The hub of the problem - in this author’s humble opinion - is that we are all arguing about different things. When Nouriel Roubini points out that 95% of crypto is a scam, this is like pointing out that most physicists are not Albert Einstein. Why? Because in a field this early stage, only a handful of projects must succeed in order to prove and provide a new paradigm.
That aside, the use of ‘crypto’ often leaves me mystified as to whether people are referring to speculative tokens or to the broader concept of web3, which remains - I would argue - poorly communicated and less well understood.
There are plenty of good technical definitions of web3 out there. They typically focus heavily on how it works. The non-technical reader (who makes up the bulk of those we need to persuade) is confronted with terms such as:
Universal state layer (Come again?)
Native value settlement (Eh?)
Smart contracts (which, confusingly, are neither!)
And so on.
Granted these terms are necessary to understand what makes Web3 different from Web2 at a fundamental level. The problem is that most people don’t understand, don’t care and don’t even need to know.
This is a bitter pill for those who have sweated, toiled and slaved over the underlying code, but isn’t this a familiar experience for anyone with a technical background?
An engineer may both understand and venerate the dawn of TCP/IP, but regular schmoes (like yours truly) do not.
Crucially, though, it’s possible for us non-engineers to love the internet with every fiber of our being. This is because we understand what it does.
And the problem is, while a small, but non-trivial number of people know how web3 works - almost no one knows exactly what it does - yet.
So we should all be skeptical. But dismissive? No way.
As Nassim Taleb himself points out in AntiFragile, most innovation comes from blind, stochastic tinkering rather than linear planning (more on that later).
Furthermore, the web3 revolution - unlike a Ponzi scheme - has a point to it. This has been well summarized elsewhere, but it comes down to the following argument.
Web1 liquified information.
Web2 liquified interaction.
Web3 will liquify value.
Most people are familiar with the arguments against the dominance of the Web2 behemoths: Google, Facebook, and Twitter. The power they wield is too much for any group of individuals to bear, regardless of their intelligence or intentions.
However, in their defense, the power of these organizations is a natural consequence of people wanting to use their services for free.
If you use a service that you derive value from but do not wish to reward financially, that service will either shut down or find a way to extract value in a non-transparent way.
What Web3 unlocks
A promising, if less celebrated, web3 use case is the potential to decentralize data storage.
A decentralized web of private computer owners renting out local storage for tokenized rewards, backed up by genuine revenue streams derived from the ultimate storage users, would provide a preferable alternative to the centralized servers of Amazon, Microsoft, and Google, which are expensive, insecure, and power-hungry.
Going beyond the concept of tokenized rewards, Web3 also opens up the possibility of the so-called DeFi matrix, whereby not only data, but all valuable possessions, become potential securities. Everything can be tokenized - even time itself (a constrained, fungible commodity that can be easily mirrored by a cryptographic token).
Why Web3 Will Win
There is another reason to be confident in the long-term viability of the decentralized Web3 over the centralized Web2.
In a (for some reason) less-celebrated article in Edge.org, Taleb posits a simple formula for disruptive (i.e. game-changing, as opposed to incremental) innovation most likely to arise from a large number of small experiments.
This is in contrast to the Manhattan project model - where innovation takes shape in a government-funded facility with security guards and worried-looking experts swooshing around in lab coats.
An illustrative example of Taleb's theory might be the victory of the Wright brothers (two no-name enthusiasts experimenting in the backyard) over the Aerodrome project (backed with government money and headed up by a credentialed body of experts).
If we follow this logic, it should be the case that an era of centralization will tend to suppress radical innovation, whereas anything that distributes and fragments power (for example, via the liquification of value) will encourage it. This will lead not only to solutions for web3’s teething issues, but could help solve other challenges to humanity, all the way up to cancer and climate change.
Given that all of this is possible even if 95% of crypto is a scam, perhaps what is called for is skeptical optimism.
I was chatting with GPT about the end of this article, wondering if there were any quotations that summed up the concept of “skeptical optimism”. It gave me some good ones ("I have learned to use the word 'impossible' with the greatest caution." - Wernher von Braun) and also some made-up ones.
One of the latter struck me as peculiarly insightful, so I’ll end with it.
“Keep your eyes open, but don’t let reality blur your vision.”
[I couldn’t find this quote on Google - hence I suspect it is GPT-3 hallucinating - but if anyone did say it, please let me know. I’d like to read more of their stuff. Thanks!]
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