Almost everything web3-related is a grift based on getting people to buy crypto. Although the distributed part of blockchain technology is sort of neat, it’s not that ground-breaking, as having stuff distributed is the whole basis of internet technology since the very beginnning.
There have been fine peer-to-peer systems for decades. But apart from being a money grab, blockchains are insanely inefficient. To the point that I’m just scared of the whole technology because of the climate impact it has.
I noticed that almost everybody evangelizing Web3 owns crypto currency. I can’t assume these people can be objective in their motivations and communication—their chance of ever making a profit depends on greater fools buying tokens after them. And few people can be honest enough with themselves to admit that they put their savings into what they now believe is a pyramid scheme. But why are others so shy to speak out against these projects?
One reason is that they do not have a financial stake in the situation. They have nothing to gain from speaking out and only risk losing friendships. But now we have big brands like Adidas and CNN making the hype more mainstream. There’s enough money in crypto to cause a financial crisis when it all crashes down. And our literal climate is put at even higher risk. So I feel we need more opposing voices.
For a long time, I felt not competent enough to write anything about web3. And I didn’t want to look like an old man yelling at a cloud. Having been on a leave for some months now, I’ve spent too much time on too many web3 websites and Discords. And I still had hope—there must be something good about web3, right? After all, it’s the web!? And web is awesome!
I was excited about a new web. And if web3 would be an empty hype, I’d have to believe that many people are full of shit and others are way too gullible. I did encounter many suspicious things, like a carbon offset token selling at $300+/tonne whereas buying and canceling European carbon credits (one of the most effective, but also expensive offsetting measures) can be done at about a quarter of that price. I still believed it was interesting and that people couldn’t be setting up a scam under the pretense of protecting the climate.
Then I read tante’s article, The Third Web. The author has a major in comp sci and a minor in philosophy. The article rips apart the idea that there’s anything amazing about blockchain tech. Now I don’t have to wonder about that part anymore, it’s easier for me to see these projects for what they really are.
Blockchain projects typically promise to solve some of the following problems:
- Concentration of power: a handful of companies are getting increased control of all online services. This is bad because their ethics (or lack thereof) aren’t aligned with ours.
- Trust: to trade online, you need to be able to trust your anonymous or pseudonymous partner. Distributed services don’t have a central authority checking who’s who, so this is extra important when problem 1 is solved.
Unfortunately neither are been solved by blockchain projects. What’s worse, blockchains are awful for private interactions.
What happens on web3 stays on web3
There’s no blockhain-based Facebook competitor. Most of the web3 discussion happens on Discord, a commercial, centralized chat service running on proprietary software. I didn’t find any web3 initiative that offers a serious replacement for existing platforms.
Content moderation is a hard problem on those social platforms. So much, that we had Meta-formerly-known-as-Facebook allowing the coordination of the genocide in Myanmar happening in plain sight. Insofar that suppression of free speech has been a problem (that censorship the blockchain crowd is so much against) promoting violence and misogyny has been a more concrete and bigger problem.
On a blockchain, content moderation is even harder than on the current platforms. After all, the whole idea of blockchains is that nothing ever can get erased from them. So next time Facebook is promoting a genocide again, we at least can address that to somebody. Just that it would be very hard for a government stop Bitcoin mining, on a distributed system it would be very difficult to suppress propaganda for whatever horrible thing a bunch of hateful people would want.
Snapchat got big because it promised that interactions between users on their platform would disappear quickly. They figured publishing something on the web already is too permanent for teens—they shouldn’t be held accountable for some innocent jokes that don’t look innocent anymore in a few decades. Blockchain is about the opposite: anything ever done on a blockhain is permanently stored for the whole world to see. That doesn’t look like an attractive situation for normal, transparent communication between individuals to me.
Blockchain schemes increase centralization
The web already is decentralized. As Wesley Aptekar-Cassels explains very nicely: Anyone can run their own server and even make their own protocols. Blockchains add centralizations to that because they add dependency on other nodes.
The reason that so many people use the same websites (like Google’s, Facebook’s, etc) is mainly because of the convenience these sites offer and the reach they can provide. If this is a problem, it’s not a technical problem, but an economic one. The big companies have more design and programming capacity to offer online services than individuals and non-profit open source projects do right now.
That said, 20 years ago it wasn’t exactly hard to run your own website and today it’s even simpler. However, interacting with a blockchain requires much more technical skill than that. The most popular blockchain projects are big because of the centralized web portals like Coinbase and OpenSea.
I don’t see blockchains destroying Facebook anytime soon nor that even being a good thing per se. What’s worse is that well-funded blockchain projects actually increase inequality. Which shouldn’t come as a surprise, as increasing inequalitiy is an effect (some would say purpose) of capitalism. And of course an internet technology that’s all about owning things and making money won’t change how globalized capitalism works. Quite the opposite: if there’s money to be made, it attracts investments that should bring the investors a high return, so they become even richer.
Real trust problems aren’t solved by blockhains
Yes, today it’s possible to sell one token (say, an NFT) and get paid with another type of token (say, ether) without having to be afraid that the buyer disappears without paying after you hand over the goods. Unfortunately, all relevant marketplaces are either centralized, commercially owned sites or run completely on Etherium, meaning that both the NFT and the currency are a derivative of the same token already.
If you want to be really sure that a token on a blockchain is backed up by something in the real world, or anything not on that particular blockchain, you need a party that you trust that verifies that. Anybody can ‘mint’ an NFT of any piece of art (whether they made it, own it, or just found a picture online), or sell a token that claims access to a piece of land on the moon. But if you want to buy and sell real ownership of an object with such a token, you need to trust the party who created the token. That’s why certification agencies, government bodies and trading platforms exist. They put their trusted name at risk every time somebody does a transaction with them. Quoting Benedict Evans: “The blockchain can’t lie, but you can lie to the blockchain”.
To turn that around: the NFTs dropped by famous artists are sold for the highest prices. They got their fame through a handful of marketplaces (centralization!). No blockchain was needed for that. Barely any buyer runs their own blockchain software—almost everything happens on the old fashioned world wide web. Buyers trust the websites that they’re really selling NFTs, really minted by the artists advertised.
Proof of work blockchains are the worst technology ever invented
Web3 is just another name for blockchain applications. And blockchains are an extremely costly way to store and share information and to do calculations with. So everything happening on a blockchain costs a lot of computer power, thus energy and thus money. There are two types of systems for that: ‘proof of work’, which is the most common type, used by Bitcoin and Ethereum. Computers have to do a complex ‘puzzle’ to proof they’re a worthy node in the network. Each node doing that gets a vote in deciding if a request is true/allowed or not. Sounds cute? Those puzzle calculations require so much electricity that in spring 2021, Bitcoin alone consumed as much electricity as Sweden. Even if some of that electricity is generated in a sustainable way, that still increases demand for electricity from non-sustainable resources. Proof of work is a damaging technology in a time where everyone should be doing their utmost best to reduce greenhouse gas emissions. Now it’s totally fine with me that even after reading this post you still want to experiment a bit. What I’m not fine with is if that happens on these proof of work blockchains. Not on my planet.
Some nuance please?
I found some blockchain initiatives that seem to be run by people with genuinely good intentions. Not using a chain that uses a currency, really trying to solve a real world problem rather than building the next get rich quick scheme. (So far I didn’t understand what problems their blockchains solve that other databases can’t though.)
I wouldn’t be surprised if in 3 years or so there’s some very niche B2B application that’s really elegantly solved with a proof of stake blockchain. But right now the media are full of DAOs, NFTs and coins as if they’re the most interesting since Big Data. Remember Big Data? That was going to change everything too. Except that unless you’re working for a big insurance company, you won’t even notice or hear about Big Data anymore.
Pyramid schemes, scientology and Tamagotchi
Blockchains don’t solve the problems they’re supposed to solve. They do cause new problems though. There’s a huge negative climate impact associated with it. The miners buy so much hardware that it’s been affecting the availability of graphics cards for years now. It makes grifters rich. Just to name a few.
Now I don’t expect anyone owning a single NFT or other blockchain asset to read this far. They expect that the cognitive dissonance will be too much and they feel offended. “I’m not a stupid or bad person”, they’ll think. “I spent money on it, so it must be good. The criticism must be wrong.”
And that makes web3 is like a combination of pyramid schemes, scientology and Tamagotchi. There’s the fact that ultimately anything you do on blockchains costs you real money and that once you’ve paid that, you’re one of the people who need to get the next cohort of buyers onboard or lose your money. There’s believing that you’re joining a movement that’s in the know, with all kinds of interesting words that and sci-fi stuff that normies just don’t understand. And there’s your portfolio, your pretty JPGs, wallets, apps and everything you spent so much time on understanding and maintaining. Good luck avoiding sunk cost fallacy there.
End on a positive note
People from all over the political spectrum now agree that the current state of the web isn’t ideal, with all that power concentrated at a few companies. After Web 2.0 several good, interesting, non-commercial technologies have emerged that bring power back to individual creators. Most importantly, the Fediverse with Mastodon, the IndieWeb movement, the rise of newsletters and new ways of making and publishing web pages. I hope that the people who care about freedom of speech, honest communication and fair creator compensation will look more into that too.
If I had known in advance that this post would reach such a big and diverse audience, I would have done a few things differently.
Tone of voice
First of all, the tone of voice may annoy some of you. The thing is, I wrote this for versions of my past self. New to the topic, I would have saved a lot of time and frustration had I read a post like this a few months ago. The condescending tone is not aimed at blockchain fanatics, but is supposed to be discernably different from the web3 marketing departments.
A little more about NFTs
After I published my post, Moxie wrote a more thorough and more devastating critique of web3. He points out is that NFTs (as they’ve been popularized) don’t even have any data in them about the object they’re referring to. Used in the context of artwork sales, they only contain an URL to the artwork, but not even a hash of the original file. The owner of the server that the URL points to can change the file behind that URL at any time. If the domain owner decides to doing something else with their site, the NFT just contains a link to something else than at the time of sale, which, in time will be a 404 page at best.
I thought NFTs were a pretty smart general purpose concept. And the URL vs hash thing could possibly be solved. But in the end, NFTs are really nothing but technically complicated purchase receipts. So in the context of artwork sales, trading NFTs is like trading the purchase receipts of paintings. [side note] (I’m sure someone some artist will do something clever around selling gallery sale receipts). In addition to NFTs being much less useful than some of the trading prices suggest, they don’t even need a blockchain.
Proof of Stake doesn’t exist and may never work
Blockchain enthusiast had previously given me the impression that proof of stake blockchains would drastically reduce the power consumption of blockchain projects. Yanmaani argues that this may never happen. That post goes a lot deeper, but I had a similar intuition to why PoS may never work. If owning just over 50% of tokens in a network means you can defraud it by double spending tokens and creating fake tokens, a scammer only needs to provide (fake) proof that their combined nodes are in agreement of them them owning the majority of tokens. Like little children quibbling:
- “I’m hundred percent right”
- “But I’m a thousand percent right”
- “No I’m a trillion percent right!”
Looking past the promises
Several of the responses to this post criticized my lack of faith in the future of blockchains. But let’s be real, distributed blockchains like bitcoin have been around since 2008! There’s as much between today and that moment as between the dotcom crash and the launch of 386 desktop computers! This post is geared towards people who want to build something today. And among all the ideas thrown at me, there wasn’t a single one I’d want to use or invest in.
It’s time to call blockchain things for what they are and not what some knees deep invested marketing guru hopes they will become.