WEST PALM BEACH – The gloomy week in the world of cryptocurrencies submitted a subtext for this week’s award “Without authorization“conference, an event billed as” the largest Metaverse and DeFi event in history, designed to celebrate the new era we are entering “.
Over 7,000 attendees in business casual attire gathered at the Palm Beach County Convention Center to stand up to bad industry news and promote their various projects. For all the industry talk of radical transformation, the event, while exciting, seemed surprisingly like any other conference, except that instead of selling medical devices or speedboats, they’re selling freedom.
Chris DixonAndressen Horowitz’s partner and cryptocurrency celebrity, he was ambassador of that hype during an opening panel on Wednesday, where he said “I believe we are in the heyday of Web3.”
But what is the basis of that optimism when one of the most high-profile conceptual projects of that “golden age”, Terra, whose founder, Thu Kwoncanceled his scheduled conference appearance – only publicly, spectacularly imploded?
Haseeb Qureshi, managing partner of Dragonfly Capital, asked during a panel: “Where do the returns come from? We now know the answer. It comes from risk “.
“Risk” is a political word for what the Web3 universe has been grappling with lately. Billions of dollars of notional value have been wiped out. A significant experiment in stable blockchain investments has essentially failed. So the crowds gathered here – idealistic technologists, entrepreneurs with big money dreams, true holders of big money – are now trying to convince the skeptics, and even themselves, that their entire ecosystem is not just a form of “regulatory arbitrage” at best, as a panel member said with a wink, or a Ponzi scheme at worst.
To understand why most of the attendees I met today were not only enthusiastic, but even happy to address this issue, it is necessary to understand how the ambitions of this crowd differ from those of the Bitcoin maximists probably by now more familiar to readers of this newsletter. The battle cry of Web3 is generally not one of “regime change“oa end the Fed. It’s to decentralize the technology behind, well, everything from your bank account to even the old school record labelstheoretically freeing our Internet experience from the strange lair of big tech companies.
Through that lens, even a market crash like this month’s isn’t a referendum or a scolding of blockchain and cryptocurrencies. It’s just part of the natural market cycle – and, yes, a serious risk – associated with any growing technology.
Dixon presented by a report posted this morning with several co-authors on the “state of cryptocurrencies”, arguing that, despite the seemingly chaotic nature of the cryptocurrency market, it actually operates on a fairly predictable cycle of price spikes and the growing interest and innovation that follow, which has led to sustained growth over the past decade.
Which might sound persuasive, but it also sounds very similar to the cryptocurrency world Other principal currency: advertising hype. It’s okay to raise billions of dollars and book Matt Damon and Tom Brady for your commercials and attract thousands of conference attendees in beautiful South Florida. But what is the case with people actually want a “decentralized” internet, especially in the midst of a crisis like the current one?
“The infrastructure here itself hasn’t broken down. What broke the model and the assumptions that came with it, “he said Josh Goodbodythe COO of Qredo, a fintech cryptocurrency company, describing the collapse of Terra.
For a panel towards the end of the day titled “Investing in an on-chain world,” the harsh reality of the market downturn was harder to ignore.
“From an institutional point of view you are talking about your Fidelities, the organizations that have followed these cycles … they diversified knowing exactly what they were getting into, and once that genius is out of the bottle you can’t really put it back. “, She said Soona Amazfounder and general partner of Volt Capital.
What does it really mean to be “decentralized”, anyway? A recent essay in Wired claimed that Web3 enthusiasts’ fervor for a decentralized Internet has led them to focus on how much new web institutions should be decentralized instead of focusing on child decentralization that would favor a freer and more open Internet.
The authors of the Wired essay, including Danielle Allen, a leading Harvard professor who recently ended her campaign for the governor of Massachusetts, propose a “subsidiary” system, which would use “trust relationships and online and offline institutions” to open the Internet, a mission comparable to the birth of TCP / IP technology. I called Divya Siddarth, who co-wrote the essay with Allen and her Microsoft colleague E. Glen Weyl, to ask what Web3 builders tend to lose. Here are the extracts of the conversation, modified for length and clarity:
What was your momentum for writing this? Was it just a coincidence that it happened to post while the cryptocurrency world is experiencing tremendous success?
The accident was a timing accident, but something like the accident was about to happen.
There are some people in the world who think cryptocurrency is the worst thing that ever happened, and just fascism all the way through. And then there are others who say it will save the world and is the solution to all our problems. Being in the middle of those two fields is a strange place to be, as they become more and more polarized.
There is something about the goals that are at least professed by many people in this space that are good and that we should work on. But these technologies are truly misleading in terms of achieving those goals. This writing grew out of that tension.
Within the Web3 community, there is a lot of resistance to creating anything that is too similar to existing systems. How was the response to your proposals?
The conversations you’re referring to are like, “But we were in this to get rid of the institutions. Why should we do something that appears to be building institutions? “An institution is a semi-stable entity with shared norms, goals and processes, which means you can’t walk away from institution building even if you’re trying not to. Crypto has tons of institutions. And not just the formal ones like the Ethereum Foundation, but Ethereum itself is an institution, and all of that L2 chains they are institutions and the way they interact with each other is inherently institutional.
Having that conversation with people has often turned out to be better than I expected, but much slower than proselytizing for Bitcoin maximization.
What are some model examples of the decentralized institutions you are describing?
Some of the pre-blockchains based, fediverse type social protocols are like this, like ActivityPub; there are a lot of them web-of-trust based identity systems, and BrightID, and Spritestuff that comes out Ink and switch which are more or less along these lines. And recently, non-transferable governance tokens they are probably in this direction.
One of the most famous examples is the architecture of today’s Internet. That set of protocols, HTTPS, TCP / P, everything that comes out of the WCC consortium, are extremely decentralized things and many of them are incredibly secure compared to practically many other technologies. They are decentralized, but they are multi-stakeholder, have institutional inputs, have clear processes on how change occurs, and are federated rather than atomized. So I think the internet itself is probably the best example.