‘What the smartest people do on the weekends is what everyone else will do during the week in ten years’ – Chris Dixon
Inspired by this quote, I took my first step into the rabbit hole of #web3 with this highly recommended podcast by Tim Ferriss with Chris Dixon and Naval Ravikant.
https://tim.blog/2021/10/28/chris-dixon-naval-ravikant/
My takeaways below:
#web3 is all about DAOs (Decentralized Autonomous Organizations), smart contracts, tokens and NFTs (Non-Fungible tokens).
DAOs
In web2, you are not in control of your own destiny. You have very few rights. Your reputation is not transferable. If you are on a platform, you can be de-platformed because it’s centralized. You’re at the whim of a handful of companies.
DAOs are not quite corporations, they’re communities and they are taking off in web3. With DAOs, we can take systems that before would have to be run by centralized authorities, ranging from the government running money to Mark Zuckerberg running Facebook, and we can replace them with a credible vote of all the people participating in the network. And people get to have a say because they have done the work. Your vote is proportional to the work you have done and your credibility. It’s not based just on who you are. This is what blockchains and web3 enable us to do.
Smart Contracts
A lot of web3 actually built on the Ethereum crypto network as it is it’s fully programmable like a computer. You can create these things called smart contracts, which are code that will continue to run in a certain way. If we think of Ethereum as this world computer, then with a smart contract instead of a ton of middlemen who are taking the lion’s share of profits, you can set in advance certain things that happen automatically.
So, we finally have private property on the internet and we don’t need people or even the studios and the labels to determine who owns what private property and hold it with their database entries and their lawyers.
Web3 is composable which means that it’s like LEGOs or it’s actually digital LEGOs, where we can just copy the LEGO and then build on top of it. So, all the apps and Web3 can sort of team up to create any app needed. Composability is a very, very powerful concept. That’s why it’s a bad idea to charge for a piece of content, and no one in their right mind who has good ideas should. You don’t want to restrict the avenues. You want people to recompose your ideas. In a sense, composability is to software as compounding interest is to finance.
The data is literally living in the blockchain or in distributed systems, but it’s secured. It’s actually secured far better than these corporations can secure our data because each is secured by our own private key. So, each of us has a safety deposit box now in the cloud that we can give selective access to with our private keys to people who need them when they need them and then close them off again.
Tokens and NFTs
In web3, we can also create these things called tokens and tokens can be fungible like the way that cryptocurrencies are, or it can be non-fungible NFTs.
Why tokens are so important is they now provide a mechanism by which value and control can be given to users and builders, as opposed to simply to centralized companies.
An NFT is not really an object, a digital object. It is a pointer or a channel, it is a link or a communication between you, the creator, and the community, and any kind of value can be funneled down that. It can be access into things. It can be recognition and reputation. It can be royalties, it can be copyrights.
NFTs are simple, they’re portable, they’re programmable, they’re composable. And people are going to recombine them to create these complex systems that work. That are going to be impossible for larger companies to compete with.
In the future, maybe you’ll buy a unique sneaker and then you’ll get the NFT for that sneaker. And then you’ll have the unique copyright to the digital representation of that sneaker. If somebody wants to use that sneaker in a marketing campaign, then maybe you can get royalties.
This can be a winning product because tokens are self-marketing. When somebody owns something and feels skin in the game, they want to go talk about it. They want to evangelize it. People get really excited when they actually get to participate.
Summary
web3 and crypto are the frontier as they are the least regulated, most decentralized and permissionless, 24x7x365 markets which are self-funding and in which hackers from all around the world can participate.
If you have a passionate group of believers, you can spread ownership amongst them. You can spread governance amongst them. You can build a DAO. You can issue NFTs. You can have an online gaming community. You can have a conversational community. You can have a real world community that maps to each other with NFTs.
You can now build something that looks and feels like one of the existing platforms using open protocols and using this new kind of philosophy where the value and control accrue to the users of the network, not to a company, because there is no company.
#web3 is still Skeuomorphic i.e. where people are taking things from the offline world and putting them on the internet. Going forward, the most important internet products will be created in the future is through this kind of new means. This is better because users get to participate more in the value creation and also in the control and governance of the system.
We should bear in mind that web3 is still in its infancy and things are evolving. NFTs make crypto look like treasury bonds with respect to volatility; they are all over the place. Crypto is to venture as venture is to value. It is standard deviation squared.