Both Tesla CEO Elon Musk and Block CEO Jack Dorsey voiced their criticism of Web3 – commonly known as the new, decentralized iteration of the internet – in recent days, in a series of tweets, which incensed a few Web3 believers and reflects the broader conversation around the technology.
“You don’t own “web3.” The VCs and their LPs do. It will never escape their incentives. It’s ultimately a centralized entity with a different label. Know what you’re getting into…,” Dorsey tweeted.
Musk quickly jumped on the criticism, tweeting that “I’m not suggesting web3 is real – seems more marketing buzzword than reality right now – just wondering what the future will be like in 10, 20 or 30 years. 2051 sounds crazy futuristic!” adding, “Has anyone seen web3? I can’t find it.”
To which, Dorsey replied “It’s somewhere between a and z,” a reference to venture capital firm Andreessen Horowitz (a16z) a strong Web3 advocate. The firm says on its website that this third generation of the internet — a group of technologies that encompasses digital assets, decentralized finance, blockchains, tokens, and DAOs — is the solution to the need for an internet “that can help us retain leadership in a world of increasing competition, unlock opportunity for the millions on the margins of the innovation economy, and enable people to take control of their digital lives.”
Shortly after Dorsey’s tweet, co-founder Marc Andreessen blocked him on Twitter, according to a Dorsey tweet with a screenshot captured “I’m officially banned from Web3.”
But what exactly is Web3?
That depends on who you ask and which camp they’re in.
Markus Levin, co-founder, XYO and head of operations at XY Labs, told GOBankingRates that Jack Dorsey appears to be very much in line with the Bitcoin maximalist camp, and that camp is pretty much opposed to almost all innovation in the crypto space beyond Bitcoin.
“This explains his skepticism of Web3, I suspect. That said, I’m hopeful that Jack will come around to what is happening in Web3 because he is an incredibly smart and well-intentioned leader.”
He added that Musk is skeptical “because I’m not sure he understands what’s happening in the crypto world more generally.”
“He represents this kind of broader skepticism of Web3 — a result, primarily, of not understanding the rapidly developing space. Web3 is still in its early stages of development, and there are many aspects to it that will be misunderstood and not fully realized for some time. But what is happening in this shift to Web3, in short, is that our digital infrastructure is gradually going from a centralized structure to a more decentralized one.”
On the contrary, Levin explained that in Web2, profits are disproportionately concentrated in large monopolies such as Google, Facebook and Amazon.
“Ultimately, Web3 will achieve what was originally intended for the internet — that is, a globally connected tool that will enrich the lives of users and empower them politically and financially. We aren’t there yet, but the ecosystem is growing relentlessly and with very promising developments,” Levin added.
Budd White, Chief Product Officer at Tacen, echoed the sentiment, saying that while many companies lean into terms like ‘Web3’ and ‘blockchain’ exclusively for the marketing clout they convey, the fact remains that many innovative startups are contributing real improvements to the way we think about the internet.
“At its core, Web3 is about asserting ownership over one’s digital identity. This is incredibly important because now, in the Web2 era, large, centralized companies dominate the internet and have essentially monetized our data, often without our consent, using it in ways that might infringe on a variety of rights. Web3 is a promising solution to this problem. And while the concept may sound abstract or even like a marketing gimmick, the fact is the combination of decentralized networks for data storage and processing, democratized digital decision-making and blockchain-scalable applications that are increasingly accessible to the masses, such as the Solana blockchain, has brought us much, much closer to a new era in which people can control their digital identities.”
There are, however, challenges for organizations in the Web 3 space, he added. First, to minimize the perception that it is just a marketing gimmick. And the second is ensuring that any Web 3 interface is easily accessible to a user who is used to traditional Web2 systems.
“If we are patient and diligent — and if we build truly useful and beneficial applications for people around the world – then I believe Web 3 will come to be seen not as a marketing ploy to attract VC funding but, rather, as a real source of public value,” he added.
But there might be additional reasons for the skepticism.
Ryan Boder, DAO Core Team Lead at API3, told GOBankingRates that he can see why Musk and Dorsey express skepticism of Web3, as it’s akin to the early days of the internet when people were skeptical of the new technology and its implications.
“Today, few people can adequately define what Web3 is if you ask them, and that’s ok — it’s a new thing that’s emerged from one of the fastest-growing industries in human history,” Boder said.
However, Web3 has a powerful meaning that is rooted in a very specific purpose.: the concept of putting your digital self — that is, your online profile – under your own control, he added.
“Starting with Bitcoin, crypto has offered internet users the opportunity to use money and finance in a self-sovereign way. The current model of the internet, Web2, comes with severe costs, especially to consumers,” he added.
Boder explained that in Web2 consumers are often the product and those who profit from influencing or controlling our behavior are the customer.
“A handful of tech monopolies dominate the internet and, in turn, exploit users and the information surrounding their digital identities. This is a massive problem that misaligns incentives, misguides innovation, and threatens to erode our civil liberties. Web3, in short, is how we address this problem,” he added.
Paddy Power, President at virtual sports exchange ASX Sports, told GOBankingRates that the beauty of Web3, for example, is that it allows almost anyone to create and trade NFTs.
“The challenge is both the gamification and sustained shared value of NFTs and how they hold innate value as a virtual object. This is accomplished by ensuring personalized utility and an ability for both the fan and the owner to extract value, both in terms of entertainment and even profit,” he said.
However, some in the crypto community tend to agree with Musk and Dorsey’s premise, as it relates to the fact that Web3 is in the hands of a select few.
Hayden Hughes, CEO of crypto social trading platform Alpha Impact, told GOBankingRates, that “for the most part, Musk is not wrong about present-day Web3.”
“Forget about the infrastructure: the proportion of people using Web3 is limited to a small group of niche adventurists who want to transact in metaverse real estate, DeFi, or in NFTs. This is like the internet in 1995. Although there’s a decentralized $100 billion lending market built on Web3, the number of human beings involved in the ecosystem is very small. Until we get widespread adoption, Elon is mostly right.“
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