Offchain: In web3 We Trust

Offchain: In web3 We Trust

The decentralised web is crypto’s latest and greatest crusade. Could a web 2.0 giant show us the way forward?

When web3 roared into the crypto vernacular last year it felt like a direct response to Facebook’s hamfisted attempts to co-opt and privatise the metaverse.

A technology that prides itself on openness and freedom of access against the lumbering avatar of all that’s wrong with the modern internet? Bring it on.

Now that we’re in the winter of all our discontents, web3 has largely become synonymous with the worst excesses of the late-stage cycle – parodically stupid NFTs and a giddily complex financial layer with the robust security of, say, a major Australian health insurer or telecommunications company.

Yet despite the crashing valuations, anaemic volumes and cringe-inducing user numbers, web3 remains a potent buzzword – for both users and companies – and a meme that looks certain to take centre stage during the next bull run. But is it all such a fait accompli?

Form and function

As much as we might wish it otherwise, the vast majority of people don’t care about decentralisation, or privacy, or permissionless networks. These are all aspirational qualities, important for the builders and philosophers, but largely irrelevant to everyday people.

People adopt new technologies as a function of culture and utility. Crypto’s success to date has been testament to the almost religious fervour that it cultivates in its adherents. But utility has been harder to come by and privileging the former over the latter has led to a pervasive distaste for what crypto represents.

Web3 is still looking for its killer app. But when and if it arrives, it will probably be shorn of the terminology and signifiers that make crypto crypto. After all, Netscape never described itself as a HyperText Transfer Protocol routing service – it was Netscape and a bold new world awaited.

I say NFT, you say digital collectible

Reddit made waves this week by revealing that since July 3 million users had minted Reddit Collectible Avatars that they were storing in their personal Reddit Vaults. Dig a little deeper and you realise that these Collectible Avatars are NFTs and the Vault is a Polygon wallet. Reddit basically Trojan Horsed 3 million people into the NFT ecosystem. (Vaults also contain your Reddit Community Points, which are actually ERC-20 tokens.)

The scale of this endeavour shouldn’t be underplayed. In a few months, Reddit has doubled OpenSea’s user base. How did it do it? It made NFTs somewhere between cheap and free, didn’t overpromise on utility, completely avoided crypto language and let the secondary markets take care of themselves.

But more importantly, Reddit built something that was appealing and useful to its users, rather than relying on the words “NFT” and “blockchain” to fill in that gap.

This is a salutary lesson to companies dipping their toes in the web3 space: make something cool and put it on the blockchain, don’t assume that the blockchain makes it cool. Blockchains are glorified databases. They are, by definition, not cool.

The original odd couple

Reddit’s success suggests another aspect of the web3 revolution that might be discomfiting for its evangelisers: that these blockchain-enabled technologies will likely exist alongside the traditional web, rather than displacing it entirely.

Part of this is technological – achieving the speed and throughput required to power blockchain applications at the scale of the global internet will be the work of decades – but it’s also a result of system inertia. Reddit’s success in no small part comes from the fact that it has 50 million daily users already. Systems tend towards adaptation not revolution.

Crypto has always struggled with the gap between expectation and reality. Few technologies have arrived with such grand and utopian visions for refashioning the way the world works. But the history of technology is one of compromise and unexpected detours and if crypto wants to achieve change over the course of those decades, it may have to start working from the inside.

Luke from CoinJar

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