Setting aside any opinion you might hold on either of these positions, it’s important to focus on the core structural issues with Web 2.0 and why there’s a need to change them. Doing so reveals a fundamental problem that’s crying out for a Web 3 advance: the misalignment between the interests of the giant companies that dominate the internet and those of the general public.
Blockchain technology can help address that, but it is by no means the only part of the solution or necessarily the most important part. We need a mix of technologies (both decentralized and centralized), regulation and economic rationale to enable business models that bring those competing private and public interests together.
By 2004, it was well known that Google, Facebook and Amazon – the survivors of the late-nineties dot.com bubble – had consolidated massive market power around ever-growing communities of value. What O’Reilly did was give a name to the new, network effects-driven business model that enabled their dominance: an ever-expanding mass user base on a common platform whose growth self-fulfillingly attracted more users to create a honeypot for advertisers. The emergence of these powerful intermediaries was a stark departure from the internet’s original decentralized idea, where publishers and users of information were expected to have direct, permissionless access to each other.
People didn’t foresee that we’d become dependent on the unchallenged control these few platforms wield over information, much less how, in handing over access to our eyeballs and clicking fingers, we’d be monitored, corralled into echo chamber groups, and manipulated with target ads and disinformation without even realizing it.
Blockchain technology advocates were now positing it, not only as a way to resolve the centralized internet’s problems but also as a novel way of framing them. In focusing on the blockchain-centric concept of “trust,” Wood, who was co-founding Ethereum at the time, shifted our gaze away from the standard economic theory that decentralization’s inefficiency had opened the door to centralizing monopolies and pushed it toward Web 2.0’s meta problem: that the distrust among decentralized communities leads people to entrust centralized entities to coordinate their exchanges of money and valuable information with each other. What was always true for banks and money could now be seen in the realm of exchanges in another valuable commodity: data.
The next step was to posit that blockchains such as Ethereum, in supplanting trust in centralized entities like Google, offered the alternative of a verifiable, “truthful” means of tracking exchanges via open protocols and decentralized validator networks. If we could achieve that, the argument went, we could replace monopolistic platforms with decentralized communities of data sharing. Business models would emerge where applications service those communities’ transactions of money and information but, in keeping with the idea of “self sovereign identity,” control over that valuable personal data would reside solely with each individual user.
All sides make valid points. One thing’s certain: We still have a long way to go to escape The Matrix. Blockchain’s “trustless” exchange models might be part of the fix, as might the emergence of decentralized autonomous organizations (DAO), where the power of collective action could overcome the network effect advantages of centralized platforms.
Thankfully, people are building such bridges. Demand will drive them. For one thing, the entrance of mainstream, lawyer-controlled media corporations into the NFT and metaverse industry will demand these normalizing features get built. Still, to O’Reilly’s point, blockchain and crypto are not solo solutions. Many other elements are needed.
This content was originally published here.