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Talking points:
I’ll define all the various terms as we go but...
This discussion is going to explore the paradox between:
The fact that Web3 development needs funding (we can't expect it all to be done by volunteers)
Large VC funds create a point of centralization
How can we still make money as individual investors?
You know how we do this by now, to make sure your understanding is thorough we start general and then go specific.
So let’s lay down the basics. When we say Web3 what do we mean?
Web1 was the static web, which would be more akin to a broadcast media where major media companies simply used the web as another way to distribute their content.
Web2 is what we are on now, the interactive web which consists of a co-creative process between vendor and user.
We used to formally refer to this as ‘user generated content’.
Facebook contains mostly user generated content but you can also post links to professional generated content from an external blog or media company.
The comments section at the end of most news articles would be considered user generated content because those people are effectively adding additional content to the same page the article appears on.
Then users can also create their own content as a simple Facebook post or more formally as a blog.
Web3 is all of that but decentralized. It’s often referred to as the decentralized web.
This is yet another step away from Web1 where the web was just a broadcast media used by large corporations with a traditional ownership structure.
Web2 is largely still powered by large corporations but 2 elements of control started to slip away from them.
One was the monopoly on the content (since users could add to and even challenge what was said by posting their own comments)...
And the other was that the web provided a billion dollar infrastructure for new companies to start up and compete with the large corporations.
The flaw in that model is that many of the big tech companies who run the web today became that way by buying up the successful startups and centralising power in one place.
Investors made money off of this by privately funding these tech startups or by investing in the IPOs of Google and so on.
So that’s a quick bit of back story.
What’s starting to rumble now though is a conversation about who is going to own web3?
How can you have a decentralized system if you have a bunch of early investors controlling a load of shares and making the decisions?
It’s the old adage that “whomever pays the piper calls the tune”, meaning any given organisation is accountable to whomever pays them.
For Facebook that would be their shareholders and their advertisers, not their users.
And I’m not just picking on Facebook it’s the same for other big tech companies as well.
And I’m not saying there is any evil intent going on, it’s simply a function of the system they exist within and the incentive structure that existed at the time.
The joker in the pack here seems to be Jack Dorsey, the CEO of Twitter, because he keeps talking about funding things like a decentralized open source social network, building innovations on top of Bitcoin and so on.
And that’s leading people to question how a silicon valley CEO can funnel research and development money into a new infrastructure that makes people like him and his investors less powerful?
VC funds have always been a big deal when it comes to tech startups, everyone knows that.
It’s traditionally been considered a high risk, high reward play, because hell, you might end up with a share in the next Google, and all you have to do is put your money in a VC fund and then let the experts find the next unicorn.
With Web3 though the VC fund is being re-imagined using crypto and blockchain technology.
Depending on how long you’ve been in crypto, you may or may not have heard of “The DAO” which was the first major attempt to create a decentralized VC fund.
The short version of the story is that $150m was invested using the Ethereum network, a hacker exploited a flaw in the code and started draining it of all it’s money.
That ultimately led to Ethereum splitting into two networks, Ethereum and Ethereum Classic.
Ethereum Classic is the original version of Ethereum with the flaw and the so called ‘theft’ left in tact, with the belief system that code is law, and the Ethereum network we have today is the version of Ethereum that was rolled back to before The DAO was drained in order to recover everyone's money.
So that one didnt even get off the ground.
The idea though was to pool everyones money into this decentralized VC fund instead, make investments and share the profits, rather than all the individual investors doing their own thing.
The concept isn’t new, there are investment clubs all over the world, but the innovation was doing it all with smart contracts.
▶️ 3Speak