Last weekend, it felt like everyone I knew was sending me the same link. three things should fix Web3 in 2022:
“The Problem With NFTs,” a long video essay by the Canadian media critic Dan Olson, ricocheted around all corners of the tech world since it was uploaded on Friday. (It now has 2.6 million views and climbing.)
Over 138 meticulously researched minutes, Olson traces the history of the 2008 financial crisis, the creation of Bitcoin and Ethereum, and the rise of NFTs and DAOs, and concludes that what we have taken to calling “Web3” is effectively beyond saving.
The technology is too broken, and its creators too indifferent to its failures, for it to ever live up to the promise of its most starry-eyed backers.
Few of Olson’s criticisms are entirely new, and on my Twitter timeline this week, I saw many crypto enthusiasts dismiss them out of hand. Few people working in the space will be surprised to learn that :
Crypto3 is awash in grifts, that current blockchains are energy inefficient and expensive, or that digital wallets are difficult to use and fraught with danger.
Many Web3 builders will also bristle at Olson’s tone, which is smug and hectoring in the house style of the YouTube video essayist; his audience is not people working in crypto, but rather everyone he thinks ought to be afraid of those people.
Because whatever you make of Olson or his overall argument, it’s undeniable that today Web3 is a mess — and not just in a “we haven’t finished building it” sort of way.
Web3 is a mess of a kind that could take five or more years to fix, and that assumes the work gets started soon.
And the thing is… I’m just not sure people are working on these things. I read through the funding announcements; I talk to the product people; I follow the Twitter timeline.
The other day I read a long post where investors talked about “what to watch in crypto in 2022,” and it sounds exactly like what we were supposed to watch in 2021: music NFTs! DAOs trying things! “The infrastructure phase.”
Three Things Should Fix Web3 In 2022:
1. Fix Crypto Transactions Safe, Reliable, And Approachable To Normal People.
Here’s a story about the blockchain.
The other day some people figured out that some high-priced NFTs listed on the trading platform OpenSea had been listed multiple times, some for a small fraction of what they are worth today.
These people took advantage of this fact to buy and then immediately re-sell the NFTs for hundreds of thousands of dollars, without the seller ever realizing what was happening.
On a good marketplace, you would only be able to list a product for sale once and at the price you intend to sell it for. At OpenSea, though, multiple listings were possible.
And blockchain-based transactions are irreversible. So as with so many things in crypto, the losers here could only fall on the mercy of the platform, which did, in the end, reimburse them. But I was struck by what OpenSea told CoinDesk about the issue:
An OpenSea spokesperson told CoinDesk via email that “this is not an exploit or a bug” but rather “an issue that arises because of the nature of the blockchain.”
Try to imagine you had just lost several thousand dollars because it turned out that you had inadvertently listed the same product twice for wildly different prices. And then imagine calling up the marketplace to complain and the person on the other end of the phone saying,
“Good news, this is not an exploit or a bug. This is simply an issue that arises because of the nature of the blockchain.”
I can’t imagine web3 would do business with that company again. More to the point, I can’t imagine regular people ever doing business with this kind of company at all.
In the early dot-com days, I used to think people who refused to give their credit card information to e-commerce sites were being a little paranoid. On Web3, paranoia is a requirement to do any sort of business, period.
2. Make A Moderately Efficient Blockchain “Computer.”
Web3 backers love to talk about how blockchain networks are computers that can be programmed to do anything you imagine, given superpowers by the fact that they are also decentralized.
Ethereum was the first of these computers to get real traction, but it was quickly overwhelmed by traffic. Traffic is managed by charging fees to use the computer, and the fees to complete a single transaction on the Ethereum network can run over $100.
Imagine spending $75 to create a “free” Facebook account and another $75 every time you wanted to post something, and you have a sense of what it would be like to participate in a social network on the web3 blockchain today.
Ethereum is in the midst of a transformation designed to make it more efficient — which is to say, faster, less expensive, and less wasteful of energy. In the meantime, technologists routinely appear announcing that they have built a more efficient blockchain.
Solana, for example, is a company that raised $314 million last year to build what it calls “the fastest blockchain in the world.”
With that in mind, let’s check in on how the fastest blockchain in the world was doing on Sunday when the aforementioned crypto crash led many people to use it to buy and sell assets. Here’s Frank Chaparro at The Block:
As the price of cryptocurrencies across the board slid during Friday’s trading session, traders large and small found themselves unable to execute transactions on Solana’s blockchain — a protocol that has been touted by proponents for its scalability and fast web3 transaction speeds.
Transactions per second (fps) were down significantly.
Those issues spilled into Saturday. Meanwhile, Solana’s official status Twitter account noted that the blockchain has been “experiencing high levels of network congestion” tied to “excessive duplicate transactions.”
3. Develop Technologies For Mitigating Harassment And Abuse.
Keeping people safe on platforms today rests on a handful of assumptions that we take for granted:
That our posts, purchases, and other activity is mostly private; that offending materials can be removed; that bad actors can be prevented from evading bans by keeping a record of phone numbers, IP addresses, and other web3 signals.
On the blockchain, none of that is true. Transactions are public; transactions are immutable, and regaining access to a platform is as simple as creating a new wallet.
In his video, Olson speculates about how corporations or governments could scan blockchain transactions and use them for discrimination; it’s one of his points that landed the hardest with me.
In an excellent blog post published a day after Olson’s video, software engineer Molly White elaborates on potential blockchain abuses. She writes in part:
People who keep their cryptocurrency wallet addresses private often do so with good reason: there is very little privacy available once your crypto wallet address is known, because every transaction is publicly visible, and attempts to obscure them are often easily web3 unobscured with chain analysis tools.
Imagine if, when you Venmo-ed your Tinder date for your half of the meal, they could now see every other transaction you’d ever made—and not just on Venmo, but the ones you made with your credit card, bank transfer, or other apps, and with no option to set the visibility of the transfer to “private”.
The split checks with all of your previous Tinder dates? That monthly transfer to your therapist? The debts you’re paying off (or not), the charities to which you’re donating (or not), the amount you’re putting in a retirement account (or not)?
The location of that corner store right by your apartment where you so frequently go to grab a pint of ice cream at 10 pm?
On Twitter, I asked who might be working on these web3 issues; so far, I’ve yet to receive any replies. It’s hard to imagine a bigger hurdle to the mass adoption of blockchain technologies than the absence of basic trust and safety features, and yet to date, we’ve seen very little.
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