The irrational exuberance of the web3 – TechCrunch

This year’s hottest new tech terms are definitely “web3” and “metaverse”. The first refers to a decentralized, blockchain-based web, while the second is a combination of the internet and augmented and virtual reality. It is possible that we will see a fusion of concepts at some point. That is, if the concepts ever turn into something.

Suddenly, out of nowhere in 2021, we started using these terms like they were obvious and we were all aware of the change. Like a giant social phone game, the blockchain has become ‘web3’ and augmented reality and virtual reality have turned into ‘the metaverse’ – and we’ve all been around.

Yet the idea of ​​blockchain has been around for years as a concept, long before Bitcoin decided to use it as a ledger for its digital currency idea in 2008.

I started covering the notion of blockchain in business in 2017 when a colleague pointed out that it could be the next big thing, a way to build trust through a strong case. It was interesting at first, but it was often referred to as a solution in search of a problem, and I ended up losing interest.

Here is what I wrote in a 2018 article on blockchain in business:

Blockchain is currently in the midst of a major hype cycle, and that makes it difficult for many people to take it seriously, but if you look at the core digital ledger technology, there is huge potential for change. our way of thinking. confidence in business. Yet it’s still only the early days and there are a number of missing pieces that need to be in place for blockchain to really take off in the business.

At the time, I had written about a number of promising startups. I spoke to blockchain folks at large companies like IBM and SAP as they pored over the idea of ​​bringing blockchain-based solutions to the business. I was actually pretty excited about it too, until I realized it was more hype than reality and moved on. Three years later, he’s back, and again, that’s the next big thing – and he’s got a new name to go with it.

British engineer and blogger Stephen Diehl sees the web3 moniker as a pure repackaging of the same technology with the same issues. “At its core, web3 is a tasteless marketing campaign that attempts to reframe the public’s negative associations of crypto assets into a false narrative about the disruption of the hegemony of legacy tech companies,” Diehl wrote in a blog post from the December 4th who made no effort.

What he means is that supporters of web3 are saying that decentralization could reduce the power of the biggest internet companies – Amazon, Google, Microsoft and Facebook – and return it to users. But will he do it?

Kevin Werbach, professor at Wharton and author of “The Blockchain and the New Architecture of Trust,” said the technology may not be as advanced as the hype, and the current popularity of digital assets does not equal still a threat to Big Tech.

“Web3 is, to some extent, a marketing meme or brand around a variety of blockchain and cryptocurrency activities, which was already happening. Like the corporate blockchain wave of a few years ago, web3 is much more advanced in adoption than it really is. A lot of people trade cryptos and buy NFTs, but that doesn’t necessarily mean they’re embracing distributed alternatives to major tech platforms, ”he said.

But Hilary Carter, vice president of research at the Linux Foundation who spent three years at the Blockchain Research Institute in Toronto, sees a promising set of technologies that may be ready to evolve to face the Web3 hype.

“Web3 simply couldn’t exist without the innovation that is blockchain. The road has not been easy, as technology has too often been dismissed for some early failures. But those failures pushed innovation to solve problems like scale, ”Carter told me.

She said the issues of scale and sustainability that I saw in my blockchain coverage several years ago have been resolved in the years since. “I think today, once these issues are resolved, we see the maturity of the blockchain ecosystem, to such an extent that nation states are building a ‘central bank digital currency’, which is probably the case. of use that will require the most throughput, ”she said.

Certainly, financial institutions are embracing the technology. In its annual blockchain survey, Deloitte reported that nearly 80% of respondents believed digital assets would be important or important enough to their industries over the next two years. There is also a lingering belief that the acceleration of digital transformation amid the pandemic is leading to a corresponding shift towards more widespread acceptance of digital currencies.

While the idea of ​​a digital currency in an increasingly digital world certainly makes sense, it’s a big step forward to say that blockchain can support a wide range of use cases, including including replacing the current Internet infrastructure, as proponents suggest.

Diehl certainly does not believe it. “On a computational basis, blockchain networks only adapt by becoming the same plutocratic, centralized systems that they would have been designed to replace,” he wrote.

But Carter sees room for both digital currency and other use cases. “Sure. I see both digital currency and blockchain implementations progressing significantly,” she said.

Werbach adds that there are some promising examples, but there is reason to be skeptical about web3 as a whole concept.

“New systems built from the ground up, like in DeFi (decentralized finance), don’t have the problem of legacy businesses, but they do face the challenge of scale-up and mass adoption. Many so-called “web3” solutions are not as decentralized as they seem, while others have yet to show that they are scalable, secure and accessible enough for the mass market. That may change, but it is not a given that all of these limitations will be overcome, ”he said.

And there is the catch. Whether web3 is a marketing slogan or a true tech trend, there is certainly a lot of money and technology behind it. Still, there are clearly substantial hurdles and challenges ahead, and only time will tell if Web3 can overcome them and live up to the latest round of hype.

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