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Taking A Long Term View Of Web3

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Summary

This article was co-written by Katie Haun and Fred Wilson, both longtime investors in web3 and board members of Coinbase. It provides perspective on the risks and failures of web3, from the Mt. Gox meltdown to recent failures like 3AC, Celsius, and Alameda/FTX. It also explains how web3 companies that have followed the rules and behaved properly have weathered these storms, like Coinbase, Kraken, and Anchorage. The article stresses that it is important to remember that while negative headlines about web3 will continue, the underlying software innovation of web3 continues unabated and is what investors remain so excited about.

Q&As

What caused the collapse of one of the largest crypto exchanges?
The collapse of one of the largest crypto exchanges was caused by leveraged trading and speculation, pumping and dumping, and, sometimes, outright fraud.

What are the strengths and weaknesses of the token system in web3?
The strengths of the token system in web3 are that tokens enable developers and users to contribute to open-source protocols and participate in the economic upside of doing so, leading to strong developer communities. The weaknesses are that tokens lend themselves to boom/bust cycles and a sense by many that web3 is simply a speculative endeavor with no real substance behind it.

How have regulated web3 businesses like Coinbase, Kraken, and Anchorage weathered recent storms?
Regulated web3 businesses like Coinbase, Kraken, and Anchorage have weathered recent storms by following the rules and behaving properly.

What improvements need to be made to the web3 infrastructure for mainstream adoption?
Improvements that need to be made to the web3 infrastructure for mainstream adoption include performance, scalability, and privacy without compromising decentralization, as well as features like blockchains that are not public by default.

What is the lesson for policymakers from the recent web3 events?
The lesson for policymakers from the recent web3 events is that pushing innovation offshore is bad and that they should provide for a healthy web3 sector in the US, and stop pushing US users to risky/shady offshore entities with unclear, uneven, and unfair policy actions.

AI Comments

👍 This article provides an excellent overview of the Web3 landscape, offering a valuable and insightful perspective on the opportunities and risks associated with this exciting new technology.

👎 The article fails to address the current regulatory landscape and how this could potentially impact the development and adoption of Web3 technologies.

AI Discussion

Me: It's about taking a long-term view of web3, and it talks about the benefits of open-source protocols and decentralized projects. It also touches on the risks of centralized companies operating trading, lending, and speculating businesses, and how they have given web3 a bad reputation.

Friend: That's really interesting. What are the implications of this article?

Me: Well, the article highlights the importance of having a healthy web3 sector in the US and of regulating centralized entities to ensure that users are protected. It also suggests that web3 can provide a viable alternative to web2 and could be a better way to manage our data and assets without relying on large centralized companies. Finally, it emphasizes that software innovation is what will drive the future of web3 and that we should continue to fund and champion these advances.

Action items

Research the different web3 protocols and their features to gain a better understanding of the technology.
Follow the development of web3 protocols and the companies that are building them to stay up to date on the latest innovations.
Participate in the discussion around web3 and its potential to redefine how we use the web by joining relevant online forums and engaging in conversations on social media.

Technical terms

Web3: A software-driven innovation that has a built-in financial system.
Tokens: Digital assets that can be used to represent a variety of digital and physical assets.
Mt Gox: A now-defunct cryptocurrency exchange that was once the largest in the world.
3AC, Celsius, and Alameda/FTX: Crypto exchanges that have recently failed.
Zero-Knowledge Proofs: A cryptographic technique that allows one party to prove to another party that a statement is true without revealing any additional information.
Rollups: A scaling solution for blockchains that allows transactions to be processed off-chain and then aggregated into a single transaction on-chain.
NFT Marketplaces: A digital marketplace for buying and selling non-fungible tokens (NFTs).
Web2: The traditional web, which is largely centralized and controlled by large companies.