Welcome Avatar! Paid subscribers may have noticed that we have recently broadened our scope from blockchain native financial products (DeFi) to crypto-enabled Internet applications (Web3). Why?
The legacy Internet (Web2) isn’t secure or fit for purpose any more.
People use email – with the same address and password – to receive both casual messages from strangers and for deeply personal, confidential, or sensitive correspondence from healthcare and financial service providers. Email isn’t secure, and is a honeypot for digital crime. The “email” of the future will be on Web3.
People use social networks which are controlled by de-facto monopolies in bed with Big Government and Big Corporations. Your entire interaction with the platform is designed to create value for the owners by selling you stuff and molding your beliefs.
In the case of Twitter, YOU the user do the work to create interesting content that others use Twitter to read, but you aren’t paid for your work. Web3 can fix this. Twitter’s successor might be a decentralized product where top contributors are rewarded in tokens!
Using Web2 will eventually open people up to regulatory and tax investigations, frivolous lawsuits, and increasingly sophisticated cyber crime. We need to build a secure-by-default networking layer for private permissionless finance to be a reality.
If you use a MetaMask wallet in Google’s Chrome browser to access OpenSea and pay for a monkey JPEG you’ve achieved very little decentralization. It might have been better to use a credit card to buy art online.
Instead, you’ve overpaid to use a series of centralized intermediaries which obliterate the benefits of settling the sale on a decentralized permissionless blockchain like Ethereum. The typical JPEG you buy has its image hosted on an ordinary web server – the server administrator can change the image at will, and the image will be unavailable if the server is not kept online.
{
"description": "You may own (?) the results of this function call, but I own the function",
"image": "https://moxie.org/nft/whim/3.png",
"name": "At my whim, #3"
}
Signal founder and crypto OG Moxie Marlinspike created an NFT which displays a different image depending on whether you are viewing it on Rarible, OpenSea, or in your wallet, proving this point.
OpenSea then censored his NFT.
OpenSea can also flag your NFT as stolen – now you can’t sell it!
In the future, regulators (and other creditors including the tax authorities) will use the power to freeze NFTs on OpenSea. Yes you own the ERC-721 token on Ethereum; but what is the point if nobody bothers to access the chain, they only view OpenSea’s proprietary and censored interpretation of it? Good luck selling a JPEG that the buyer cannot resell (or even display) on OpenSea.
Disintermediation was meant to drive down costs for users, but de facto monopolies can take a bite of several percentage points of value per transaction, even though the transactions are completely automated. Crypto should be learned with low overhead. The best engineers can create the most efficient product in teams of 2-12. Yet many “decentralized” services charge a larger rake than any casino or race track would dare.
When the regulators, tax man, or even resourceful cyber criminals come for you in the future it will be too late to learn that lazily grafting some blockchain compatibility on top of the centralized, insecure, heavily surveilled internet was simply not good enough.
Web3 will fix all of this over time.
People need to build and adopt more secure alternatives to the centralized Internet before its too late. DeFi Education will be at the forefront of analyzing this promising new technology and separating the genuine prospects from the likely failures.
We’re here to keep you up to date on the best new technology to invest in and use before everyone realizes they need it.
We covered some important projects recently:
Using decentralized file storage like IPFS or Arweave means that you’ll always own your NFT image and nobody can censor it, remove it completely from the Internet, or change the image to something else. You can upload any other content and make it permanently accessible and tamper proof.
Using Akash Network means that you can host servers anonymously and permissionlessly – Amazon and Google demand to know who you are and snoop on you with phone number verification etc. And they don’t accept anon crypto payments. When did we accept the bargin “you can only do your computing with permission from, and under the surveillence of, one of the three Government linked ologopy companies”?
Using Railgun means that your DeFi transactions will stay private so you can trade and invest without fear of nuisance lawsuits or being targeted by criminals
We are researching alternatives to the centralized Internet where a few huge corporations (telecom providers and cloud computing / software giants) monitor and control everything you do online. Your name is on the bill. VPNs do help, but they won’t be enough in future - we need a peer-to-peer network.
Alternatives are being built: people can share WiFi with each other in a city, using something called a mesh network; those who share their WiFi can be rewarded with the protocol native token.
Web3 can finally disrupt social networks, moving content creation off of centralized platforms which take a huge bite of creator revenues and tend towards monopolies / network effects. If there’s a decentralized social media network (huge TAM) it will probably be Web3. We are studying what such a network would need to succeed.
“X to earn” is going to boom, but do people really want the hassle of filing additional paperwork with their tax authorities to earn a few hundred dollars extra per month? Could the tax offices even handle a large percentage of the population working multiple informal jobs online? This friction holds back the economy. If earnings could be received completely anonymously, the tax authorities would be forced to adjust if evasion couldn’t be detected. They would need to offer an efficient self-reporting system with fair tax rates to deter evasion (or emigration!).
Web3 done correctly could result in a fairer tax system. (ambitious, but possible if adoption is significant)
Crypto tokens need to be easily exchanged for real world services to be valuable long term. BowTiedBull makes the critical point that we need to be able to pay for essentials like food with crypto.
Software people think it is more likely that we will first pay for our Internet connection, cell phone bill, digital entertainment, transport (decentralized Uber), and the services we need as business owners (Internet ads, meme / brand creation, server hosting, job adverts, etc) with tokens.
Web3 is a key part of building a crypto-native economy.
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Disclaimer: None of this is to be deemed legal or financial advice of any kind. These are opinions from an anonymous group of cartoon animals with Wall Street and Software backgrounds.
Why The World Needs Web3
Imagine a search engine (Google) that you pay to use rather than having your personal data sold and pillaged. Micro-transaction to execute a search query.
Possibilities are endless for web3, it can be built for the betterment of society. Own technology and build in Web3, don't let technology own you.
It's good to know what doesn't work, and then at the same time keep plowing ahead as if it does.
NFTs have utility and value even with Open Sea's trad-fi drag on them, and will continue to improve over time. At some point OS could jump the shark and over-regulate a pivotal project and we see a massive amount of users jump ship to a competitor.