The interest in Web3 is heating up. We’ve seen major excitement around blockchain and new Web3 protocols that are poised to reinvent the web as we know it. But it’s hard to hide the skepticism and the suspicion that there are ulterior motives behind large cryptocurrency coin fundraisers. There’s no doubt that there are benefits to the Web3 movement — the decentralized nature of Web3 brings innovative forms of shared ownership. Yet, both the marketing hype and investment fervor could get in the way of actual progress in the industry.
According to Biilmann, the theory behind Web3 is exciting and sound and it fits into the headless movement quite well. Yet, in practice, Web3 will require more emphasis on interoperability and open standards, said Biilmann. Without inter-chain portability and better data control, the trend will likely fall victim to the same walled gardens and centralization that underpins the current web. There are some other concerns to keep in mind about Web3 and blockchain, which we’ll explore below.
Back to The Open Web
First off, what exactly is Web3? Well, Web3 is a broad term with loosely-related phenomena, but it can be summed up as a new web designed with decentralized technology and built on blockchains with distributed ownership. “There’s a general sense behind the Web3 movement that goes back to roots of the web as a non-centralized entity,” explained Biilmann.
Whereas in Web2 users were participating in someone else’s walled garden, the concept behind Web3 is that it’s fundamentally open. But how do we make more pieces of the stack a collaborative standard with no single owner? According to Biilmann, this is the aspect that the industry should expand upon.
Issues With Web3
There’s a lot of speculation. One big issue Biilmann foresees with Web3 is the rampant speculation. The long-term success of new Web3 projects founded on a blockchain is muddled by the fact that the creators wanted people to buy in so tokens rise in value. “How much of the underpinnings of Web3 are actually solving real problems and how much is pure speculative investment?” he asks. It’s not always apparent whether, behind their flashy, chic facades, blockchain solutions solve real problems.
A lack of inter-chain interoperability. A lack of interoperability between the many emerging flavors of blockchain could also pose a risk to this fledgling space. “To what degree are they actually building things around standards with the possibility to move from one player to the other?” asked Biilmann. “We need open standards where you can migrate from one to the other.”
Centralization still exists. No matter what the copy around decentralization said, there will still be players who hold more control and power in a capitalist economy. According to Biilmann, it will be important to make platforms fundamentally open and extendable to avoid creating more walled gardens. He admitted that having strong central providers is not a huge problem as long as these open platforms provided interoperability.
A lack of identity portability. When a person owns a web domain, they can move content around freely from server to server. In a similar vein, Biilmam believes that comparable freedom is necessary for identity within Web3. The ideal is to increase ownership and portability of one’s digital identity. Yet, Biilmann questioned whether blockchain is the best vehicle for that goal, especially as competing blockchain protocols could interfere with portability.
Blockchain will still hinge on the authority of an external source. Another issue is how blockchain will interface with reality. Often, a smart contract will point to a URL for an off-chain context without a strict guarantee of what’s happening outside of the chain. If blockchain must depend on the authority of an external source, this is somewhat counter to the ideals of an interdependent network. “Most of the time, you have to trust a provider between what happens in blockchain and what happens in the outside world,” explained Biilmann. In this scenario, the integrity of the blockchain could end up revolving around a single entity.
Connecting blockchain to the outside world is hard. On that note, the exact process for interfacing with off-chain constructs is still being developed. This usually relies on a third-party oracle model, although some headway has been made to eliminate the oracle concept in favor of a more modern standard for integrating off-chain computations.
Every operation incurs high processing costs. Blockchain requires excessive processing power to accomplish simple tasks, which can be wasteful at scale both in monetary and resource terms.
The benefits of NFTs are greatly exaggerated. NFTs won’t likely help the majority of creators. As Kimberly Parker explained, NFT platform sales data showed “an acutely minuscule number of artists making a vast amount of wealth off a small number of sales while the majority of artists are being sold a dream of immense profit that is horrifically exaggerated.”
NFT scams are common, and since minting an NFT requires exorbitant platform fees, the likelihood of an artist recouping their upfront investment is minimal. “I think that people who stand to gain the most are people like the Winklevoss twins, who are already mega-rich and own an NFT platform,” Cat Graffam said on Time.com. “The biggest losers are the vast majority of unestablished artists that are attempting to break into NFT sales.”
Keeping Alternative Options On The Table
“Let’s not jump to the conclusion that cryptocurrencies and blockchain are the solutions,” said Biilmann. As he noted, people have been tinkering with ways to open up identity and data for decades now. These thinkers may also have relevant insights and alternative solutions that shouldn’t be dismissed or ignored.
For example, Tim Berners-Lee, inventor of the World Wide Web and the HTML programming language, has been spearheading a new initiative called Solid. Solid is a “proposed set of conventions and tools for building decentralized social applications based on linked data.” The project’s goal is to enable true data ownership and better privacy. “If we’re after the goal of an open web, we should be just as curious to know what they’ve been studying for years,” said Biilmann.
We may be seeing Web3 projects excel simply due to the underlying speculative interest in cryptocurrency, Biilmann said, not that they’re technically the best solution or have the best open ownership model. Other solutions include IPFS for high-volume distributed storage. Or, take DNS, the decentralized naming system at the core of the web—”that part of the existing web is already very open and user-owned,” said Biilmann.
Goal: Plant Gardens Without Walls
“I’m excited about this—personally, I hold no grudge about the tech,” Biillmann clarified. “Making identity and underlying data fundamentally more open is awesome.”
But, at the same time, the space is too speculative and too far removed from building useful things for users, said Biilmann. There is also a pressing need for interoperability and portability in the blockchain industry. And with so much noise driven by the interest in tokens, it could be more beneficial for society to trust a more neutral party in architecting the fabric of our digital lives.
“It’d be a shame if people forget what we can build already,” said Biilmann, pointing to pre-existing technologies like IPFS and DNS. Although these open standards won’t make early stakeholders rich in the short term, they could help get us to that open state even faster.
Web3 is still in an early space. And if we separate currency from this ambition, it could deliver tremendous outcomes. “Let’s figure out how we make identity and data open and not tied to specific walled gardens,” said Biilmann. “That’s something we, as an industry, should work toward.”