More than semantics: "crypto" vs. "web3" is about what will be decentralized

I was struck by Matt Huang's "Web3 has done much damage" tweet, which disparages the term Web3 in favor of “crypto.”

"Crypto" has its roots in two camps with strong overlap:  money-crypto and the more political “sovereign individual” crypto—the nexus of which is decentralized assets and protocols, finance and autonomy. It follows that “crypto” commonly refers to decentralized assets/protocols, whereas “Web3” broadly espouses decentralization of consumer products, a more egalitarian and expansive strand that builds on the origins of the former.

When I talk about my work, I always say I work in crypto, though I still think the term “Web3” is useful, and will serve a lasting purpose.  That said, I think the underlying argument, that Web3 has caused some indirection, has merit worth exploring further:

It is the case that building consumer products tends to benefit from centralization. In making the case for progressive decentralization, I argued for centralized product development at the outset, which benefits from rapid iteration and singular vision. A more recent supplement on the topic argued that this can be pursued so long as future decentralization is worked into the initial planning and vision. But what resonated about the tweet is that it was misguided to think that everything— especially well-known Web 2.0 apps—would be better off decentralized as DAOs.

I’ve argued that assets (tokens) can and should be products—NFTs being a prime example—and I continue to think there is ample room for tokens and DAOs to be fun and transformative consumer experiences. But I’ve also refocused on a specific line in the original thesis penned for Variant, that “ownership will be a keystone of new user experiences.”

Next generation consumer products may be built around making users into owners, but it doesn’t follow that the platforms facilitating access to new ownership experiences will all be owned like co-ops, by their users. While the latter is newly possible, the realization of users as owners may be barbelled: at the fat head, for critical infrastructure that depends on decentralization for its core value proposition suchas Ethereum or Uniswap. And on the other side, the long-tail of networks that wouldn’t exist any other way—NFT and DAOs formed around them, online investment clubs, trade guilds, etc. In the middle, we may find companies that broker access to both ends.

Weighed against Variant’s mission to build a more equitable internet, I take a glass half full view of this: even if users don’t own the product interface for the next major consumer social product, its still the case that for the first time, users will have the chance to own a piece of the internet: their content, their identity, and their on-chain data. This is a forcing function for platforms to be more aligned with users, economically and otherwise, because ownership empowers users to participate in market activity more directly and vote with their feet. That is the glass half full take. Half empty is that it would be better if everyone could earn equity-like upside in every product and service they use – in other words, for user ownership to extend to the product level. The other half empty take is that because platforms have network effects, the utility of user ownership of underlying crypto assets can still be eroded, as we’ve seen unfold recently as NFT marketplaces enact whitelists and blacklists regarding where NFTs can trade.

To get to the extreme realization of user ownership of consumer interface products, there’s no question in my mind that it must be done through progressive decentralization, where ownership is intrinsic to the product flywheel and user experience. It could be that the time-scale to progressively decentralize these types of applications is much longer than folks in the “web3” camp would have hoped—wherein it makes sense to decentralize unstable elements of otherwise mature and stable products, like, for example, content moderation for a scaled social network.

To tie this up: long live crypto and long live Web3. They both need our chants, because its definitely the case that 10 years from now, just as today, nobody will use the name of the technology or its epoch number to describe what they do on the internet.