Hi all — I wrote these notes with my colleagues at PSL while trying to wrap our heads around the madness that is Web3/Crypto. I’m an engineer by background and sort of a skeptic by nature; I think of this piece as a collection of loosely connected, hopefully pragmatic opinions from a builder’s perspective.
Thanks to you and your colleagues for writing this - the best writeup I've come across so far. This puts all of a16z's crypto marketing babble to shame.
This is truly fantastic work. This is going to be my new recommendation for anyone who wants to seriously grapple with the space. I'm a crypto skeptic, but I think you make a strong point that crypto doesn't have to win the future on technical terms, it may be the place where new products emerge simply because it inspires people.
thanks for the well-written primer. Just one observation. You write:
>Over time, Ethereum has proven to be sub-optimal for the incredible demand DeFi services have seen. The network has diseconomies of scale and, given its low throughput capability, gas fees (the cost of executing a transaction on the Ethereum network) have recently been over $150. This makes executing simple low-value transactions, such as swaps on Uniswap, prohibitively expensive! Since the emergence of DeFi, there are several other L1 chains (like Solana and Avalanche) that have become a popular place for DeFi developers to build with transaction fees. Ethereum itself is also in the midst of the infamous “ETH2” transition, which aims to solve this problem on the Ethereum network itself.
This is not correct in the sense that a) 'ETH2.0' is now deprecated term, and b) does not solve the gas fee issue by itself. Ethereum has pivoted to a modular rollup centric roadmap that solves the high costs of transactions already now (cf StarkWare and MatterLabs zkSync) while still keeping the secuirty and decentralisation of the main Ethereum settlement layer. This is in contrast to other L1s such as Solana which have sacrificed decentralisation for higher speed and throughput.
Check out this wonderful resource by @epolynya for the most comprehensive summary of this new roadmap
It's a good question. I don't know if this is helpful, but: I dipped my toes in with Solidity and Ethereum on day one, and used Hardhat to help set up a local blockchain, dev environment, and test suite. I quickly found myself scratching my head about many of Solidity's language features (particularly some of its modifier keywords) and spent a bunch of time looking at opcodes at https://www.ethervm.io/ and the really solid technical documentation on https://ethereum.org/en/developers/docs/. Solana was next; it's a whole different ballgame. Luckily, I have some Rust under my belt, so my focus was primarily on writing programs and deploying them.
AFAIK only EVM(Ethereum VM) is popular and others are emulating it. You have Soldity there which is meh from my CS view. On frontend you use whatever you like and just bind via library to wallets.
EVM seems to be the hottest, because of early entrance with its own langauges. But WebAssembly in Cosmos, and Solana favors Rust as a programming language but afaik you can use any LLVM compatible. After that it is just a matter of connecting a client to a node, usually done in the browser.
I started a subreddit a few days ago to try to channel some of the web3 criticism/skepticism and to take the hype down a peg or two. If you're so inclined this is exactly the kind of content that would be worthwhile there.
Thanks for the great article! I wished the section on DeFi addressed the biggest elephant in the room, overcollateralization. A DeFi borrower always needs to lock in more assets as collateral than what they are borrowing, thus defeating the whole purpose for taking a loan aside from financial speculation. And there's no real way to solve it: all mechanisms I've heard of either try to replicate some form of background checks on borrowers (not decentralised, and uses the real world), or claim to use real-world assets as NFT collateral (once again, uses the real world). Thus I can't see a way for DeFi loans to ever be used for mortgages and other loans regular people actually need.
Of course DeFi is more than just loans and borrowing, but that's an aspect that's constantly promoted by evangelists so I think it's an important point to mention.
This is a great point. Some ways I'm seeing this addressed are in the form of,
- Credit ratings from the real world being moved on chain, both by startups and by established companies (see Fitch report from Oct 21, pay-to-access only).
- Credit ratings across and on chains (https://www.credprotocol.com/) to make sure that a defi OG on eth can have access to collateral on other chains.
- Chainlink and others are working on products like CCIP (https://chain.link/cross-chain) to facilitate creating more systems like this through Oracles vs having to be reinvented.
I would imagine this state of affairs gets better over time.
Why would anyone want their credit history on a public blockchain?
Besides, credit histories often have incorrect information that needs to be corrected, and often creditors will cut you a deal or just be nice ("goodwill adjustments"). Blockchain history is immutable, so how do you handle this? Sure, you can write something to the blockchain that amends an existing entry, but the existing entry is still there to see, even if it was erroneous. I would bet that some lenders would use "has more than $SOME_NUMBER amended entries in history" as a negative signal, even though it's not necessarily fair to characterize them that way.
Hell, negative things on credit reports (in the US) disappear after 7 years. Sure, you can tell lenders to disregard negative things older than 7 years, but do you really expect them to do that?
Great point. I think having this data encrypted on a public system for anyone to verify will lead to much more openness in the ratings system. It has the potential to be a far cry than the black hole the US system is today. I don’t pretend to predict the future, but if you look at the past, any time “open standards” have replaced closed black box systems - it has generally benefitted the end consumer.
With zero knowledge proofs you can prove that you have a specific credit rating or above to anyone who needs to know, without having to reveal what your credit rating is.
Bad marks on credit reports fall off after certain amount of time. you can also dispute it in court or settle it for less than owed. None of which translate to a blockchain and which beg the question of privacy when it comes to collections outside of generic consumer transactions.
I think DeFi basically justifies the high market cap of ethereum. You have a decentralized exchange working 24h, with basically no downtime.
Compare it to normal exchanges:
- need to register
- need kyc
- hard to tranfer LARGE sums cheaply
- your bank can block your assets as well as your gouverment
- fees are sometimes very high as well. Example tried to convert one currency to an other 1% fees in europe. I think you would pay less in a DeFi setup.
- Now imagine you could buy stocks and so on on defi. That would be a killer application.
I could go on but the point is. DeFi solves a problem.
I have trouble imagining who might want to do this. It seems like a really small niche? Normal people don't need to trade or move large sums of money 24-7. An ATM and/or credit card is good enough.
I mean 24-7 comes for free. Security comes in some way for free as well.
Large amount: its relative, so even for 10k USD you would pay 100 USD as fee. You get similar fees for purchasing stocks and many have more then 100k in equity. So it isn't really a small niche. Rather a huge market that may get more simple and cheap through DeFi.
Ok maybe in the us. Anyway are you sure it is really free in regards that they don't give you a worse price or won't execute if things move in the wrong direction like Robinhood did...? My point is, its just inconvenient for me to rely on a third party without able to enter the "true" market on myself.
The question is, worse price than what? In the US you’re supposed to get at least the best price quoted at any stock exchange, the “nationally best bid and offer” (NBBO). Surprisingly, you can often do better, but this is still a good price. I don’t think you can easily do that with cryptocurrency where you normally only trade at one exchange?
Maybe relying on a third party is useful if they can get you better prices without needing accounts with all the exchanges? And brokerages normally give you a better price than any exchange. This is called price improvement. [1]
Robinhood got in trouble for falsely claiming that they get better prices than their competitors and not disclosing that they get payment for order flow, but their customers still got the NBBO I think? Although see [2].
People make a big deal about payment for order flow because they don’t like the idea of someone else making money off them, but that doesn’t mean you got a bad price.
Actually you can do it for cryptocurrencies as well. There are a lot of aggregators that execute or split your order across different exchanges.
As you said yourself, brokers may offer somehow better prices. My point is just, it is not possible to interact directly with the exchange, even if it maybe for some people more convenient to use a broker. There is no free lunch, more third parties means in my opinion worse price or higher fees.
You'd think that, but apparently retail customers get better prices because market makers are more likely to lose money trading against a professional who knows something is coming, and the smaller spread from lower risk for them is enough to pay for the business model. They still make money on the spread but it's lower.
It's a bit weird that it works that way, but there is a logic to it. Price discrimination can work in your favor.
(And having gotten many literally free lunches from an employer, there is no harm to it if you know why they do it.)
Got it. Sounds interesting.
Just one remark about it, europe seems to be banning practices related selling the order flow. As you said it sounds a bit weird. Lets say non transparent.
So maybe you don't always get a good deal.
PS:
Crypto isn't always better in this regard since, there are some frontrunners and so on. The difference is that it is completely transparent.
This is still mostly restricted to those living in the USA. It's also only a fraction of the investment market too, to invest in higher risk things such as startups you need to already have a net worth of $2M or make $250k/year+ which is only the top 1% of people. I'd like to see a lot more democratization of finance than that.
> your bank can block your assets as well as your government
It wasn't until recently that governments (arguably) became good at using technology to physically regulate banking activity, and it's only because the financial system became centralized enough for them to gain visibility into what was going on. Before then, and - to be honest, even now - government regulation was operationalized through the threat of repercussions and consequences for non-compliance.
Aside from reducing visibility into the transactions themselves, I don't understand what, exactly, DeFi or any of the other acronyms for ledger based systems do to stop this. Does DeFi, crypto, or whatever it's being called at the moment make it easier to avoid government oversight? Sure, but if you are doing something illegal in the process and get caught, there will still be legal repercussions.
> hard to transfer LARGE sums cheaply... fees are sometimes very high as well. Example tried to convert one currency to an other 1% fees in europe. I think you would pay less in a DeFi setup.
Is this still true? I'm pretty (very) sure that Interactive Brokers and other platforms allow for extremely cost effective currency transfers.
1% is true, for a lot of banks in my country. IB may be an exception, without going into details I had trouble with their kyc.
DeFi is a buzz word. Lets take Uniswap. You get direct access to an exchange. It works 100% of the time. You pay the same fees as everybody else.
Traditional exchanges: try to get the same fees as a HFT shops. Yeah forget it. Even through IB you don't get direct participation on the exchange. So in my perspective the traditional system is kind of rigged in the way how different actors are able to participate. At least at the moment DeFi is fair in this regard. Also you get full access to the assets you are holding without any third party..
A more important limitation for defi loans is that nothing other than blockchain assets can be used as collateral. You can't use the loan to buy anything real without having enough money to buy it already.
A mortgage lets you buy and live in a house even if you don't have enough money to buy the house.
That is a bit too simplified. You can add yield bearing tokens as collateral. That basically means that as long as the yeild is more than the cost of the loan the loan wil pay back it self.
Hmm, that's sort of interesting but it seems like it presumes you own the income stream to begin with, and that it's already been turned into a cryptocurrency token. What are some examples?
Not totally true. You could, for example, use as collateral tokens that represent staked Ethereum (rocket pool ETH for example) so you are effectively using the ETH to generate staking yield, and also using it as collateral simultaneously.
The ability to wrap ownership in a smart contract can extend to pretty much any use case, as long as the lending protocol supports using the wrapped token as collateral.
CREAM's Ironbank does undercollateralied/uncollateralized loans. They approve lending to protocols but they can easily decide to take risk on individuals if they want.
Likely there will be competition, and bad actors causing no recourse. But non-performing loans are easy to see so much faster than the traditional system, could easily limit losses with lending caps.
I didnt really understand the part about loans only usuable for financial speculation, you can cash those loan proceeds out for USD to do whatever you want. But even if you couldnt, financial speculation is called “good debt” anyway, compared to consumptive spending, so I dint understand the criticism standard here.
Can you provide an example of someone claiming defi can provide solutions for loans?
The best I can come up with logically is something like cardano's prism that effectively puts a persons encrypted identity on the blockchain which allows that person to reveal things like their grades etc. to future partners as a means of quickly establishing trust. Maybe something like that could enable defi loans? Even that is a stretch.
Searching for "DeFi loan" returns a deluge of results with https://defirate.com/loan/ at the top for me. They seem content claiming that secured loans are useful loans.
1. People have out-of-band trust relationships in real life which reduce the likelihood of malice. Bitcoin-style anonymous identities undermine trust relationships and are not needed for legitimate (not illegal) transactions.
2. Real life legal systems encourage good behaviors. If you have a dispute with someone, you can sue them. Bitcoin and related systems lack these protections.
3. Existing tools such as public-key cryptography and digital signatures can provide most of the functionality that applications need without the problems that blockchain-based systems have.
1. Existing payment systems expose your entire financial history to the service provider (e.g.: your bank, your credit card company etc.). I don't understand how people can complain about surveillance and data collection by tech companies, and then be perfectly fine with consumer finance companies doing the same thing.
2. What is legal is not what is moral. E.g., outlawing sex work, which results in SWers in even Western countries getting kicked off traditional payment systems, or having SW forums taken down (e.g. backpage). Having a decentralized and censorship-resistant infrastructure for these essential utilities is vital, and blockchains can be a key component of that infrastructure.
3. As a cryptographer, PKC and digital signatures have thoroughly failed to provide a decentralized and secure P2P communications infrastructure. (And no, Signal doesn't count: it's fantastic, but it's run by a benevolent operator.)
Honest question: What if coinbase is hacked, and the info connecting people's verified real-world identities to their wallet is revealed? Now everything is public - isn't that worse?
>> 1. Existing payment systems expose your entire financial history to the service provider (e.g.: your bank, your credit card company etc.). I don't understand how people can complain about surveillance and data collection by tech companies, and then be perfectly fine with consumer finance companies doing the same thing.
Generally people have choices in how they handle their finances: you can choose which financial institutions you use and how you want to pay most of the time. If you don't want to be tracked, you can get cash and pay with cash.
However, some of the tracking can be to your benefit. Most banks and credit card companies offer some degree of fraud protection / prevention and if you have a good credit history and want to take out a loan, they will happily give you the money. It requires a real-life trust relationship where the bank / finance company is a trusted business partner and not an untrustworthy predator.
If you find the relationship with your bank or credit card provider it not to your liking, you can choose a different bank or credit card provider that offers more favorable terms.
>> 2. What is legal is not what is moral. E.g., outlawing sex work, which results in SWers in even Western countries getting kicked off traditional payment systems, or having SW forums taken down (e.g. backpage). Having a decentralized and censorship-resistant infrastructure for these essential utilities is vital, and blockchains can be a key component of that infrastructure.
I disagree here. I personally do not think that sex work is moral or 'an essential utility'. If a payment provider does not want to offer payments for illegal or immoral products or services that is their choice. Some payment providers might still be willing to, but no one can really stop cash payments.
You do have a point here though, no one can stop blockchain-based payment systems and they have been instrumental in the recent increases in malware and ransomware.
>> 3. As a cryptographer, PKC and digital signatures have thoroughly failed to provide a decentralized and secure P2P communications infrastructure. (And no, Signal doesn't count: it's fantastic, but it's run by a benevolent operator.)
PKC and digital signatures don't provide infrastructure. They provide tools to be used at endpoints. You can use freely available cryptography tools such as OpenPGP (https://www.openpgp.org/software/) to generate your own keys and securely communicate with someone else over existing communication infrastructure.
> 1. People have out-of-band trust relationships in real life which reduce the likelihood of malice. Bitcoin-style anonymous identities undermine trust relationships and are not needed for legitimate (not illegal) transactions.
Bitcoin provides pseudononymous identities. Just like how someone can move to a new domain or amazon account after word gets out that they are selling deffective goods.
Trust only goes so far, even when dealing with people you should be able to trust. If this were not the case, then close-to-home scams would not exist. E.g. embezellment and other forms of stealing from people you work with face-to-face.
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>2. Real life legal systems encourage good behaviors. If you have a dispute with someone, you can sue them. Bitcoin and related systems lack these protections.
The legal system is complex, slow, and _EXPENSIVE_. A lot of bad behaviour also goes unpunished when the cost to rectify is greater than the amount stolen. Offering an alternative, low-cost and quick system, and accepting the downside of there being no "takebacks", who is to say this is a strictly negative thing?
There is also nothing stopping a service provider from stepping in and providing dispute resolution by way of mostly automated eskrow. If the transaction of goods for money happens without flaw, then the money is released automatically. If an issue occurs but the buyer and seller can resolve it amicably, that two is automated. In the unlikely case that one or both parties are malicious, the service provider reviews the case and releases funds as appropriate (e.g. checking that the parcel was actually posted, reviewing images of the good if it was damaged in transit, resolving as best able in case of scams).
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>3. Existing tools such as public-key cryptography and digital signatures can provide most of the functionality that applications need without the problems that blockchain-based systems have.
They can, but there are very few examples of such tools. This is hackernews, and this opinion is repeated ad nauseum, yet I don't see anyone actually going out and hacking something together.
Just like how it has been possible for financial houses to open up APIs to allow people to better manage, automate or make their money work exactly they want; it should come at no surprise when something comes along that actually allows this, no matter how much people cry that this was all possible and much more efficient without $NewTech, the people that have adopted said $NewTech aren't going to care too much.
One interesting misrepresentation is this: “ Several innovations in distributed consensus design make Solana’s performance possible.”
Solana’s consensus protocol isn’t responsible for its performance, it’s the fact that they mandate higher performing machine SKUs and at least 500Mbs (recommending 1Gbs) internet speeds. They also had to largely centralizing and have around 1000 validators. Ethereum’s fees and performance are due to a push for decentralization instead of cranking up the max gas per block to a level that wouldn’t be feasible for someone at home to run a node.
I’m not sure why I’d use a blockchain that’s very close to being a centralized service. That’s the worst of both worlds, you don’t have censorship resistance you get with Ethereum and you don’t get the consumer protections you get with fully centralized services.
1000 validators is very centralized. All you have to do is bribe 2/3rds of them control the chain. This is on top of Solana not having slashing in place to punish bad behavior, and the Solana Foundation hosting validators for people who want to delegate.
Solana’s 1000 validators may not even be owned by 1000 different entities, which reduces the attack difficulty.
Solana scales through centralization, not new ideas in blockchain scalability.
I don’t care how many Bitcoin mining pools there are. Mining pools are different than validators since they are made up of different individuals and not a single controlling entity. I also think PoW should die, and that’s all Bitcoin will ever support.
Edit: if all we want is 1000 entities controlling our chain, we can choose 1000 well-known institutions (banks, libraries, etc…). That would be less vulnerable to bribes and random censoring (perhaps I censor txt if a Dapp that’s competing with my investments) than 1000-ish unknown entities running the chain without any slashing.
Usually this spectrum of decentralization is downplayed by all blockchains. When you look at their frontpage it's either not mentioned or hidden how it works, or how many nodes there are, how to become a node etc. Very dishonest and annoying. But the marketing and hype around the L1s overwhelms facts.
> Solana’s consensus protocol isn’t responsible for its performance, it’s the fact that they mandate higher performing machine SKUs and at least 500Mbs (recommending 1Gbs) internet speeds.
While it's true that Solana nodes have higher requirements than Ethereum full nodes (though not sure about validators?) I think it's incorrect to say that Solana's consensus protocol is not responsible for the high performance performance. Solana's consensus protocol (Tower BFT) works tightly with Proof of History. These two elements coupled together allow that the validator leader can be rotated asynchronously allowing performance increases in block propagation, throughput and ledger storage. Have you really had a good read of how Solana works? For eg. Sealevel allows for parallel contract execution, something which to my knowledge no other chain is capable of. All these innovations combined with the higher node requirements allow for TPS that no other chain is even close to and the Ethereum Modular vision will not achieve for quite some time (assuming it works).
> They also had to largely centralizing and have around 1000 validators.
Not sure what you're pointing to here. There was 600 validators a few months ago. Now there is 1000. 2000 additional validators are on devnet and would likely go onto mainnet in the coming months. How else should a blockchain decentralize then to add additional validators and try and spread the delegated stake around to reduce the number of nodes required to halt the network?
The fact that Solana went down for 17 hours not too long ago and there was nothing Solana labs could do to bring it back shows the validators are not run by themselves.
> Ethereum’s fees and performance are due to a push for decentralization instead of cranking up the max gas per block to a level that wouldn’t be feasible for someone at home to run a node.
Ethereum's fees are due to its wild success + it's very low TPS on the L1 because it was more or less the first of its kind. Subsequent chains like Solana have made thousands of small or large alternative engineering decisions that in sum allow for much higher throughput and lower fees. Solana doesn't use gas, perhaps you're thinking of BSC or AVAX?
Could you provide some pointers to resources that explain clearly how Solana's consensus protocol and its Proof of History work? I read the whitepaper, watched a couple of videos but still find it unclear. As some other people said, it is not different from Bitcoin's mechanism with difficulty of zero.
Personally as a user of both ecosystems I strongly prefer the speed of transactions and minimal fees on Solana, despite it being more centralized. I like EVM from a dev standpoint, but for most applications I want to use a financially practical and scalable L1 personally. There are some very solid products on Solana as well. I think that both are gonna be around for a long time regardless.
The problem is that Solana is much easier to attack. Imagine running a business on Solana and all an attacker has to do is bribe 700 (or fewer) operators to give your competitors a advantage. Those attackers can’t even be punished by slashing their stake.
Solana is attractive to everyday users because it’s cheap to use, but it’s security isn’t suitable for high-valued assets (even self-verifying the chain is expensive). They sacrificed security and censorship resistance for short-term low fees, but will suffer from the same scalability issues every other L1 will/has hit and will rely on rollups. Rollups with a highly-centralized base layer aren’t suitable. Even the ZKSync team has tweeted that using ZKSync on top of Solana is more secure than using Solana itself because the zero-knowledge proof will be validated by Ethereum.
If you don't mind me asking, do you know of any good resources for learning more about the scalability solutions of Solana vs Ethereum? I've only been in the space for about 6 months as an engineer and almost every document I've read in regards to Solana scaling are sure that they will not encounter the same scalability issues that ETH has had. However, they are direct competitors so I wonder how biased these claims are sometimes, from both perspectives.
When reading about competing blockchains, it’s important to figure out if someone you’re reading values money or decentralization (and therefore individual’s digital autonomy once we enter the Metaverse). Polynya (Liberosist on Reddit) is in the same camp as me - we want the most permissionless, secure, and censorship resistant solution. As an Ethereum Dev recently put it they want to build in the MSIT secure, decentralized blockchain and as long as Ethereum is the only one providing that, they’ll keep building on Ethereum.
It’s hard to understand which protocols are the most decentralized and secure because blockchains have gone from being built for decentralization, to being marketing machines. No one really writes about things like the importance of state receipts for blockchain validation, how many chains remove those due to the storage overhead, and how users lose a lot of self-reliance when that happens. I think they largely don’t write about it because most users nowadays just want to get rich and don’t care about decentralization, but I hope that changes and people realize that we need a neutral layer to store digital assets that we actually own as the Metaverse becomes a real part of our lives over the next 10-20 years.
Thanks for sharing that article and for the insight, I appreciate it! I'm trying to learn the pros and cons of a lot of chains and agree that a lot of articles come across as marketing focused, so it's been hard for me to learn about each chain other than being a user and working with each chain creating simple dapps or other projects.
I’d suggest looking at the block explorer for any chain to first understand how many validators they have (there are some hot new chains with fewer than 200 validators which may be run by far fewer than 200 people). I’d also take a look at what’s actually being processed - some blockchains have their validators submit regular transactions to vote for the next block, and they can account for 90+% of the TPS the chain claims to have.
I’d then look at how their consensus model behaves - if it’s Delegated Proof of Stake, how are they handling voter apathy where users have very little incentive to change who they delegate to even if the validator they delegate to is misbehaving? What happens to misbehaving validator? Is there some mechanism in the protocol that punishes a validator for doing the wrong thing (aka slashing)?
I’d then dig into how they are any different from the thousands of existing blockchains. Did they centralize by having a few powerful machines run the chain, did they fork the Ethereum Geth code and simply increase the max gas per block to reduce fees and get a higher TPS? Making short-term decisions like that look great in the short term, but will fail over the long run due to state bloat and centralizing forces (large storage, compute, and/or networking requirements).
I’d also recommend reading articles on https://vitalik.ca/ and https://ethresear.ch/. Before you say “won’t those be bias towards Ethereum?” The answer is, sort of… Vitalik writes a lot about technical challenges in the blockchain space and how Ethereum is planning to handle them, but he seems to remain somewhat levelheaded and focuses on how the solutions help retain censorship resistance and security. EthResearch is actually used by people in the Ethereum and non-Ethereum blockchain space since many chains need to solve the same problems and are building on the work of Ethereum researchers. They are pretty open for non-Ethereum discussions there.
I would almost certainly say to avoid the cryptocurrency subreddit (that’s where people go to con others into buying their coins and farm Moons) as well as Twitter - with the exception of epolynya. I recommend reading epolynya‘s tweets because they engage with people who are championing non-Ethereum chains and start technical discussions with them which tend to be very educational. That can get you exposed to how developers on other chains view solutions to technical and economic problems.
It’s a ton of work to keep up to date on the inner workings of all these chains. Reading about the blockchain trilemma and understanding it is a good way to start get a lense to view these blockchain projects through so you can at least tell when a claim smells funny.
The "delightfully weird" aesthetic is MARKETING. The "culture"? Compromised.
In the same way that legitimate artistic spaces of old are just capitalised upon and harvested to make that "hip bar", which is but a pale imitation designed to trick us. "Web3" is the Shoreditch of Web 1.0. There are no real things in it any more, no real culture, only rehashes created for profit!
People who are creating "Web3" content are doing it in order to capitalise on the throwback culture, the "geekiness", it's all done purely to further the cash grab, it's co-opting and appropriating geek culture for personal gain.
It's almost an artistic statement upon itself. Almost.
> Protocols like SMTP (1981; email), TCP (1983; reliable packet transmission), HTTP (1991; web), and XMPP (1999; chat) all created immense value while capturing little for their inventors.
GOOD. "Web3" will be rightfully choked to death by greed.
Not going to lie, I thought and still think that the whole Web 2.0 thing was clever marketing and window dressing on top of fairly pedestrian but useful technologies. It was actually less of seismic shock than mobile first which despite being a bigger shift didn't actually get a number.
As far as I'm concerned, Web3 is beyond this. It's what happen when you let Ponzi schemers write the marketing material. I can't for the life of me discern what's of actual value from what is a fabrication in the pile of technologies put forward. It doesn't help that I personally have yet to see a use for a blockchain which isn't replicating an existing financial instrument while trying to avoid the eyes of the state.
I’m sure there is some good things in the middle of it all but I respect the authors of this article for having the courage to delve into the whole steaming pile. I certainly do not have it.
Blockchain isn't even central in Web3, but it surely helps.
Web3 = decentralized identity, full data and connection graph ownership by user, reputation transfer, verification via zero knowledge proofs, support for VR/AR and 3D objects.
All of this stuff is either in prototype or draft phase, but it's ok. These things need to be built to stop horror stories on HN about "algorithm justice" and "data kingdoms”:
- Google accidentaly bans your 10+ year old Gmail account that is a huge part of your online identity, oops. You can't access your important data or reach support if you can't make this situation a huge deal on HN, Reddit or Twitter
- Facebook or Twitter locks your account because you added a new sentence to your About you section
- LinkedIn reads your messages and makes sure you can't automate responses to recruiters, locks your account if you reply in a generic way
Can you explain how web3 solves any of your bullets?
If you are trying to say that web3 will prevent platform holders from banning you from their platform, then good luck with that. Any platform can and will ban you and have complete control over their platform. Thinking web3 is going to prevent that is naive for many many reasons. If Facebook bans me then web3 isn't going to allow me to post on Facebook still. Same with Twitter and Linked In.
If you are saying that web3 solves these by making it so that these platforms aren't in charge of my identity, well they aren't today so I'm not sure what the deal is. If gmail bans my account it's not a huge issue because I use a custom domain for my email, so I can route it to another provider or host my own. If Facebook bans me then I lose contact with family on there but I don't lost my identity because FB isn't in charge of my identity. same with twitter or linked in or whatever.
All these problems you list are solvable today with the decentralized web we've had for decades. There's a reason centralization has happened on these platforms, and it seems like all the web3 talk I see is naive to that.
Edit: Also Keybase is a great example using cryptography to solve the identity problem without a blockchain and with some level of decentralization (keybase's servers are centralized but the actual identity is all based on PGP and GPG that's been around for a long time).
This is always my issue with things in this space. There's a list of bad things to be fixed or good things to achieve. And then there's a technology like [jazz hands] blockchain. But when you ask how they relate, it gets very handwavey.
When I was at Code for America in 2015, somebody dropped by one of our events to buttonhole me about [jazz hands] blockchain for governments. I listened politely for a while and then asked, "Why would something that is definitionally a central authority need a trustless, distributed system?" They blathered and huffed for a while, but could never answer the question. They walked away thinking I was clearly not bright enough to see how it was all going to change.
A couple years later a friend asked me to set down with somebody who wanted to launch a startup. Their customers were companies who wanted employees to be able to safely report sexual harassment and other misbehavior. They had a few existing competitors, so I asked what made this new company different. The would-be founder explained that they would use [jazz hands] blockchain. I asked further, and it turned out that they would use [jazz hands] blockchain internally. So basically a database with extra steps. I pointed out that assault reporters wouldn't be able to see any difference; from the user perspective, all the companies in the market were just saying, "trust us, we definitely won't tell the people paying us anything". The entrepreneur was convinced that it really was different, but if so they couldn't make it clear to me.
So now we've had, what, 6 or 7 years where [jazz hands] blockchain was going to revolutionize things and it hasn't made a practical dent in any real industry. Originally I too was willing to call that naive, but it seems an awfully long time to accidentally maintain such perfect innocence.
At its heart, the strongest claim blockchain technology offers is pretty good data consistency assurances between nodes that don't trust one another. I guess that's kind of interesting as a technical demonstration, but it's hard to see what's actually the practical benefit of that. This has been around and under continuous development since 2008, and still no actual use case.
It seems like the space is full of hype-bro crooks and hype-bro dupes who feed off one another, warping a niche technical toy into whatever get-rich-quick revolutionary fantasy they want.
That's because everyone fell for the systems fallacy. Blockchain was designed for bitcoin to function, for that purpose alone. Then because it worked for that one use case of a decentralized storage/transfer of value, people assumed they could make it work for everything else. Not how technology works.
> it's hard to see what's actually the practical benefit of that
Its utility is much easier to see if you're stuck in a system rife with corruption and have a general lack of trust in central institutions. A key aspect of corruption is that central authorities are not accountable to anyone.
With blockchains, you can design systems where game theory via what's encoded into system design, can limit what concentrations of power can do. The centralized powers in bitcoin for example, can't rationally act in way that destroys the value of the system they're participating in. This is totally not true for many developing economies; just that property is already an encouraging one.
Working on scaling these systems, making them less resource intensive and proving stronger more formal bounds for open peer to peer friendly non-discriminatory systems that are harder to corrupt and more robust to bad actors is a not a solution in search of a problem.
This sounds good. But I think technology cannot solve political issues or corruption of central authorities.
The reason in my mind is simple: a corrupt central system will never choose such technology.
In our human history we kept inventing technology but it (the technology) never fixed corruption. Of course maybe web3 is truly something special but I doubt this. Why: because I dont see how this techology changes fundamental human nature.
Here is an example: people were saying that internet (web1 or web2 not sure how to name this) will offer free access to knowledge thus making everybody smarter. But we see this not happening. It is true that more people are smarter or better but many many more are influenced by internet in bad (corrupted) ways.
Can you elaborate more? It's unclear to me how a data storage technology has any bearing on trust and power relationships, especially in interactions that are largely in meatspace.
Governments mired in corruption, embezzlement of public funds, dumping toxic waste and ignoring infrastructure and human development are not banning crypto out of the goodness of their heart. They're banning it because it erodes and threatens control of their mismanaged currencies.
If we required governments and large corporations to use identifiable addresses then the traceability and immutability of public blockchains makes bribes and corruption much harder to hide. Government spending, which is not used to being held accountable would of course not take kindly to this.
This seems very whataboutist. Is your serious claim that Bitcoin, et al, aren't increasing bribery? They're helping out other sorts of financial crime quite handily, so this is a claim that would require a lot of evidence.
And as to your second paragraph, [citation needed]. As long as we're imagining central authorities mandating the sort of transparency that would make it harder for corruption, we could just use the existing financial system, which is already reasonably well tied to real-world identity. Cryptocurrency in no way helps here.
I remember when the massive early growth of Napster led to a similar hype cycle around P2P, with overblown articles in Wired proclaiming it to be the answer to everything. Around 2004 I was CTO of a company building a streaming music service and I got a call from the CEO of a P2P-based CDN. I asked him some basic questions trying to find any reason I might consider them. It became clear that it would make no sense for us - their pricing was above the quotes I had received from other CDNs and I had no confidence in their reliability. The only selling point was whatever residual buzz P2P had at that point. He quickly became agitated and began yelling at me about how I "didn't get it". The company was called Red Swoosh and the angry CEO was Travis Kalanick. A few years later he somehow managed to sell it to Akamai, and as I recall it was shut down within a year.
Wow, excellent story. If only he had gone out of business before the sale, we might never have heard from that guy again, and the world would have been much better for it.
Oh, is today the day on HN where we give unwanted writing advice? In that case, I'll just tell you that I don't really listen to people who universalize their individual reactions and act as if they're their only audience member in the world. So next time you want to give feedback, please do it in a fashion where your individual feelings are clearly marked as such, not hyperbolized into the total ruination of the writing in question.
- Setting up a separate domain for mail is a good idea, but access to previous emails and/or photos, docs, Drive files will be not recovered. Also non-technical person would probably skip this step.
The issue of not really being in control of your data can be solved by:
- regulating Google to let you access your data irrespectively if you are banned from their frontend or not. You can choose to export it in a standardized way to your own server, IPFS or another cloud provider. All data and metadata is exported and then parsed depending on capabilities of the receiving server.
- putting all of your data, encrypted, on IPFS or similar and creating multiple frontends for it (not unlike email clients, right? Similar idea). Then assigning your unique DID to this data, so it's part of your online belongings
- Next step would be regulating Google to allow you to use the complete user data stored on their servers with any client. Like an S3 bucket? Yes, something like that. Google can choose to charge some price for the access, that's OK.
GDPR tried to solve some of the high level issues related to user data, but it's not enough
Edit:
Google already has semi-closed APIs for some of their products, but only for partner businesses.
Lack of human support in the old Web 2.0 is bad, but going full zero-trust in response seems more like throwing a fit instead of improving things (e.g., banning the exploitative ‘free’ ad-supported business models).
A world in which you lose some magic alphanumeric combination (or a thief pinches your hardware key, etc.) and you are literally locked out of your identity (together with access to your eternal blockchain-backed social rating or whatever is the logical next move) seems simultaneously horrifying and ridiculous.
Because your money are in a bank (which is generally a bit more difficult to break into), and if the thief takes some of the shiny toys you are still left with your identity at least.
It's just that by relying so much on centralized corporations we give them powers of a country/dictatorship:
- issue an ID
- create a policy
- ban if you break the ambiguous rules or trip some fraud algorithm
- not ban some people or orgs even if they break the rules, because they bring too much value to platform (= almost a bribe in some sense)
- and you can't really emigrate and take your belongings with you. Can you export your social graph from FB? Not sure if that's possible, at least not in a straightforward way, you need to recreate it on another platform again.
- Google and Apple become a little better with this last few years, there is data export (in a .zip, lol)
I agree with your second point. For non-technical users, taking care of their private key will be a huge issue. There are some models like multisig, or social recovery (you add a guardian or a set of trusted persons that can vouch for you).
AFAIK even FB has been trying out social recovery features.
This is a good post about social recovery wallets:
This won’t solve the problem with maliciuos actors in positions of power, and if we take care of malicious intent (which is really the only way forward) there is no need for technology that essentially exists to avoid having people to trust each other.
Sure, but that’s replaced with user’s being in control of their identity (permanently).
Lose your keys, you’re out of luck and locked out of who knows how many applications permanently.
It might be fine for us, but just think of the less technically inclined folks in your life. Are they going to remember a 32 word phrase or use a password manager for a key?
And what happens if they’re hacked? If google detects your account is hacked, you may be able to salvage it.
If someone nabs your wallet, they get access to however many apps you have set up along with whatever funds you have in there.
I think the idea of fully decentralising all the things as per web3 or the move to crypto is really interesting.
But if the last couple years has told us anything it’s that it’s being immediately met with a wave of recentralisation where some ungodly percentage of crypto wallets are all sitting with centralised providers and services, which still require email/password entry.
I fail to see how a non-tecnhical user is going to migrate from where we are now to keeping all their keys by themselves
(Sorry I recognise you’re agreeing with these points as well basically but started replying here so might as well finish)
And that's an improvement how? At least with Google there's a chance you'll be able to get your account back. If it's "decentralized" (which in crypto land is apparently synonymous with "run by a cabal of miners in China") and you lose your private key, you're completely out of luck.
If it isn't relying on a blockchain thing, and it's based on you setting up a private key, there's no "run by a cabal of miners in China" issue.
And how is "google accidentally bans your account" and "you lose your private key" comparable anyway? In the first case, it isn't under your control, but under the control of some large organization, and in the second case it is because you messed up.
In addition, there are mechanisms being worked on (often in the context of on-blockchain stuff, but I don't see this as fundamentally necessary to it) for facilitating like, "I trust these people to authenticate whether someone is me, in the case that I lose my private key", in order to establish that a new key still corresponds to the same person.
Like, I'm less enthusiastic about this kind of thing than I have been in the past (and I've never spent money on it), but your criticism doesn't seem to be engaging in the ideas really.
You may have a different experience, but most people tend to only keep small amounts of cash that they're able to accept the loss of around. They put the rest of their assets in banks and securities because then they're protected from loss by several mechanisms like bank security, legal security, and insurance.
The way people handle money is literally the opposite of keeping your identity on a blockchain.
I'm actually not sure this is true. I lived in the US 2014-early 2021 and don't think I used cash after about 2017; I've lived in Europe since and just got touched cash for the first time today because my Christmas tree delivery guy doesn't take Revolut. A few months ago I had lunch at a restaurant whose terminal went down and I asked what they wanted me to do and they said "sure, don't worry about it, come back later today and pay, or whenever you can" (so I did, obviously.)
No doubt there are people for whom cash has valuable properties, but I'm just saying I don't think I'm one of them and my use case seems pretty normal as far as people go.
Even if you're logging in with the 'blockchain' they can still ban your account, all of the good usages of 'Web3' I've seen look like WebAuthn but with most possibilities for scams
Indeed. Blockchain identities have the unfortunate property of being immutable and easily traceable. No longer can you just create a new email account to evade a service ban...
People can self publish and now we have a total shitshow of misinformation. It’s not guaranteed that decentralised finance and web solves world peace. There is always a tradeoff.
Maybe it’s awesome. Maybe it’s the web version of string theory. Can someone tell us why it’s more of the former than the latter?
Riding off a wave of addicts and their enthusiasm for gambling.
Meanwhile, Cash App, Apple Pay, and Stripe have done more for fintech in the past month than all other cryptocurrency technologies combined in the last decade.
Where I live none of those services are available but cryptocurrency tech is.
Connecting to services like patreon or getting small amounts for games on itch.io are headache inducing high friction activities involving several extra third party services that are barely worth the effort. The attached risk is hard to state as better given all the fly by night operations in the local finance industry.
Even if very few people use crypto, it's orders of magnitude less stress to put up a link to a wallet for donations on say a page with a visual demo on how linear acceleration and light bending motivate gravity.
It's instrumental in financing sci-hub, which is also vital here.
You probably live in a country where central institutions are trusted. Probably without overwhelming levels of corruption actively antagonistic to citizens, or double digit inflation, or very high unemployment rates and a general lack of opportunity.
I don't think cryptocurrencies are some magical cure and can't say they will be part of a solution concept. Neither do I care for gambling and scummy activity on it. For some of us it isn't about inflation hedging (although it has a useful role if you can anticipate impending economic collapse) or anti-fiat or overthrowing governments.
It's about imagining a network of transactions where anyone can participate regardless of their country of birth, without a central synchronizing consensus mechanism and a strongly tamper resistant storage useful in coordinating economic activity. Blockchain free decentralized tech are preferable where possible but there are some things only blockchain structures (or even worse scaling massive communication overhead systems) can do.
For some reason, i just can’t fathom that it would be wise for a stable economic system to connect to such an unstable system - the only reason to champion such would be to create instability at larger scale.
Unsure about what you mean but the current instability of this type of economy is already very high.
What with double digit inflation being hard to tackle due to the feedback loop of corruption fueling too few employment opportunities, being import dependent amid rising costs everywhere and then noting the large divergence between black market and official rates, it cannot be said with certainty which is more stable and less risky in the long run. Things are bad enough that putting some money in crypto as a makeshift uncorrelated hedging instrument makes sense.
Crypto isn't an exception to any of your concerns. Easily manipulated by foriegn governments, no assurance in import/exports, no assurance on value for employment opportunities, ripe for fraud and as for inflation - until Crypto actually behaves like a currency all your doing is betting against the dollar and if the dollar collapses then all you're doing is ensuring instability and perptetuating exactly what you say you solve
Not sure about OP, but I live in Argentina, and there is no Apple Pay, Stripe, or Cash App here either. Not in most of the Latin American countries, actually. I had to make a U.S Wyoming company in order to be able to use Stripe. And Latin America is a pretty big chunk of land, with a ton of people.
And with the ever-increasing inflation of 40% YoY and government restrictions on the ability to convert foreign currency to local currency, crypto P2P is a saving grace here.
I do think most crypto stuff is probably still a scam, but the ability to buy stable coins and sell them to someone local here for peso's by getting 2x more than I would with the official central bank rate is a godsend.
Is there actual data on cryptocurrency use in Argentina?
Last I lived in an unstable Latin America country with inflation issues, the common solution was just to buy dollars. So much so that the country, Ecuador, eventually just switched over to using dollars entirely. So I can believe it's possible that people are trying to do similar things digitally when they don't trust the local currency. But given the user-hostile nature of a lot of the cryptocurrency systems, I suspect they aren't doing all that much of it. As an example, look at El Salvador's clown-shoes attempt to switch over to using Bitcoin.
So as much as I grant the theoretical potential of an imagined version of cryptocurrencies to be useful, I'm still pretty skeptical of the actual use of actual cryptocurrencies, even under those conditions.
I don't have any data points, but my own social circle, of which the majority uses Binance to buy crypto and uses Binance P2P to sell it to ARS (Peso). And since the transfer will be reflected on your bank balance as some regular person sending you money locally, it's not taxed either. The whole process of buying stablecoins USDC or Tether to it being sold to ARS and actually landing on my local bank account takes about 5 min maybe, which is really nice as well - Western Union and Xoom take up to 3 days or so on average.
Most people have used Western Union / Xoom here to get local money, but those have quick limits here, and the government is making it harder and harder to do that, by often prompting to explain your income, then pay taxes on that income, often resulting in double taxation for people.
Most of the things in Argentina are still in Pesos (pubs, restaurants, grocery stores, etc), except for the real estate market of which about half the rental listings ask payment in USD, and if you want to buy a car then half the listings of those are also in USD. Lots of local jobs also pay in USD, so I can definitely see how ARS might at some point be devalued and everything going over to USD, but for now for most day-to-day things you still need ARS.
I'm by no means saying that crypto is the future or even a great solution, but for the current situation here it is quite convenient and better than any alternative.
Edit: To add, if there is one indication of crypto use there, it's that the local Apple Pay equivalent "Mercado Pago", which is available in most shops and restaurants here, has announced that they will add the ability to pay with crypto balance to their app, so I guess there are enough people to warrant that, at the very least.
Thanks for the details. But I'm not quite following this bit: "The whole process of buying stablecoins USDC or Tether to it being sold to ARS and actually landing on my local bank account takes about 5 min maybe"
This sounds like you are going from pesos to pesos in 5 minutes, but I assume that isn't the case. What are you buying the stablecoins with?
Also, if I understand the use case directly, there's nothing here that requires a blockchain at all. The same thing could happen with dollars and another centralized company like Binance, yes? It seems like the novel technical part is the person-to-person transactions used to hide that it's a centralized company. Did I get tha right?
I'm buying the crypto with foreign currency, e.g USD or EUR. For example, since I have a U.S company, I effectively make dollars with my work, but to be able to live here I need pesos. And the same would be the case if you work for one of the local companies that pay you in USD, since you still need pesos for day to day stuff.
Now, I can of course convert my foreign currency to ARS via a central bank, or a regular bank transfer. But here's the thing: official central bank rate for 1 USD is around 100 ARS. The unofficial rate (Western Union, Xoom, Crypto P2P) gives me 200 ARS for 1 USD. Quite literally double the money. That's a very big deal.
And yes, you're right that there is no inherent need for the blockchain or crypto at all, but the lack of oversight is probably the only reason why it is so convenient, and the lack of alternatives, because Western Union and Xoom serve the same purpose, but are much slower (days instead of minutes) and are bombarded with government restrictions.
I could, of course, try to find people here directly who want to buy my USD for ARS, and it would function the same way, but Binance P2P offers a marketplace website for that without me needing to find any of the people myself, equipped with escrow functionality so I won't get scammed.
I definitely agree that evading governmental controls on currency exchange can be beneficial, especially if one's income isn't local. And reasonable when the controls are used to cover up other problems. I also agree that in the short term using centralized digital services can help there, especially ones that don't worry much about fraud prevention or remediation, as they can be very quick. Doubly so if they're tuned for financial crime.
But by the same token, the centrality and convenience are major points of weakness if they are going to last. Binance is under regulatory threat the world over, and keeps withdrawing from markets one step ahead of regulators. I'd be very surprised if they are able to do that for you a decade from now. Especially as digital forensics and AML tooling will be a decade better.
Instead, I'd guess people in your situation will be doing what they've always done: building informal networks of collaborators so that the regulatory evasion happens offline in ways that are hard to track or limit. Perhaps it will be more like what I saw in Ecuador: friends of friends swapping envelopes of cash when it suits them both.
So to me this story isn't about the power of crypto, which is incidental here, or the magic of decentralization, which isn't much in play either. Instead it's about another temporary window where technology has gotten ahead of regulation.
They can't even get their numbering scheme right. This would be "web4"
Disregarding the semantic web throws out the history of the tech that sought to build p2p knowledge graphs before the social giants pushed it aside. They care little for these concepts given their blatant disregard.
In a world without the concentration of development to venture capital-backed tech firms, semantic models of data create a web of rich APIs and data that are interlinked and that can grow and evolve.
You have schemas for representing people that you can download as contacts. Schemas for representing articles that can be linked to people. Schemas for comments and upvotes... Fully distributed Facebook / Reddit / Twitter that anyone could extend.
Venture-backed startups grew faster than the Semantic Web. That's the reason it didn't materialize.
When upward mobility has been stymied for generations (the US has the lowest upword mobility among Western nations, outdoing even the class-ridden Brits) and insane house prices, student loans and cost of living increases have cut all the bootstraps, people are looking for anything - anything - that offers the slimmest of opportunities, because education and hard work don't cut it any more. Hence the crypto nonsense among the younger generation and MLM cults for the older Facebook crowd.
The people who put their hope into blockchain and crypto currency technology are missing a fundamental point that would have _catastrophic_ consequences on social mobility, exploitation and oppression in the long term: You don't actually want a decentralized, persistent log of all transactions, especially if that also includes credit and debt.
The financial market is going out of hand because since the 70's/80's it isn't serving it's purpose anymore, which is regulating and allocating resources and credit. Instead it is disjoint from actual value and productivity, so it has started a life of its own.
People and entire nations are being held down by financial obligations while not benefiting from the increase in productivity and profit because the connection between finance and value production is almost completely severed.
The only non-violent way out of this is forgiveness. Which acknowledges that exact monetary value and debt in any form and especially in it's current form is just a highly volatile figment. And that's only possible if we can actually _forget_ transactions.
An eternal, cryptographic, decentralized transaction log might just be the perfect tool for long term financial oppression and exploitation. And the more convenient it gets the more exchange will flow through it. Well at least until the people start magnetizing and burning down data centers and PCs. But I think there are less destructive ways forward.
You make a large assumption that people don't want a permanent log. If the system works then you do want it to be permanent. The only reason why you propose forgetting the transactions of the current system is that it is distorted by politicians. Politicians cannot distorted crypto markets in the same way they can with the USD, therefore is no need to ever forget crypto transactions
I think you give politicians too much credit, they have influence, but at the end of the day we all have one master in this world. There is something importantly impersonal and algorithmic about the circulation and allotment of capital and currency, and that is the ultimate reason we live in the unjust and unforgiving world we do. A persistent totalizing ledger would only reify these systems more. It would absolve the system of any traces of humanity it might incidentally have, leaving nothing but transactions.
There is not a more egalitarian capitalism hidden under the machinations of corrupt politicians, it is itself a dark, destructive thing. I am confident that money will save no one at the end. Money is not the salvation you are looking for.
I'm saying "the system" doesn't work because it doesn't serve its purpose and on a deeper level it is inherently based on imagination.
Politicians and the financial system are not entities that can isolated from each other. The financial system is in of itself a form of trade regulation: to make rules about what costs what, who owes who, what can be traded how and so on. Finance is the bureaucracy of trade. It is failing because it shifted its purpose from regulation and quantification of value to a life of its own and has become in large parts speculative and non-proportional. Even some of the most libertarian thinkers like Adam Smith have warned us about this.
A crypto market is one such thing, but not only is it already disjoint from its purpose, which is enumerating value, credit and regulating trade. The speculative and volatile nature of crypto markets show that. But it also doesn't enable the use of a safety break - that has been used time and time again in larger history but also in smaller interactions - to repair the economy from becoming fantastical to real again. Crypto has also no alternative solution of doing that.
What happens when you don't do that for long enough is that the people will do it for you. They will at some point burn it all down. Debt and profits that are disjoint from actual value and become more so through financial mechanisms erode trust. And currently that is exactly what you can see happening since a few years. People are quitting their jobs, joining protests, unions and so on because they intuitively understand that they are being screwed.
The way to deal with excess debt is not to have a cranky database that loses the records. Also forgiveness seldom happens.
What does happen in reality often is inflation - government gives money to the needy (or similar) and the money being given out inflates away the debts.
Education and hard work drive labor. These aren’t qualities respected by any kind of wealth generators or management. If anything they are unrewarded implicit requirements except for labor where there aren’t other more substantial qualities to rate individual contributions.
In most of the country house prices remained low and stable until very recently. Only a few coastal areas have seen decades of out of control pricing.
I can clearly see a strong correlation between both education and hard work vs. social status and income. I come from Europe though. Is it really not the case in the US? Is it because of student loan barrier?
How hard did Boris Johnson work again? Or Priti Patel? Or Don Jr? Or Jair Bolsonaro?
I'm Brazilian, but I live in Europe, and everyday I see that I was privileged to be able to focus on studying hard (and didn't, most of the time) and still managed to be quite successful when compared to the average European. In Brazil, my skin and eye color was a ticket to some very restricted spaces I simply wouldn't have access to with the wrong colors.
You are cherry picking outliers to argue against a claim about a general trend.
It really does not matter how hard this or that particular individual worked. What matters is statistics which describes the opportunity of an anonymous Joe in the society.
It really depends on what kind of mobility we are talking about. The wealth and influence of the individuals I mentioned is pretty much impossible to reach unless you have optimal initial conditions. As the saying goes, the easiest way to become a millionaire is to be born a billionaire. Even if you are born a mere millionaire, you can make many more attempts at becoming a billionaire than a person who needs to work in order to have dinner.
There is a lot of statistics that point that current levels of social mobility are on par with feudal England and, while a modest improvement in conditions is very achievable for those who aren’t born in the most unforgiving situations, the remaining possible paths are very much closed.
I kind of expected that we are talking about the basic mobility, such as my wife coming from a low income blue collar family becoming an upper-middle class architect. Not the chance of becoming a super-rich or super-powerful.
>It doesn't help that I personally have yet to see a use for a blockchain which isn't replicating an existing financial instrument while trying to avoid the eyes of the state.
I mean, there's a domain name system. There are various games. There was recently a high-profile crowdfunded attempt to buy an artifact at auction. Feel free to be skeptical of all of these, but what's the point of posting that you "haven't seen" anything legitimate if you're unwilling to exert a bare minimum level of effort to research other use cases?
You mean ENS, the .eth domain registrar incorporated in the Cayman Islands? It doesn't matter what the blockchain says, my .eth domain is only good as long as the registrar agrees to honor it. Sounds like GoDaddy with more steps.
> There are various games.
What's the point of a distribute ledger that can only be used within a game controlled by a centralized company?
> There was recently a high-profile crowdfunded attempt to buy an artifact at auction.
You mean ConstitutionDOA, which imploded quite spectacularly? People are still wondering if that was a scam or just sheer incompetence.
Honestly it's hilarious that you would bring that up as a flagship example.
> you're unwilling to exert a bare minimum level of effort to research other use cases
I have exerted that effort and more, and still come up short.
So when I point out that there are other use cases beyond "replicating an existing financial instrument while trying to avoid the eyes of the state", instead of walking back your claim that no other use cases exist, you simply move the goalposts and attack these use cases in other ways.
They're all perfectly legitimate complaints. But the fact that you have to resort to them, rather than defending your original claim, shows how weak that claim was.
When someone says "use case" they mean something... useful. I think it's pretty obvious that the OP didn't mean "no one has tried anything with blockchain."
I wasn't the one who made that claim anyways, so let me make one: Beyond cryptocurrency, there is no problem that blockchain solves better (simpler, cheaper, more efficient, more practical, etc.) than "traditional" organizations and technology.
> What's the point of a distribute ledger that can only be used within a game controlled by a centralized company?
The game is made by a centralized company. The items and economy in the game are on chain. Gamers can sell their items to other gamers. Or items can be interwoven into multiple games because the items / economy share the same "backend".
Regarding ENS, it actually does matter what the blockchain says, because everyone that has integrated ENS (like IPFS or MetaMask) are using the records in the blockchain to resolve which name.eth is connected to which wallet.
The crowdfunding to bust the constitution is surely a replication of an existing financial instrument? Crowdfunding is not new.
That particular episode also laid bare the problems no web3 proponent seems to want to address: a whole load of people are going to lose all the money they gave to the fund because transaction fees will swallow their investment whole if they ever try for a refund.
Not to mention that all the transaction fees meant their final fund was just barely too small to actually buy the item they had crowdfunded for. Cryptocurrency: it just ain't good for anything.
Please consider that they have seen those things. Is there any of those that couldn't be done without a blockchain? Indeed, wouldn't have been done better without a blockchain?
> unwilling to exert a bare minimum level of effort to research other use cases?
What I'm unwilling to do is wade through the mountains of scams and get-rich-quick schemes to find novel applications of a distributed ledger. Games? Seriously? Show me a game that isn't just a vehicle for boosting the trade volume of some shitcoin.
It's all dystopian tech bro capitalism to me.
> There was recently a high-profile crowdfunded attempt to buy an artifact at auction. Feel free to be skeptical of all of these, but
Yeah, that one where half the people who want a refund will lose a significant chunk, if not all, of their donation in fees. I find it absolutely laughable that with all of the fancy "smart contract" tech out there someone couldn't figure how to hold these donations in cryptographic escrow and return them without a huge penalty if the transaction were to fall through. It's hard to feel bad for those who put money in. It should all be automated and foolproof, and I thought that was the point.
Go to a web3 site and use your wallet as your identity without any signin flow, don't click on any asinine cookie prompts, and you'll see it's already bringing improvements. Or you can just write comments like this.
OK, NOW WE’RE TALKIN. In years of talking to blockchain people about this stuff, no one has ever given me a use case description that succinct and concrete. A decentralized SSO is the kind of thing that would seem useful on it’s own, even without the other stuff.
So let’s say I want to try this out this weekend. Do I just download MetaMask and make a wallet? Do I have to go somewhere or pay someone to inscribe my username in the blockchain or does this basically work immediately? And what are some sites that support this?
Setup a MetaMask wallet. That's it! You don't even have to fund it in order to authenticate on web3 applications. MetaMask will allow you to authenticate on all the different chains that have EVM-based dapps including Ethereum, Fantom, Avalanche, & Moonriver
Polkadot.js for Kusama and Polkadot apps. You can also check out Fearless wallet on mobile for Polkadot & Kusama where you can participate in the ongoing parachain auctiona. Use the Phantom extension to authenticate on Solana dapps.
My understanding is that you could use that to auth with a site where you already have an account or where you’re signing up. But if blockchain enables me to go to a site I’ve never been to and be already signed in with a unique name I reserved on the blockchain, I’m pretty sure that would be a novel thing.
Maybe not enough to swing me over to being a crypto-booster, but this is the first time that someone has shown me anything at all that makes sense.
With WebAuthn you could signup with just the auth as well. It's basically the same thing as a wallet private/public key-pair so can do all the same things as a proxy for a universal ID.
Decentralized SSO is a great use case for blockchain tech and there are so many ways you can do it. There has been a lot of hype around NFTs due to the crazy prices we've been seeing for "digital artwork NFTs", but you can also use them for auth and it's actually pretty slick.
Here is a project[1] that a friend of mine is building that does exactly that. It's basically a collection of TailwindCSS components that he originally built in the "web 2.0" way, as in: buy a subscription (via Stripe) and now you have access to his collection of pre-built components. But then he realized this is actually a great use-case for web3. So instead of signing up for an account with an email + password then using your credit card to buy a lifetime deal, you can connect your MetaMask wallet to his website and "mint" a pass for 0.08 ETH (approx ~$350 atm) which is just an NFT on the Ethereum blockchain. Then as long as that NFT is owned by your wallet you can use it to login to his website. The benefits are: it's actually faster for the user (your wallet is your identity and you access pass is attached directly to that wallet on the blockchain) and also pretty simple for him to integrate on his end. The other benefit is you can trade these passes at will without his oversight – so if he adds more and more Tailwind components to the collection the value of this lifetime access to them hypothetically goes up. But let's say you no longer are interested in building anything with Tailwind components – well you can just sell the NFT that gives you access to someone else via any of the 3rd party decentralized marketplaces.
Anyway there are a lot of cool ideas and use-cases that aren't just decentralized lending (which I'm still pretty skeptical of) or generic gambling (still most of crypto). The main problem right now is that a lot of the coolest stuff has been built on Ethereum (due to the flexibility of its smart contracts) but the transaction fees and throughput are pretty terrible at the moment.
Finally, it gets a lot of hate here on HN, but Brave Browser actually has a MetaMask-equivalent (I think it might actually just be a fork of MetaMask) that is built right into the browser, alongside best-in-class ad-blocking so I'd consider using that too. Though installing MetaMask is super easy as well.
Thanks for sharing the NFT-as-access-token example, it's far and away the strongest example of a relatable use for NFTs that I've heard, and is compelling both in its value to the issuer (as a verifiable access token) and to the buyer (for both immediate use and due to its resale of residual value after having been used).
I imagine that your friend's NFT contract stipulates he gets a cut of resales, but I'm also curious if/how your friend deals with potentially bad actors that, say, scrape the entire content then resell the token for most of what they paid for it having extracted the content it unlocks. Obviously the contract could help offset a part of that trade, but seems tricky nonetheless?
Edit: I suppose part of the premise is that there are only 500 passes and content continues to be produced, so if you want access to the current library after all passes have been used trading the pass is actually a key attribute of others gaining access to the content.
Sure, and if “web3” was sold as “banking for those who cannot use normal banking” and “worthy transactions you want to hide from the state” then I think a lot fewer people would have a negative perception of it. But it isn’t.
Since nobody is in charge you should expect most sellers to be full of nonsense and misinformed. That’s the nature of any decentralized movement - especially one as directly antagonistic to the status quo.
> It doesn't help that I personally have yet to see a use for a blockchain which isn't replicating an existing financial instrument while trying to avoid the eyes of the state.
That's kind of the whole point. Money without a state and without permission. If you don't believe in that then of course you won't see the value in decentralized finance.
Blockchain wasn't at first about avoiding eyes of the state, but tyranic control of the state, or any other authority. Then projects allowing secrecy appeared.
Coins like Ethereum pushed way forward, via smart contracts, the possibilities available in cryptocurrencies. Then others like Chainlink added again a whole new level of possibilities connecting the smart contracts to trusted real world data. That goes way beyond the scope of financial instruments, a whole world of automated business can be built on top of that. BTW blockchain is outdated technology, is doesn't scale enough for being able to handle a massive use of cryptocurrencies.
Let's say you live in a country where the government carefully monitors all printing presses that publish newspapers and books. And once you see the world wide web, you might just see "trying to avoid the eyes of the state" but that's just a part of what makes it such an important revolution. In both cases, one person with an idea and a keyboard can create something new, or something new that interacts with other existing things. It's a paradigm shift.
I totally agree with you. The only Blockchain-first technology I got excited about was a system where people can put their free disk space for rent. They get paid in some coin, and that is how the coin gets generated. Sure, you can do it without the Blockchain, but the tech has some real added value.
The biggest problem with this idea is proving data replication and guaranteed retrievability to the users in a trustless manner.
With a traditional cloud provider, you trust them, upload your data and they deal with the rest, backing it up internally and guaranteeing retrievability with their reputation.
But with blockchain p2p storage, it's really hard to provide the same guarantees. If you only upload the file once and let the blockchain replicate it, then a malicious (or greedy) entity can manipulate the blockchain and control all replicas (backed by a single disk copy). So your software must encrypt multiple copies of your data and upload seperate replicas with different encryption keys.
But that still leaves you open to a very malicious entity going out of it's way to track all uploads from a node, and monopolising control over them, then deleting them when you try to download them. To actually provide the same guarantees that a cloud provider does in a trustless way, your local software will also have to continually download chunks to make sure they are still retrievable, and you might also need to use the tor network for all accesses.
With all that extra complexity, there is a lot to go wrong, and a traditional cloud provider might end up being the cheapest option. I used to agree with you, but after trying to design such a system with these trustless guarantees myself, I've come to the conclusion that there is no good use case for blockchain, outside of exchanging value.
Filecoin is “live” only technically. There is no way for individuals to contribute, which seems to be intentional as the leadership is looking for corporate support first. It currently has no real use cases. I say this as someone who is also excited by the idea.
Perhaps you can clarify the relations between IPFS and FileCoin? I was under the impression that they were related projects of Protocol Labs, with IPFS being a dependency of FileCoin.
> It doesn't help that I personally have yet to see a use for a blockchain which isn't replicating an existing financial instrument while trying to avoid the eyes of the state.
Is that not enough for you? Just because you think you live in a time and place where the eyes of the state are kind and benevolent?
Why wouldn’t this primitive thing we call the web have massive and frequent revolutions? You can’t discern the value but creators and their consumers will and will again.
Web 2 is distinct from Web (AJAX, SaaS. Cloud, Mobile). I’m sort of shocked it’s even brought up as a fuzzy distinction.
Nothing wrong with that. Everyone agrees cryptography is a good thing, worldwide warrantless surveillance is bad, privacy is good. So why is it acceptable for the government to pry into people's finances? Total surveillance is already the norm there. If a blockchain is what it takes to defeat that, then so be it.
I partially agree. Bitcoin is a failure and it's pretty sad that so much energy is being spent mining it. I wouldn't mind that same amount of energy being spent on Monero though.
It would also be nice if we could use the heat generated by computers for something instead of dissipating it all into the air. That way the energy wouldn't actually be wasted.
Web 2.0 was definitely a thing … the introduction of social media and targeted advertising as a revenue source changed things a lot. Not to mention cloud computing … but that’s really Web 2.5.
Web 3.0 should probably have something to do with the increasing centralization of web services, and the increasingly common subscription fees everyone is paying.
Instead it’s about blockchains … which are pretty much the only way the web is becoming less centralized.
Excellent post. Succinctly cutting through the crypto hype-squad and addressing the concerns, unveiling the shortcomings and outlining the possibilities of the current Web3 ecosystem.
I disagree with much of the other points but building on ethereum is amazing. Compare creaing AWS microservices and its crappy web UI with hardhat that emulates everything locally. Best practices do exist this is not new tech, Ethereum is almost 10 years old.
Discord but access is granted by owning a specific NFT. Mint limited numbers of the tokens for specific groups. The value of the token ends up being based on the current members. Want in? Buy a token off someone. Done with the group? Sell it. Exclusivity is appealing to many.
Quite possibly the difference between people who are hostile vs favorably disposed to Web3 is whether or not they think traditional orgs work fine or need improvement. Frustration with traditional organizational pathologies is not universal.
The right comparison may not be with past tech revolutions. It may be to organizational evolutions like monarchy to democracy, women entering the workplace, the invention of the limited liability corporation etc. In each case there were people who thought it was unnecessary.
I suspect what makes Web3 appear extra contentious is that it divides core members of the middle class. Like artists for eg. Artists tend to be reliably anti-tech initially, taking pride in being socially middle class but economically underclass unless supported by other means.
Artists still largely depend on patronage but now are less beholden to institutions/expert tastemakers (museums, grants, commercial art buyers like movies) or potentially tyrannical cohesive crowds based on ideological aesthetics (Patreon style). Web3 loosens the grip of both.
Web3 is Crowds3 too. We focus too much on authority figures and institutions. Crowds evolve too.
Crowd1 = geographic scene in a city that could ostracize you
Crowd2 = filter-bubble online crowd that can cancel you
Crowd3 = skin-in-the-game crowd that doesn’t subsume individuals
I suggest the people who have the most beef with 'traditional orgs' haven't worked in them (or not for very long) and don't understand the nuance of the limitations of them, and also don't grasp the value that's created at scale.
Also, I think less than 0.01% of 'artists' have ever heard of Web3, even most people in Tech haven't really hard of it or couldn't describe it in any meaningful way.
I think the biggest potential might be in creating companies and contracts. I would love smart contracts that with given payment also give me some shares of company.
Also investing in pre IPO for retail investors in scam-resistant schemes.
Public funding of projects. Voting with ones wallet but formalized and outliers and spam resistant.
Ability to profit from and measure public goods thus allowing to employ Capitalism there and get rid of EU bureocracy. One can dream.
> Also investing in pre IPO for retail investors in scam-resistant schemes.
If you're an accredited investor (which is easier to be than ever), there's always Equityzen and friends. But it's already not so scam-resistant. There are lots of sketchy startups out there, and I'm not sure why one bypassing traditional finance channels would be any less scammy.
I think Web3 is just a term that something will change the web. Semantic web used it first, there's the whole AI/VR Web3 movement, there's crypto, etc...
The way I see it is the idea of "ownership" creates a way to produce scarcity from story telling. If you have a good story to tell about why people should "own" your "goods" you can make a fortune. I think it's very interesting in economy / sociology / psychology sense, and an amazing opportunity for cash grab. But I won't call it a progress on web to call it "web3" because it does nothing on connecting people together like web 1.0 and web 2.0
Whenever I read about Web3 I always get the idea the feeling it's an entirely self-interested idea or movement, and there is nothing idealistic about it. Instead of control being with a single corporation, control will be with an exclusive limited group of founders who got in cheap, and to which access is sold at a significant premium.
It pretends to democratize things, but rather moves from a monopoly to an oligarchy, which works great for the 'in' group but not necessarily for those outside it.
I think if you take a Western/developed country centric view, all of crypto seems pretty useless. In the rest of the world, you probably dealing with some or all of the following:
- Dysfunctional government
- Hyperinflation
- Limited access to financial/investment products if any
The crypto space does have a huge amount of problems, but I think there's some innovative stuff going on in crypto. You'll end up writing it off if you just fixate on the speculators and the "blockchain everything" people.
> Protocols like SMTP (1981; email), TCP (1983; reliable packet transmission), HTTP (1991; web), and XMPP (1999; chat) all created immense value while capturing little for their inventors. Blockchains upend this, allowing inventors to capture considerable value for themselves.
That... seems like a huge negative to me. No wonder crypto enthusiasts give me the same feeling as relentless door-to-door salesmen.
Putting monetisation before use case, rather than the traditional use case before monetisation, leads to several perversions:
- It turns practitioners into "relentless door-to-door salesmen" as you put it, fanatical commission-based salesmen, which makes any kind of rational discussion about pros and cons etc. impossible.
- It allows you to monetise without having anything to monetise, which has drawn in the scammers and fraudsters on an unprecedented scale.
- It offers no incentive to working solutions. All the ICOs failed because they got the money up front with no obligation to deliver anything, so even the small number that weren't out and out scams ended up effectively becoming scams. Spend any time in the space, and you'll realise the gap between what is promised and what is possible is often insurmountable, but the gap isn't important, because you just need to convince enough people that what you are trying to do is possible for long enough to get rich quickly.
- It offers no incentive to more efficient solutions. Why use existing fast, free and low energy money transfers, for example, when you can make slow, expensive money transfers that use up 5% of the world's electricity but make a handful of people rich in the process? There are very few cryptocurrencies which have genuine legitimate use cases, and the small number that arguably do are always worse in every way than what they replace, but they are still attractive and gain traction because they can get a small number of people rich quickly.
- It doesn't look like it'll go away. While putting use case before monetisation means something without a use case will wither away, with monetisation before use case it could go on burning up trillions more programming hours and countless other resources indefinitely without ever finding a genuine legitimate use case.
Not necessary negative from UX perspective. Can make economics of walled gardens less diserable as you can profit on protocol and have incentive to make best protocol possible. Time will tell.
I think it might help if you look at it in a slightly different way. While yes, crypto investors can capture the value of the network growth, this isn't the important point. Crypto protocols are fundamentally value storage and transfer protocols. So I think it's useful to draw a parallel between the protocols you listed above and the internet, which are all used for the storage and transfer of data. The internet/web was an immense success because it freed data from it's shackles, and allowed a more free and efficient flow of information. This allowed everyday users to publish information, apps, etc. and innovation to flourish.
So crypto is doing the same for value/money. It's freeing it from the institutions (banks, governments, etc.) and allowing it to flow more freely and efficiently. This is why some people call it the internet of value/money. So, if you believe that freedom allows innovation to flourish, you should see this as a very powerful thing that could eventually be the backend of the entire financial system, just as TCP and other protocols are the backbone of the internet. It allows innovation to flourish at the edges, because we have stable monetary protocols that are open to anyone. A hacker in their basement can now build financial applications, or a group can coordinate in new ways through DAOs, or someone can just store value that isn't tied to any government.
I came hoping for a lack of hype and I left covered in confetti and glitter with a nasty black-eye from the rolled up T-shirt that was shot out of a cannon at me.
It still really depends how far down the stack you go. One of the better observations Eric Raymond made in his essay The Magic Cauldron was that the closer you get to infrastructure the stronger the demands become for open protocols (emphasis added):
> The network effects behind TCP/IP's and Linux's success are fairly clear and reduce ultimately to issues of trust and symmetry -- potential parties to a shared infrastructure can rationally trust it more if they can see how it works all the way down, and will prefer an infrastructure in which all parties have symmetrical rights to one in which a single party is in a privileged position to extract rents or exert control.
Sure you may be able to build a bespoke proprietary protocol on top of the open foundations of http or the bitcoin and etheream blockchains, but businesses will have an incentive to shop for more open systems if they are staking anything important on it.
Because this allows to make bigger pie for everyone in the end. Not sure it does. Just speculating based on economic benefits of infra - see roads, transport, internet, aws etc.
Not everything is about capturing value and extracting profit. There had been something like hacker culture back then, Mr. Serious Business Ventures on HACKER News.
Also, the page requires JS to render, so it's probably crap anyway.
(Original author here: I agree completely. I’m… one of those older hackers. That said, I’m also fascinated and, frankly, a bit alarmed by this sudden change in the balance of value capture and creation. I think it’s worth looking at and contemplating face-on. That doesn’t mean I like it!)
> However: just because you don’t need a blockchain to do something doesn’t mean the industry won’t settle on using blockchains to do it anyway.
Exactly, both blockchain skeptics and one-blockchain maximalists miss that people are doing what the market can bare. Do what the market can bare. Why die on the ideological hill? What utility does that have?
The path for founders is simpler. The founders bring their whole network to their ventures over and over and over again. That is projects launched on blockchain platforms right now.
Unless the non-blockchain space magically becomes competitive for founders, globally, of any background, anonymously, overnight, then that world isn't competition. There are 3 trillion dollars within the crypto ecosystem that doesn't need to be converted to cash to be used to fund new ventures.
> However: just because you don’t need a blockchain to do something doesn’t mean the industry won’t settle on using blockchains to do it anyway. The technology industry is immensely path dependent. Particularly when buckets of money appear, feedback loops can form whose outcomes seem all but inevitable. Speculators and venture capitalists alike have inundated crypto with cash. There’s a certain reflexivity to it: when cash pours into anything, the intrinsic value of the thing is at least the value of the cash… and potentially much more, if that cash is invested productively! Blockchains may become the future — including for use cases where they are not natural fits — only because their story was told, speculated on, invested in, and told some more.
This bothers me: That we could end up with expensive, unnecessary systems that exist not because they offer a tangible benefit but because everyone just kept going along with things, collecting investor money and ignoring criticism until it was too late.
I don’t see that being apocalyptic necessarily, I think Adam Smith’s scythe will mow down any companies that make truly bonkers decisions on this stuff. But it bugs me that we could collectively spend years arguing about this and building blockchains and training a generation of blockchain engineers only for the near totality of blockchain stuff to fail for reasons that were evident from the beginning.
So .. TL;Dr web3 is nothing to do with the web, and is just the same old smart contract crypto hype we've all seen before?
No mention of the actual distributed web protocols like IPFS or Dat as far as I could tell.
Have I massively missed something or has the crypto community just co-opted the name web3 for their own non-web related stuff? How does the web factor in to crypto?
So I attended a year end function last month and there was an independent financial advisor present (CFP straight-arrow-type-guy that was reluctant about crypto's a few years ago). During a conversation he expressed regret that he didn't get onto the crypto train 3 years ago and that he is going alllll in on web3 and threw the word nft's around a bit and that he has some more web3/nft webinars lined up for the coming week. Mind you, this guy manages about $50M for his clients (it's true, I saw his dashboards on a third party website - he knows his shit). He told a whole bunch of people at the event about nft and how it will put spotify and youtube out of business.
But the thing is, he is not tech-inclined at all and spends most of his time on excel and on third party platforms (as in, fund manager platforms, insurance platform, medical aid, taxation etc). So what I took away from his talking about this stuff is that financial advisors are being "educated" to think that web3 = crypto = new 4th industrial revolution etc and everyone will get rich as hell very quickly so we all have to do it NOW. It was a huge wtf moment for me because I was mostly ignoring this stuff and the whole web3 umbrella and here I have a legit CFP guy talking about this stuff. All while I'm standing there not knowing wtf he is going on about, most of it sounding extremely dodgy from a software developers perspective.
Make of this what you will but I think a lot of people will get hurt, esp non-tech people. I feel like these people live in an alternate universe and they've built a whole ecosystem of webinars, trading platforms that they are trying to sell onto normal people that doesn't know better; that doesn't seem to be used for the greater good (most of it scammy or used for crime etc).
I think the web part is now "log in with your wallet, fetch account state from the blockchain". It all happens on the normal web and the blockchain access is facilitated by "normal" web API gateways like Infura or Cloudflare. This is my view from the outside so it might be off on the details.
It seems pretty reasonable, as far as crypto stuff goes, except that there is a massive, expensive machine behind all the HTTP APIs that is solving very specific problems you probably don‘t have while making someone rich.
Today, I hopped into a Twitter Space called "web3 for gaming" and from the moment I joined until the moment I left five minutes later was talking about how crypto payments need to be better on mobile.
This feels like when web2 was coalescing as an idea. A lot of people were trying to shoehorn their pet technologies into the discussion. XML was holding on for dear life. It's ridiculous and completely divorced from the topic at hand. My only explanation for the behavior is that it's difficult to see the obvious absurdity when you're deeply invested in a particular outcome.
It's so weird to me how such a seemingly smart community (HN) can be so completely out of the loop with regards to one of the biggest sea changes to ever happen online.
At least spend a week or two as a web 3 USER before you make your own conclusions. Forget the investment side for a minute and use the dapps.
> Smart contracts are deployed once and run forever; their code cannot be changed. The software development industry has literally zero experience with such a deployment model.
Programmers for cartridge-based game systems and many other embedded devices with no connectivity have decades of experience with this.
Sorry, I'm not going to allow people to rewrite history and claim torrents are Web3. The technology is 20 years old and the most dominant protocol for file sharing.
sorry for misinfo. torrents are not at all web3. web3 usually means decentralized plus backed by blockchain. DTube and Steemit are some products built on web3.
Do we even have a generally accepted usable definition of what Web 3 would be?
I see cryptocurrencies and ledgers being mentioned and, at the same time, comments mentioning the concepts aren't central to it. It seems we are the proverbial blind men describing an elephant.
Thank you for the no-nonsense writeup. Simply reading through it helped me solved many ambiguities and puzzles. Could you please provide some further readings, esp. high quality materials that have had helped you in the compilation of these observations?
Original author here. Totally. I’m old enough to remember when Web 3 was the semantic web, so I guess I don’t put much stock in the label. And, personally, I’m really interested in crypto-less federated systems like Mastodon and some of the stuff the Indie Web community has built. I have no idea if those are, uh, web3 enough for web3.:-)
As for the question of casinos, I think @pinboard’s description of Web 3 as “an unregulated casino with a hip bar scene” (sigh) strikes me as… about right?
The web3 movement should be be inclusive of IndieWeb and federated ActivityPub ecosystems. Interoperability and open standards paved the way for all of this, and it'd be a shame to toss that out of the window for some pie in the sky vapor.
edit: by inclusive, I mean adoption and funding. The wheel does not need to be re-invented, poorly.
This is so wrong it's astonishing, web 3 is build build using principles and designs that are decades in the making, literally 30-40 years of cryptography, zero knowledge proofs, game theory, and advanced mathematics. It's incredible that these ideas and academic papers are finally becoming real. The web 3 movement is very inclusive, but technology moves forwards not backwards.
I'm old enough to remember web 1, web 2, and web 3 , thinking web3 is a casino is ridiculously immature, it's how get rich quick moonboys and the mainstream media view blockchain, without actually spending the time researching the technology and understanding basic economic principles.
As for "Crypto-less federated systems like Mastodon and friends" - you have to ask yourself why they don't work at scale. That's the key insight of Bitcoin. You need to have a system-native incentive for the nodes to do their thing, and this system-native thing (BTC the currency, in Bitcoin's case), should have outside value. Many wiser people have said this (not on HackerNews maybe), that money is the only use case for a blockchain.
I’m not sure that Bitcoin offers any special insight here.
We use email; it’s very much a crypto-less federated system that works at scale (of, more or less, every Internet user!)
And there are newer examples: while it’s by no means a Twitter, Mastodon (and the broader ActivityPub universe) is already at a healthy scale. I collected these stats three and a half years ago; the ecosystem has grown substantially since then: https://davepeck.org/2018/05/03/mastodon-stats/
Exactly. If Bitcoin had not gone "to the moon", all of this would be a tiny niche, like Chaum's DigiCash was.
The problem is all the junk riding Bitcoin's coattails.
At some point, probably soon, the bottom will fall out of at least part of this. NFTs are already crashing. That's not too visible, because there's no "market price" across different items.
But you can look at sales on OpenSea, and notice that the resale prices are mostly lower than the previous price.[1] Smooth Love Potion [2], part of the Axie Infinity Ponzi, already crashed.
The big moment will come when Tether comes un-tethered. It cannot survive a net outflow, because it has very little asset backing. Something is going to crack in the Tether/Binance area. Binance is giving some people 200x leverage.[3] That never ends well.
> Exactly. If Bitcoin had not gone "to the moon", all of this would be a tiny niche, like Chaum's DigiCash was.
I don't think "if this didn't happen then this wouldn't have happened" is a real argument, it's just a statement. True for just about everything. It's possible I'm misinterpreting and you just mean it as a statement?
Every time I read about decentralization, I remember this episode from NPR Planet Money (one of the best podcasts, btw). It's about Libertarian Summer Camp where they tried to spend a day without fiat money. Gold standard everything. Turned out it's actually pretty hard because you have to get gold, and make sure the gold isn't fake, all by yourself. You bought a hotdog with the gold and now you have to worry about if it contains anything FDA-banned substances, etc etc.
Being decentralized means that all the efforts that a central government is currently taking will be distributed to everyone, and now everyone has to worry about things that were taken granted before: basic safety, security and trust. This is why there aren't many decentralized systems that caught on because their usability is pretty bad for most people.
Aren’t most of these actually “wash sales” paid in funny money by sellers pumping up the prices? If not, there are many more crazy people in this world than I hoped.
> At the same time, smart contracts have some deeply problematic constraints:
> Smart contracts can’t be upgraded. Smart contracts are deployed once and run forever; their code cannot be changed. The software development industry has literally zero experience with such a deployment model.
I stopped reading here. First, this is factually wrong -- the software industry has tons of experience dealing with software that can't be upgraded. Ever try to upgrade the firmware on a chip with no I/O facility for doing so? The answer is you don't; you instead focus on getting the code correct the first time, and possibly you build out a way to recall the product and replace it with a fixed version and price in the risk of needing to do so into the product itself. It can be done; it just takes discipline.
Second, if you don't understand why smart contracts being immutable is a necessary and desirable feature of the system, not a bug, then you're not going to understand much of web3. Like, think about it for five minutes -- if your smart contracts can be upgraded by default, and this code manages valuable digital assets, then their code can be replaced with code that steals those assets. Making this very, very, very hard is deliberate.
While it’s certainly true that firmware on many devices can’t be or simply isn’t updated, it’s also the case that bugs ship. Because of this, engineers design and ship their more complex devices with the facility to upgrade firmware. Even my ages old stereo receiver is upgradable (although painfully so).
But this is about smart contracts: code that in many cases moves money. I’d put that in the category of code that really could benefit from carefully controlled upgradability.
I’m not the only one. For instance, the primary USDC contract on Ethereum is a proxy contract — it’s upgradable by design. I think that makes a lot of sense, and apparently so do the engineers managing those many billions of dollars: they’ve weighed the balance of “trust” in the abstract with “make sure it doesn’t break” in the real and made their decision.
Beyond that, a guiding principle of some newer blockchains (like Tezos) is that code will need to evolve over time. Like many things Web3, it’s too soon to tell how things will shake out in the long run, and a variety of approaches seems desirable.
> I’d put that in the category of code that really could benefit from carefully controlled upgradability.
First, if you're saying that you need a way to upgrade your money-managing code periodically because you will likely ship versions of it with show-stopping bugs (such as those that enable the destruction or theft of the users' funds), then why should I trust that you will ship flawless code for upgrades?
Second, if the combined security budget of the people who can carry out the upgrade is less than that of the majority of the block producers on the chain, then why build an upgrade procedure at all? Why risk it? Instead, just deploy a new version of the smart contract, and ask users to use that one instead. If it gets confirmed, then an honest majority of block producers will ensure that it stays confirmed. This takes no code at all. You simply sign the new code with the same key that deployed the old code to demonstrate that it originates from the same author(s). Let users decide on their own whether or not to use your upgraded code -- after all, it might introduce new bugs, and the "bugs" you are fixing might be features to other people. It's not your place to tell users what version of the code should be used, and what should not be used.
> why should I trust that you will ship flawless code
You shouldn’t, because no code of sufficient complexity is flawless.
> just deploy a new version of the smart contract
On the Ethereum blockchain (for instance) storage and smart contracts are tightly coupled. If you move to a new smart contract you may well lose your state. This is fine in many cases and preferable in some. But not in others!
> You shouldn’t, because no code of sufficient complexity is flawless.
So why build an upgrade procedure at all, when you don't have to?
> On the Ethereum blockchain (for instance) storage and smart contracts are tightly coupled.
Sounds like an unforced error on these smart contracts' authors parts, and should not be used as an excuse to compromise the principle of code immutability.
If the possibility existed that they need to replace the business logic at a later date, then they should factor the storage logic so as to avoid this coupling. It can be done -- for example, a smart contract dapp can leverage a shared contract that only implements a public key/value store, where the keys are prefixed by the calling contract's address. Then, when the business logic contract changes, it can access any old versions' state with the old versions' contract address, apply any migrations on-the-fly, and store new state that will not overwrite old state due to this key prefixing.
In the Stacks blockchain (which I work on), we go one step further by making it so you can run an arbitrary read-only code snippet on the state of the blockchain at any point in the past (as given by a block hash). Then, you don't even need to do any migrations -- you can just query the historic state of your old contract and only store new data once it's necessary.
> So why build an upgrade procedure at all, when you don't have to?
Flaws, once known, can be remediated. I don’t think macOS has bulletproof security but I’m sure glad Apple keeps updating it.
> In the Stacks blockchain (which I work on), we go one step further by making it so you can run an arbitrary read-only code snippet on the state of the blockchain at any point in the past (as given by a block hash).
That’s a super interesting design point; I’m excited to see where that leads.
Out of curiosity, how does this typically get exposed in dApps (or wallet UIs) built on Stacks?
> Flaws, once known, can be remediated. I don’t think macOS has bulletproof security but I’m sure glad Apple keeps updating it.
My point is that a piece of software does not need an upgrade procedure if there exists a way to install a newer copy without touching the old one. Trying to build an upgrade procedure when there is always the option to install a newer version this way (especially if it can seamlessly access the older version's state) is at best over-engineering.
> Out of curiosity, how does this typically get exposed in dApps (or wallet UIs) built on Stacks?
This is being done right now with Stacks' on-chain naming system, which is realized as a smart contract. The new naming system does not need to import any state from the old system in order to resolve pre-existing names, nor does the existing naming system need to be disabled, because the new system is instead able to call the name resolution method via this "run read-only code on the chainstate as of this block" feature. The past is immutable, so future changes to the state of the old system beyond a predetermined sunset block (defined in the new contract) will not be visible to the users of the new system.
Consider this example. Suppose the name "alice.btc" was registered at block 1000 (hash 0x123) in the old system, and suppose the new system was deployed to use all the state in the old system up to block 1001 (hash 0xabc). Resolving alice.btc in the new system runs code to the effect of:
(let (
(alice-rec (at-block 0xabc
(contract-call? 'SP000000000000000000002Q6VF78.bns name-lookup? "alice.btc")))
)
;; Do something with alice-rec
)
Internally, the (at-block) function runs the given code body with access to the system state as it was as of the end of block 0xabc. The system state is represented internally as a set of key/value pairs indexed by a forest of authenticated hash tries which make it efficient to query a key as of a particular block (see https://github.com/stacksgov/sips/blob/main/sips/sip-004/sip... for details).
Suppose bob.btc was registered in block 1002 (hash 0xdef). The above (at-block) call will not resolve bob.btc in the old contract, because its state was written after the sunset block 0xabc.
Being able to query arbitrary past blockchain history is kind of gross, because you can neither partition nor elide any of the data under consensus- your verifiers need to have a copy of everything. Leads to expensive nodes cause disk space and RAM use explodes. Not an uncommon complaint about immutable programming techniques generally. Idk, kinda seems like a bad tradeoff to me. But then again if you're building it on top of the literal money fire that is bitcoin, who cares about scalability and resource use!
Hate to break it to you, but if your consensus rules permit forks, then there's no getting around this. A fork can be mined arbitrarily far in the future that builds off of a block arbitrarily far in the past.
well basically you have to throw out proof of work and then it's fine. If that's a philosophical thing then you're constrained to highly inefficient systems that yeah, are designed to fork like you say. But if you're okay with any kind of proof of stake setup, you don't have to consider forks, because you trust your validators.
Ultimately it comes down to what you like about the blockchain chimera. Some people like proof of work for its own sake; they think that's the way forward. Some of us think that public distributed append-only log structures with cryptographically enforced permissioning are super interesting all by themselves, maybe even MORE interesting without proof of work!
Long term I don't think it's going to be any fun until a larger subset of homomorphic computing is cheap enough to run distributed-consensus style. In the meantime all I know is it's a lot more fun once you stop trying to be the source of truth for the universe, and accept proof of stake as a natural compromise necessary to keep playing with our toys w/o burning up.
I'd be happy to share but you'll have to message me. And I'm an idiot.
> just deploy a new version of the smart contract, and ask users to use that one instead. If it gets confirmed, then an honest majority of block producers will ensure that it stays confirmed.
I can't see how the operation you describe here is defined or possible for any blockchain that hosts more than one smart contract. Just for a start, how do you decide whether to include a smart contract upgrade that the majority of verifiers doesn't care about either way (surely the most common case)? It's like saying that legislation doesn't matter because we have elections. The elections (consensus) produce the legislation (allowed transactions). You can squish those two layers together, but starts to break the premises of the underlying system (e.g. DAO fork).
I would love to know what software system you were thinking of when you wrote this. Or were you? Sincere question.
Uniswap comes to mind. V2 is superseded by V3, and V3 is the default option of the web UI, but you can still use V2. There are no plans to sunset V2, and I’m not certain that V2 could be terminated at this point, as the signing keys were burned IIUC.
I think that's what's interesting about "blockchains" versus on specific chain.
1. polygon is a cheap(as in transaction fees) knock off of Ethereum, competition good. bad from the perspective of capture value in the protocol.
2. as far as I can tell as long as one oracle doesn't become dominate that provides competition
3. Defi is enabling users value across other networks. uniswap, etc.
4. On a side note, not sure why there's not an api that encrypts an nft on ipfs and only returns the watermarked version unless you send it a fee. or your the owner.
because it's not a real problem. The same way you can buy a mona lisa t-shirt in the gift shop and that doesn't steal any of the value away from the owner.
What you describe could be rather easily implemented, but why would anyone build or use that?
Most (any?) smart contract platforms can theoretically bake in a concept of proxy upgrading or even decentralized governance over triggering the proxy into an upgraded contract. Sure it's complex now, but this is still very very new tech and those problems can easily be built upon and abstracted away.
Yes, 100%. It’s one reason why I mentioned Tezos: it has upgradability and upgrade governance built in from day one, which — if nothing else — I think is an interesting design point.
Right. In the case of USDC, whoever has the private key to their proxy contract’s owner account. You’re trusting their engineering team to do the right thing.
(EDIT: if I’m reading my etherscan correctly, it’s account 0xfcb19e6a322b27c06842a71e8c725399f049ae3a with upgrade rights. Sorry, I’m in transit so tapping on my phone.)
So you deploy a new contract and tell users why they should update. Then they can choose to use the new version or not. I don't think you really understand this idea.
As a user who might prefer the first version of the code to the second, why should I be excited about a software system that can force me to use the upgraded version? That's a design flaw in the current Web -- when a Web service I rely on changes its behavior and goes out of business, I'm SOL. Web3, with immutable smart contracts that stay online, has the potential to fix this.
> ...instead focus on getting the code correct the first time
This is a threshold that real-world contracts don't typically have to achieve. They leave lots of details out, or vaguely defined, because the odds are low that that part of the contract will have to come into play, and it's not worth the extraordinary effort and time and expense to negotiate every tiny very-unlikely-to-happen case.
To quote Lawrence Lessig [1]: "Often obscurity is a real value. Obscurity is what you want... In principle we should be negotiating all of these [possible things that could happen to our deal]... What contracts do all the time [instead] is they create these fuzzy or vague or ambiguous places as a gamble... And if it turns out [that this .002% occurrence does] happen, we'll ask... a judge to figure them out.
Also, if you're just going to replace one immutable contract with another, you're back to meatspace and re-negotiation, which can be time consuming and expensive.
> This is a threshold that real-world contracts don't typically have to achieve
And boy does it show!
How do you debug your smart contract? Your users tell you their money got stolen out of it. I wish that was a joke.
> Also, if you're just going to replace one immutable contract with another, you're back to meatspace and re-negotiation, which can be time consuming and expensive.
Is upgrading them in place somehow better? At least by keeping the old systems around, the people who still get mileage out of them aren't sold up-river.
It's not very, very hard currently though. It's just slightly more complex and more error prone. Most complex DeFi protocols are upgradeable by design these days.
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