Avishay Ovadia The political-economic revolution of decentralized technology is in full swing, and is destined to change the existing world order. It won't happen in a day or a year, but it will eventually overturn social classes, bring down corporations, and threaten the exclusive control of the technology and finance giants over our information and capital.
This revolution has a variety of names - blockchain, cryptocurrency, NFT, Bitcoin and more. They all represent part of the puzzle of the next generation of the Internet, Web 3.0. Public discourse on the subject usually focuses on Bitcoin, on the prospect of getting rich quick, or on scams. Try to put all of this aside for the moment. In this column, we dive into the basics of decentralized technology that has been changing the world since the early 1990s. Our journey moves along the decentralized continuum: from Web 1.0, the first-generation primordial Internet that gave birth to the open but static basic infrastructure, through Web 2.0, the second-generation, which paved the way for user experience but was characterized by closed, centralized applications, to the third generation which will attempt to restore the Web to its former glory, decentralizing the network while maintaining user experience.
Web 1.0: The Revolution Begins
Surprisingly, there are many similarities between the Internet’s first generation and its third. The first generation, which began in 1991, was characterized by a Wild West atmosphere that built the infrastructures which exist to this day: browser, email, hypertext transfer protocol (HTTP), and more. These protocols were open source and available to everyone, but the Internet was alien to most people who saw no need to use it. Over time, companies like AOL, Yahoo, and MSN, began to develop websites that presented static, non-interactive information. At that time, users were passive and not partners in creating the information.
Web 2.0: Users become the product
Things began to change with the advent of Web 2.0. In the early 2000s, alongside technological improvements, tech companies began to perceive users as partners in creating online content - and as potential customers. Amazon, Google, Facebook, Dropbox, and Uber burst into our lives. The emphasis in this second generation was on the user experience, but the thing that changed dramatically was the transition from open source to closed source. Companies began building walls around their technologies, patented them, controlled users mainly through payment or advertising models, and in doing so, raked in the big bucks.
At this point, a true user experience was finally achieved: social networks where you could express yourself and influence others. On the other hand, knowingly or not, users had waived their rights and privacy in advance, in light of the information that they uploaded to these networks and the capital bound up with it, to the benefit of the corporate shareholders - for whom users representing big winnings. On the basis of the usage of their various applications, company valuations were determined, huge amounts were raised, and billion-dollar exits were celebrated. Users, meanwhile, became a captive audience who, while enjoying an ever-improving experience, were completely detached from the wealth built on their backs. They had become the product itself.
Web 3.0: A change in approach and power struggles
A significant change led to the third generation. The seeds were planted during the global economic crisis of 2008. Following the collapse of public confidence in the banking system after the subprime crisis, the first decentralized trial balloon was released when Satoshi Nakamoto published a paper outlining a distributed currency called Bitcoin. Only at the end of the following decade did the use of decentralized currency become more widespread, and the technology at its core - blockchain - gained momentum.
Contrary to popular belief, blockchain is first and foremost a way of thinking, a political-economic approach that, through economic incentives, allows for cooperation between entities without the need for trust. Blockchain is a combination of several technological methods: nodes of a computer network, a database, encryption, and consensus calculation, all coming together to create the decentralized technology. These methods had been around for decades and used by researchers and programmers, but the technological breakthrough was not enough. It took the climate of corporate centralization, which had gained so much power, to bring about the widespread desire to adopt it.
The winds of change that came at the same time both from the development of decentralized technology and from the socio-political climate, gave birth to the third generation. Its users are more sensitive to issues of privacy, ownership and equal distribution of the value generated online. Web 3.0 is an attempt to take back control of power and wealth from corporations and return it users.
In fact, the goal is to fight corporations, which have become far stronger in recent decades, and change the way our wealth is controlled. The third generation has also adopted the dramatic change brought about by its predecessor - user experience - and seeks to present the perfect product that is both high-quality and decentralized.
Web 3.0 entrepreneurs are interested in decentralizing almost any type of asset, information, persona, or community. Non-fungible token (NFT) technology seeks to give control of any work or platform to its creator and community, and neutralize any intermediaries along the way. It lays the groundwork for liquidating the giant financial corporations through digital banks that return control over wealth to the public, insurance companies that benefit their customers, and credit products and loans that are executed without third party supervision. Thus, corporations can be broken up, and using currency and economic incentives, decentralized organizations can be created to take decisions about power democratically.
This challenging and complex process requires deep technological and economic infrastructures most of which are not yet ready to support the mass of Web 2.0 users. Blockchainers have not yet declared a winner, stablecoins (digital currencies pegged to a "stable" reserve asset) still suffer from regulatory pressures, and investor fraud and protocol breaches are becoming ever-more sophisticated.
The author is an entrepreneur and co-founder of Collider Ventures
Published by Globes, Israel business news - en.globes.co.il - on February 20, 2022.
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