, individuals will still seek communities and, in that means, look for polarization. As humans, we love polarization.

These communities can indeed be managed in a decentralized way, giving every user a voice in both the topics and the network's development and rewards. Nonetheless, the establishment of spheres of influence will persist, as they strive to organize themselves for governance, just like political parties. A group of people could, for example, create a sphere of influence in order to leverage the votes of the network participants. It’s true, one vote is always one vote, but how it happens in modern democracies, it is one main sphere of influence that governs the country. Technically, you can’t have all this centralization, but practically yes.

Making a simple decision about a product's future is another situation that doesn't benefit from this aspect. A single entity can make strategic decisions, whether right or wrong, and investing resources to ensure that strategic vision comes to fruition efficiently. The emphasis on objectives becomes diluted in a decentralized setting, where strategic decisions may lack clarity or definition. Transitioning to a decentralized model, therefore, raises significant questions about the ability to make quick and effective decisions, which in a centralized structure might be simpler to manage. Yes, you would have spheres of influence, but it’s not the same thing, and it’s not the same commitment a central guidance could give.

Yep, the future

I want to stress that my observations do not intend to criticize either the blockchain model or the Nixon framework. Blockchain has the potential to contribute to the advancement of the internet. I am convinced, it's progress, it's really interesting.

I agree with the thoughts of Sam Altman, founder of OpenAI, after he read this book.

The Web 3.0 undoubtedly holds great potential and can indeed help promote decentralization. However, as I mentioned earlier, there is always that famous scale of grays. The model can work, but it shall consider multiple external variables that can alter its functioning. Among these, the most important is undoubtedly the human being. Human nature, with its fears, desires, complexities and inclinations, plays a crucial role in the adoption and effectiveness of any technology, Web 3.0 included. The tendency to aggregate into communities, the pursuit of power and control, as well as the capacity to innovate and adapt are all variables.

We are humans, after all.

📚My Readings

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