The chaotic vision of Web3 of a technical future

What is the need for an online revolution? While the year 2022 appears, a new movement under the banner of Web3 has become one of the most discussed - and the least understood - forces in technology. But it is not yet clear what practical problems it will solve to become part of everyday life.

Every iteration of the web is based on new technical options. With the first version, it was the possibility to navigate between static websites. With Web 2.0 the web became a more interactive real -time medium and the users themselves became content.

These developments that build on the open protocols of the Internet were radical enough to support new forms of online mass behavior. So what about the alleged shift of Web3 is a more decentralized online world?

Its minting is based on the distributed consensus enabled by blockchains - the ability to make binding agreements with completely strange, without having to rely on a mediator or a central authority. Imagine that large groups of people could spontaneously carry out transactions: Which new miracles of human coordination could be possible? The crypto boom has transferred this idea to money, but the full promise of web3 is based on using the same technical basics to convey many other forms of human interaction.

The rhetoric behind it corresponds to the time mood with its distrust of elites and institutional authority. In addition, there seems to be a simple answer to the power of Big Tech: You can also get control of your data and online life back and at the same time get a chance to participate in the insane profits of Big Tech.

It is a tempting pitch. But behind the decentralization rhetoric it is not clear what practical applications would actually dissuade people from the current online services that are still very popular.

The first eruptions were in decentralized finance, in which individuals do business without intermediate traders, and for digital collector's pieces that are known as NFTs. These hardly show the way to other uses. Much of the attraction of the former is based on the bypass of financial regulation, while the latter was the excuse for speculative mania.

There are other reasons to be careful. Tear away the institutional supports that the human mass interaction frames, and what remains? As some supervisory authorities have warned, the current system for regulating the financial markets is based on the supervision of banks, brokers and market authorities.

It is true that the regulatory authorities do not yet have to find a way to limit today's huge technology companies. But would the promise of Web3 - everything to be left to the rules anchored in software, which are ensured by supposedly ball -proof cryptography - give normal people the feeling that their interests are met?

The use of new digital currencies to lubricate the wheels of this decentralized online world-a process that is known as a tokenization-would have other effects. It would transform online activities into markets in which every interaction is immediately monetized. As such, it would be a form of hyperfinancing with unpredictable effects on people's online behavior.

This may appear at least as a fair starting point for the establishment of a fairer system that gives the individual control. But the results of revolutions usually do not match the rhetoric of the market launch.

The bypass of the old agents usually opens the way to a new group of intermediaries - as the first web did. The blockchain dream has its limits. It is not possible to put everything in an open, distributed database in which all nodes can be updated immediately in order to reflect each new group of transactions. This leaves a lot of space for new intermediaries that grow at the edges and implement the promise into practical services.

The wild speculations that have accompanied the crypto boom also remind you that an orderly division of profits is unlikely.

This does not mean that the central technology behind Web3 does not have a radical potential or that-like the first Dotcom boom-the speculative madness of today will not found the next important tech companies. So far, however, supporters of the new technology are still fighting with a higher -level challenge: to develop practical applications that meet everyday demands from millions of users. The Silicon Valley works on the principle that a better way will appear if you invest enough technical intelligence and capital in a problem. We will see. Web revolutions were chaotic in the past. This looks like it is more chaoting than most.

richard.waters@ft.com