Is Web3 Just Web2 in Disguise?

“What do you think is the biggest issue with the Web3 industry right now? Other than the lack of education”, a certain Web3 social media influencer (yes, there’s something like that now) asked me last week. It was a casual question, one that was posed while she was absentmindedly sipping her coffee.

Even as a self-proclaimed Web3 journalist, I struggled to answer her, not because I don’t know the definitions of Web3 and its constituents, but because education is really the sole issue that’s hindering adoption.

And by education, I mean that apart from having to understand the esoteric nature of blockchain technology and digital assets, we also don’t really know much about who are the people behind this supposed “revolution”, and what their real intentions may be.

I once worked with an editor who always took the chance to remind me of the fact that he’s a boring boomer who’s just unwilling to crawl out of his traditional finance frame of mind. But despite his constant droning, he did offer some useful insights on cryptocurrencies occasionally, some of which I was too stubborn to acknowledge or understand at that point in time (and also because I didn’t want him to continue rambling). But one thing that he said to me really stood out: “Cryptocurrencies are a bubble. You’re either in it or you’re not”.

Web3 is often marketed as the next iteration of the Internet, a more “decentralized” and “democratized” web where users and content creators will be able to own and monetise their assets without having to rely on centralised organisations. The reason it’s “revolutionary” is because blockchain technology will become the bedrock of this new Internet, allowing transactions to be executed and recorded without financial institutions, and data to be stored and viewed on public ledgers instead of centralised repositories.

This means that, in theory, the institutions that we have so often relied upon for centuries are at the risk of becoming obsolete (at least, according to the Web3 industry). And then there’s cryptocurrencies, which despite their volatility, will somehow become the de-facto money of a future where the human race will, for some reason, be entirely willing to exist in virtual worlds and trade digital assets for a living full-time.

The biggest issue with the industry right now is that while we know what blockchain technology, cryptocurrencies and NFTs are, we still don’t know how much they can actually achieve.

The biggest issue with the industry right now is that while we know what blockchain technology, cryptocurrencies and NFTs are, we still don’t know how much they can actually achieve. Despite their nascency, the industry is already creating so much hype around this new buzzword called “Web3” that people are just blindly jumping onto the bandwagon, knowing that it’ll be easy for them to quickly get rich off a random jpeg or cryptocurrency that has some sort of “utility” (or none) just because crypto Twitter and random Discord channels generate enough FOMO to make them believe and claim that they’re investing in the tech of the future.

I’ve said that DeFi is a dangerous pipe dream propagated by tech capitalists and this is a statement that should also be applied to the entire Web3 industry. Despite bear market conditions and increasing doubts over the viability of certain types of cryptocurrencies, more money from venture capital firms are pouring into Web3 than ever before.

In May, venture firm Andreessen Horowitz announced it had raised a US$4.5 billion crypto fund following a series of high-profile investments into projects such as Axie Infinity and Yuga Labs. Earlier this month, Binance Labs, the venture capital arm of crypto exchange Binance, announced that it closed a US$500 million investment fund. It’s already invested in about 100 Web3 startups including Axie Infinity and Polygon. According to research by Pitchbook, the early and seed-stage Web3 projects received US$2 billion from venture capital firms last quarter, more than double what the next-highest sector, biotechnology, received, and triple what traditional fintech got.

As Vitalik Buterin, the biggest-headed nerd, explained: “Crypto was at first just decentralisation enthusiasts, but now there’s also various types of money people”.

It’s evident that the Web3 hysteria is getting out of hand in the sense that VCs are obviously trying to capitalise on the fear of missing out on Web3’s promising but unproven ideologies.

Yes, DeFi has its potential as a more accessible form of finance (but not as a global financial system for now), NFT technology may be able accelerate the creator economy (even though the only thing it’s accelerating right now is the creation of ugly Adjective Animal jpegs), and DAOs might work as a short-term profit sharing solution (they probably will never replace traditional corporations because that’s not capitalism works).

VCs are almost entirely in control of the Web3 industry, and they just can’t be bothered about the state of crypto now.

But the point is that VCs are almost entirely in control of the Web3 industry, and they just can’t be bothered about the state of crypto now, or whether or not decentralisation will be able to help the underprivileged. Instead, they know that the very mention of “Web3” will be enough to drive profit-hungry but tech-ignorant investors into a money-grabbing, free-for-all frenzy. It’s actually akin to a giant multi-level marketing scheme, whereby these investors will essentially be driving up the value of the holdings of these VCs. They might get rich, even crazy rich, but that’s hardly the ethos of a more “equitable” Internet, and definitely not how decentralization should be.

Web3 is almost certainly Web2 in disguise. Just that instead of us having to rely on corporations to handle our data, we’ll be relying on the “decentralized” knick knacks developed by these billion-dollar companies instead, which means that the “power” and “wealth” isn’t exactly going back to the people (Binance founder Changpeng Zhao’s net worth of US$96 billion is a great example).

You can’t have “ownership” over something that you never really owned to begin with.

You can’t have “ownership” over something that you never really owned to begin with. The centralization of wealth and power will always occur with capitalism, and in the cash-grabbing bubble that’s known as Web3, at least for now, you’re either in or you’re not.