I’ve been collecting a list of the supposed benefits of web3, to understand how the term is used these days. Might as well post what I found:
- better, fairer internet
- wrest back power from a small number of centralized institutions
- participate on a level playing field
- control what data a platform receives
- all data (incl. identities) is self-sovereign and secure
- high-quality information flows
- creators benefit
- reduced inefficiencies
- fewer intermediaries
- better marketing
- capture value from virtual items
- no censorship (content, finance etc)
- democratized content creation
- crypto-verified information correctness
Some of this is clearly aspirational, perhaps on the other side of likely. Also not exactly what I would say if asked. But nevertheless an interesting list.
- web1: read
- web2: read + write
- web3: read + write + own
Found here, but probably lots of other places, too.
Definitions of “DAO” (short for Decentralized Autonomous Organization) usually start with technology, specifically blockchain. But I think that actually misses much of what’s exciting about DAOs, a bit like if you were to explain why your smartphone is great by talking about semiconductor circuits. Let’s try to define DAO without starting with blockchain.
A DAO is…
- a distributed group
- with a common cause of consequence
- that governs itself,
- does not have a single point of failure,
- and that is digital-native.
Let’s unpack this:
A group: a DAO is a form of organization. It is usually a group of people, but it could also be a group of organizations, a group of other DAOs (yes!) or any combination.
This group is distributed: the group members are not all sitting around the same conference table, and may never. The members of many DAOs have not met in person, and often never will. From the get-go, DAO members may come from around the globe. A common jurisdiction cannot be assumed, and as DAO membership changes, over time it may be that most members eventually come from a very different geography than where the DAO started.
With a common cause: DAOs are organized around a common cause, or mission, like “save the whales” or “invest in real-estate together”. Lots of different causes are possible, covering most areas of human interest, including “doing good”, “not for profit” or “for profit”.
This cause is of consequence to the members, and members are invested in the group. Because of that, members will not easily abandon the group. So we are not talking about informal pop-in-and-out-groups where maybe people have a good time but don’t really care whether the group is successful, but something where success of the group is important to the members and they will work on making the group successful.
That governs itself: it’s not a group that is subservient to somebody or some other organization or some other ruleset. Instead, the members of the DAO together make the rules, including how to change the rules. They do not depend on anybody outside of the DAO for that (unless, of course, they decide to do that). While some DAOs might identify specific members with specific roles, a DAO is much closer to direct democracy than representative democracy (e.g. as in traditional organization where shareholders elect directors who then appoint officers who then run things).
That does not have a single point of failure and are generally resilient. No single point of failure should occur in terms of people who are “essential” and cannot be replaced, or tools (like specific websites). This often is described in a DAO context as “sufficient decentralization”.
And that is digital-native: a DAO usually starts on-line as a discussion group, and over time, as its cause, membership and governance become more defined, gradually turns into a DAO. At all stages members prefer digital tools and digital interactions over traditional tools and interactions. For example, instead of having an annual membership meeting at a certain place and time, they will meet online. Instead of filling out paper ballots, they will vote electronically, e.g. on a blockchain. (This is where having a blockchain is convenient, but there are certainly other technical ways voting could be performed.)
Sounds … very broad? It is! For me, that’s one of the exciting things about DAOs. They come with very little up-front structure, so the members can decide what and how they want to do things. And if they change their minds, they change their minds and can do that any time, collectively, democratically!
Of course, all this freedom means more work because a lot of defaults fall away and need to be defined. Governance can fail in new and unexpected ways because we don’t have hundreds of years of precedent in how, say, Delaware corporations work.
As an inventor and innovator, I’m perfectly fine with that. The things I tend to invent – in technology – are also new and fail in unexpected ways. Of course, there is many situations where that would be unacceptable: when operating a nuclear power plant, for example. So DAOs definitely aren’t for everyone and everything. But where existing structure of governance are found to be lacking, here is a new canvas for you!
I usually invent technology, but today I present you with a new term:Platform DAO.
Web searches don’t bring anything meaningful up, so I claim authorship on this term.
Admittedly the amount of my inventiveness here is not very large. Trebor Scholz coined the term “Platform Cooperative” in an article in 2014 (according to Wikipedia). He started with the long established term of a “cooperative”, and applied it to an organization that creates and maintains a software platform. So we get a “Platform Co-op”.
I’m doing the exact same thing: a “Platform DAO” is a Decentralized Autonomous Organization, a DAO, that creates and maintains a software platform. Given that DAOs largely are the same as Co-ops, except that they use technology in order to automate, and reduce the cost of some governance tasks – and also use technology for better transparency – it seems appropriate to create that parallel.
Why is this term needed? This is where I think things get really interesting.
The Platform co-op article on Wikipedia lists many reasons why platform co-ops could deliver much more societal benefits than traditional vendor-owned tech platforms can. But it also points out some core difficulties, which is why we haven’t seen too many successful platform co-ops. At the top of which is the difficulty of securing early-stage capital.
Unlike in co-ops, venture investors these days definitely invest in DAOs.
Which means we might see the value of “Platform Co-ops” realized in their form as “Platform DAOs” as venture investment would allow them to compete at a much larger scale.
Imagine if today, somebody started Microsoft Windows. As a DAO. Where users, and developers, and the entire VAR channel, are voting members of the DAO. This DAO will be just as valuable as Microsoft – in fact I would argue it would be more valuable than Microsoft –, with no reason to believe it would deliver fewer features or quality, but lots of reasons to believe that the ecosystem would rally around it in a way that it would never rally around somebody else’s company.
Want to help? (No, I’m not building a Windows DAO. But a tech platform DAO that could be on that scale.) Get in touch!
This past weekend I went to the Consensus conference in Austin. I hadn’t been to another, so I can’t easily compare this year with previous years. But here are my impressions, in random order:
The show was huge. Supposedly 20,000 in-person attendees. Just walking from one presentation to another at the other end of the conference took a considerable amount of time. And there were other locations distributed all over downtown Austin.
Lots and lots of trade show booths with lots of traffic.
In spite of “crypto winter”, companies still spent on the trade show booths. (But then, maybe they committed to the expense before the recent price declines)
Pretty much all sessions were “talking heads on stage”. They were doing a good job at putting many women on. But only “broadcast from the experts to the (dumb) audience”? This feels out of touch in 2022, and particularly because web3/crypto is all supposed to be giving everyday users agency, and a voice. Why not practice what you promote, Consensus? Not even an official hash tag or back channel.
Frances Haugen is impressive.
No theme emerged. I figured that there would be one, or a couple, of “hot topics” that everybody talked about and would be excited about. Instead, I didn’t really see anything that I hadn’t heard about for some years.
Some of the demos at some of the booths, and some of the related conversations were surprisingly bad. Without naming names, for example, what would you expect if somebody’s booth promises you some kind of “web3 authentication”? What I won’t expect is that the demo consists of clicking on a button labeled “Log in with Google”, and when I voiced surprise, handwaved about something with split keys, without being able to explain, or show, it at all.
I really hate it if I ask “what does the product do?”", and the answer is “60,000 people use it”. This kind of response is of course not specific to crypto, but either the sales guy doesn’t actually know what the product does – which happens surprisingly often – or simply doesn’t care at all the somebody asked a question. Why are you going to trade shows again?
The refrain “it’s early days for crypto” is getting a bit old. Yes, other industries have been around for longer, but one should be able to see a few compelling, deployed solutions for real-world problems that are touching the real world outside of crypto. Many of those that I heard people pitch were often some major distance away from being realistic. For example, if somebody pitches tokenizing real estate, I would expect them to talk about the value proposition for, say, realtors, how they are reaching them and converting them, or how there is a new title insurance company based on blockchain that is growing very rapidly because it can provide better title insurance at much lower cost. Things like that. But no such conversation could be heard – well, at least not by me – and that indicates to me that the people pitching this haven’t really really encountered the market yet.
An anonymous crypto whale/investor – I think – who I chatted with over breakfast so much confirmed this: he basically complained that so many pitches he’s getting are on subjects that the entrepreneurs basically know nothing about. So real domain knowledge is missing for too many projects. (Which would explain many things, including why so many promising projects have run out of steam when it is time to actually deliver on the lofty vision),
The crypto “market” still seems to mostly consist of a bunch of relatively young people who have found a cool new technology, and are all in, but haven’t either felt the need to, nor have been successful at applying it to the real world. I guess billions of dollars of money flowing in crypto coins allowed them to ignore this so far. I wonder whether this attitude can last in this “crypto winter”.
But this is also a great opportunity. While 90% of what has been pitched in web3/crypto is probably crap and/or fraudulent (your number may be lower, or higher), it is not 100% and some things are truly intriguing. My personal favorites are DAOs, which have turned into this incredible laboratory for governance innovations. Given that we still vote – e.g. in the US – in largely the same way as hundreds of years ago, innovation in democratic governance has been glacial. All of a sudden we have groups that apply liquid democracy, and quadratic voting, and weigh votes by contributions, and lots of other ideas. It’s like somebody turned on the water in the desert, and instead of governance being all the same sand as always, there are now flowers of a 1000 different kinds that you have never seen before, blooming all over. (Of course many of those will not survive, as we don’t know how to do governance differently, but the innovation is inspiring.)
In personal view, the potential of crypto technologies is largely all about governance. The monetary uses should be considered a side effect of new forms of governance, not the other way around. Of course, almost nobody – technologist or not – has many thoughts on novel, better forms governance, because we have so been trained into believing that “western style democracy” cannot be improved on. Clearly, that is not true, and there are tons of spaces that need better governance than we have – my favorite pet peeve is the rules about the trees on my street – so all innovations in governance are welcome. If we could govern those trees better, perhaps we could also have a street fund to pay for their maintenance – which would be a great example for a local wallet with a “multisig”. Certainly it convinces me much more than some of the examples that I heard about at Consensus.
I think the early days are ending. The crypto winter will have a bunch of projects die, but the foundation has been laid for some new projects that could take over the world overnight, by leading with governance of an undergoverned, high-value space. Now what was your’s truly working on again? :-)
What is the common theme in these commonly stated problems with the internet today?
- Too much tracking you from one site to another.
- Wrong approach to moderation (too heavy-handed, too light, inconsistent, contextually inappropriate etc).
- Too much fake news.
- Too many advertisements.
- Products that make you addicted, or are otherwise bad for your mental health.
In my view, the common theme underlying these problems is: “The wrong decisions were made.” That’s it. Not technology, not product, not price, not marketing, not standards, not legal, nor whatever else. Just that the wrong decisions were made.
Maybe it was:
The wrong people made the decisions. Example: should it really be Mark Zuckerberg who decides which of my friends’ posts I see?
The wrong goals were picked by the decisionmakers and they are optimizing for those. Example: I don’t want to be “engaged” more and I don’t care about another penny per share for your earnings release.
A lack of understanding or interest in the complexity of a situation, and inability for the people with the understanding to make the decision instead. Example: are a bunch of six-figure Silicon Valley guys really the ones who should decide what does and does not inflame religious tensions in a low-income country half-way around the world with a societal structure that’s fully alien to liberal Northern California?
What do we call the thing that deals with who gets to decide, who has to agree, who can keep them from doing bad things and the like? Yep, it’s “governance”.
Back in the 1980’s in 90’s, all we cared about was code. So when the commercial powers started abusing their power, in the mind of some users, those users pushed back with projects such as GNU and open-source.
But we’ve long moved on from there. In one of the defining characteristics of Web2 over Web1, data has become more important than the code.
Starting about 15 years ago, it was suddenly the data scientists and machine learning people who started getting the big bucks, not the coders any more. Today the fight is not about who had the code any more; it is about who has the data.
Pretty much the entire technology industry understands that now. What it doesn’t understand yet is that the consumer internet crisis we are in is best understood as a need to add another layer to the sandwich: not just the right code, not just plus the right data, but also plus the right governance: have the right people decide for the right reasons, and the mechanisms to get rid of the decisionmakers if the affected community decides they made the wrong decisions or had the wrong reasons.
Have you noticed that pretty much all senior technologists that dismiss Web3 — usually in highly emotional terms – completely ignore that pretty much all the genuinely interesting innovations in the Web3 world are governance innovations? (never mind blockchain, it’s just a means to an end for those innovators).
If we had governance as part of the consumer technology sandwich, then:
Whether I see which of my friends’ posts should be decisions that I make with my friends, and nobody else gets a say.
Whether a product optimizes for this or that should be a decision that is made by its users, not some remote investors or power-hungry executives.
A community of people half-way around the world should determine, on its own for its own purposes, what is good for its members.
(If we had a functioning competitive marketplace, Adam Smith-style, then we would probably get this because products that do what the customers want win over products that don’t. But have monopolies instead that cement the decisionmaking in the wrong places for the wrong reasons. A governance problem, in other words.)
If you want to get ahead of the curve, pay attention to this. All the genuinely new stuff in technology that I’ve seen for a few years has genuinely new ideas about governance. It’s a complete game changer.
Conversely, if you build technology with the same rudimentary, often dictatorial and almost always dysfunctional governance we have had for technology in the Web1 and Web2 world, you are fundamentally building a solution for the past, not for the future.
To be clear, better governance for technology is in the pre-kindergarten stage. It’s like the Apple 1 of the personal computer – assembly required – or the Archie stage of the internet. But we would have been wrong to dismiss those as mere fads then, and it would be wrong to dismiss the crucial importance of governance now.
That, for me, is the essence of how the thing after Web2 – and we might as well call it Web3 – is different. And it is totally exciting! Because “better governance” is just another way to say: the users get to have a say!!