What can you build in web3 that you can't in web2?
Web3 has a lot of buzz right now, from digital apes to crypto investments and everything in between.
Everyone is reiterating the same buzzwords (Decentralisation, DAOs, NFTs) but giving no real examples of the utility.
Unfortunately, I am not one of those people who sees something new and decides to spend my time on it, only because everyone else is doing so.
I want to know real, practical use cases/problems that can be solved with web3 that can't be solved with web2 - otherwise what is the point?
But the FOMO is real with this one, you don't want to be the same guys who were mocking Web2 because, why would you send an email when you can just call someone?
As far as I understand currently there are three major concepts in web3
- Defi
- DAOs
- NFTs
Let's start with Defi or Decentralised Finance
The idea is to allow anyone with internet access to lend, borrow and bank without going through middlemen.
The big one is obviously banking.
If you live in a 1st world country like me, the use case might not seem super apparent but in 3rd world countries, with corrupt governments, no proper justice system or infrastructure in place and skyrocketing inflation, crypto is a great way how to provide banking functionality to these places.
(But in our context we don't really care about it, since as indie hackers we're not going to start tackling global banking problems soon)
The other one is simply online payments.
Everyone has heard that bitcoin was used to buy drugs on the Silkroad. In this case, it was for more nefarious purposes, but let me ask you this. Have you ever tried to build a marketplace like Uber? Stripe percentage fees and KYC (Know-your-customer) procedures most likely are some of the issues that you'll come across.
Since Defi is basically money-in money-out with crypto it is a lot easier to provide payment functionalities and make them do what you want them to do without the hassle of needing to have multiple agreements with banks and so on.
(This is also partly because for the time being, crypto isn't really regulated by anyone right now, so there is no legal requirement for KYC and such - which is both a good thing and a bad thing)
Secondly - DAOs or Digital Autonomous Organizations (Essentially Zappier on steroids with Github Pull requests)
Not going into too many details here, but it's essentially a way how a group of people can make decisions on how a company or organisation should operate. (Hiring, price changes, offered services, etc.)
The decisions are executed by smart contracts that people can vote on through bidding the internal DAOs cryptocurrency (more money, more power)
i.e. Let's take a venture capital organisation. Their sole purpose is deciding where to invest their funds. If the VC operates as a DAO everyone who owns some of the tokens the DAO uses can vote on which stock to buy next. The option with the most votes wins, and the DAO (which is a bunch of smart contracts) buys that stock
People can also submit changes to the way these smart contracts that govern the DAO work. And again all of that is up for a vote where all the people who own the token can participate
This sounds all great from afar, but I seriously doubt, that any private company can really properly operate this way. And since I personally don't see any way how we makers can utilise this, I'll just skip this as one of those ideas that I personally don't get. But it sounds interesting... Maybe it has a utility for government / social programs?
And last but not least, NFTs
Not the apes or other digital art that is trending today but the concept of "digital ownership" that can be confirmed by almost anyone.
In the current web - how can you actually prove that you own something?
You really can't without trusted intermediaries, with web3 you kind of can (This guy sold his apartment ownership papers as an NFT https://www.coindesk.com/business/2021/05/25/techcrunch-founders-apartment-to-be-sold-as-nft/ )
Imagine that you buy a skin on Fortnite, you paid for it, but the skin is still technically on Fortnites servers. They can ban you acc and you lose the skin. If you own the skin as an NFT - then you have it in your wallet. And Fortnite cant take it away from you. Again, digital ownership.
(Whether or not you will be able to do anything with that skin without Fortnites servers, is another question)
Obviously right now we don't have the infrastructure to support real useful cases. It's kind of like when smartphones came out - the leap that you can use built-in GPS and build something like Uber wasn't supper obvious at the beginning.
From all of the things that I mentioned IMO the biggest thing in web3 is gonna be NFTs or digital ownership
Also, its worth noting that 99% of the end-users won't care if its a web3 or a web2 project - even if the project has some built-in privacy (i.e. duck duck go vs google) and that adoption will be slow with little to no incentive for existing companies to migrate.
Other things that people have mentioned that web3 can be used for:
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You can log in anywhere with your wallet (and receive funds from any platform)
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Since you can log in anywhere with your wallet there is a possibility of an ad model that instead of companies paying Facebook to show ads to you, they pay you to watch their ads. (Brave browser already does it some extent, but for other companies like FB there is no incentive to do so)
I am no expert on crypto or web3, but I had the same question as most of you here
Comparing web2 vs web3 what can you build in web3 that you can't in web2?
And for now, the answer is niche financial things.
Maybe in the future, someone figures out a non "deep state" application to web3.
But a lot of it also dependents whether governments will want to play nice with it or not. In theory, it is cool that you can sell your car as an NFT. But for it to be legit, that transaction also will need to be recognised by the law. Which is notoriously slow and buggy as hell
Also, a fun thought experiment, let's say that you can sell your house as an NFT, and someone just steals/gets your private keys and comes up to you the next day telling you to leave. What do you do? Go to the police? He technically owns the house
If you're interested in hearing about some of the more critical/negative aspects of the whole web3 thing here's a great video by Folding Ideas
https://www.youtube.com/watch?v=YQ_xWvX1n9g
If I missed something, or if you disagree with me, let me know in the comments
H! I think there are a lot of real-world applications for Web3, It's something we think a lot about with my partners. For example, once the hype around NFTs as digital collectibles to make money settles down, there are a lot of real-world applications for NFTs (creating exclusive offerings, giving members-only access to holders, for example). I can imagine luxury brands having a lot of use for NFTs. Sports organizations too (season passes for example). The whole concept is not that web3 can provide so many more functionalities than web2 (most things that are getting built of web3 can be built on web2), but that given the option, society should gravitate towards web3 built solutions (once they understand it) because it means that we all get a piece/share/say.
I also wrote this short blog post 2 months back, using a very simple example for a real-world web3 use case. So many things have been said around Facebook in the last few years that I imagine that it's quite possible: https://blog.ultrix.digital/web3.html
It's a great point. One way to restate this is, "web3 solves the 2-sided marketplace cold start problem".
What do you mean by cold start problem ?
Could you please eloborate ?
The cold start problem is where a new 2-sided marketplace has no value because both sides just want the other.
For example, I go to steam to buy a game because that's where all the games are selling. Game devs sell their games because thats where all of the buyers are. If you make a new marketplace, there are no sellers, so why would a buyer go there? There are no buyers, so why would a seller go there?
Social networks have this problem, too. What value did LinkedIn provide to its first user? None! There was nobody to connect with.
Each network and marketplace has needed a clever hack to get started. But with crypto companies, the initial users are also owners, so the incentives are aligned for them to help go from cold start to fledgeling network.
Hey, nice writeup, I agree with your observation of the three main concepts (DAOs, NFTs, Defi) and
I also agree that:
[time]: "right now", most, probably 99.999 ... % of
[user]: "end user"-facing applications
are better built in web2 than with web3 technologies.
But from my understanding, for all of these concepts, we're still at the infrastructure level, and will likely remain there for the next 3-5 years, maybe even longer. So whether or not as you say: "real, practical use cases / problems can be solved" depends a lot on what that means to you.
So!
if you swap [time] for "in 3-5 years", there will very likely be a lot more "end-user" facing application to be built. Starting probably with ownership and finance use cases, then maybe legal, org, maybe even health related use cases.
if you swap [user] for "web3 company", you could start "right now" to build b2b infrastructure layer products that will be financially successful. Just look into the tooling required for DAOs at the moment.
Cheers!
If you're still reading, here are my thoughts on why both NFTs and DAOs could become powerful in the future:
a) NFTs: are likely just the starting idea for a base layer of cross-platform / cross-app digital ownership. Sure, at the moment much of it is hype and games, but a globally verifiable ownership, independent from citizenship / government is a powerful idea. That's long term, decades, though. The short term advantage that I see is that blockchain-validated ownership could become "more convenient" than owning digital infrastructure (servers, domains, tokens, ...) while at the same time being "more secure" than owning physical hardware (phone, laptop, hard drives...) yourself.
b) DAOs: are likely just the start of a revolution on how we cooperate as humans on a larger scale. Sure, at the moment, a VC like you say, is somewhat similar. But thinking ahead: when trying to organize ourselves on matters like i) climate change, ii) pandemics, neither clubs / orgs, nor states, nor companies are the right forms of organizations. Why could DAOs help? Because they have the potential to become truly decentralized (not many are today), to become large and international, and to find innovative combinations of fair, large-scale decision making (check ranked-choice voting, delegated voting, accountability-built-in voting).
Let's keep our eyes and minds open :)
Adding to this, I agree a significant advantage is around ownership. For example, instead of earning just likes on social media you could instead earn royalties in web3. Or a startup could raise capital by issuing NFTs that entitle the holders of those NFTs a portion of future profits, which in turn incentives those NFT holders to promote the startup. The https://www.rallyon.com/ startup (by indie hacker Jordan Gal) is doing something innovative where they're giving part ownership to merchants on their platform to gain more buy-in to their ecommerce ecosystem. All this more generally opens up the possibility of fractional ownership of assets that hasn't existed before (eg many anonymous people owning a property together and easily selling your equity stake in a liquid market). I think the possibilites are beneficial, exciting and already happening.
They're a funded team, not an indie.
A government can regulate everything around web3 tech, but they can't actually get in it. They can't "switch it off." That's the main value proposition. Web3 enables unstoppable apps and services.
To your points, yes, take a snapshot of the crypto hype-scene and there is plenty to criticize. But crypto represents a major, macro-level inflection point that extends way beyond business and tech. Ultimately this is a political technology. It will take decades to make its full impact.
Your fortnite example is flawed.
An NFT is just a token, a random string of characters. The way a fortnite skin-as-NFT would work would simply be that the token references a skin on their server. The skin wouldn't be "on-chain".
So fortnite can simply ban your token and boom, you can't use your skin anymore.
I don't think I've heard of a single application of utility NFTs that isn't limited by the same centralization of authority that we have in Web2.
To me, it's all a passing fad.
Exactly. It would only make sense if the skin was actually stored on-chain, not on a third-party server.
And there would also need to be some sort of interoperability standard that make skins usable in different games.
From a technical perspective, neither are even close to being a reality right now. And I seriously doubt they'll ever be.
The whole concept of DeFi is far more powerful than most have realised. New developments like staking allow individuals to essentially act as retail banks, lending out capital and earning interest.
Yeah, Web 3.0 developing too fast. Finally, user's content will take control
You can build a young, driven and fast-moving team. I personally don't think web3 will bring much novelty in and of itself, but it most certainly is washing in a lot of new talent. Like many similar things, it's often less about the exact product or idea behind something, and a whole lot more about the community building around it. My main guess as to why a lot of large (read: old and boring) corps are venturing out into the occasional web3 experiments is probably 90% for hiring purposes, 9% for marketing purposes and 1% for keeping existing teams engaged and feeling heard for doing lab-type spin-off projects.
A great pool of talent. Albeit an expensive one, for now.
Nothing really. Just as you wrote maybe something in the future but right now everything is more or less concept and it requires not only technical innovation but also a change in the society. You mentioned Fortinite gear on NFT world. Let's say you spend 1000 dollars in Fortnite gear and you get tired and want to play Minecraft instead. Let's say we would have some technical standard across games to convert game goods to another. Why would Minecraft accept to give player 1000 dollars worth of in-app purhases for their game? How this would make sense financially? It would be like I would go to Burger King with coupons from McDonalds.
Haha, I love this analogy. Going to steal this!
Im new to IH and I’m really surprised that this is the second post I’ve found at the top of the list against blockchains. I had these same pessimistic thoughts about it until I examined the use cases and asked the same questions you are. The web2 killer here is trust. You are also missing an important web3 concept which is dApps. Trust and dApps create an ecosystem for the people unlike anything web2 can do. Take BrainTrust for example, a network of freelancers for freelancers. SmartContracts ensure the network gets stronger every time a fee is taken by buying BTRST and distributing it back to the community through grants and other incentives. You could somehow build a similar mechanism with web2 but what would you use for currency, fake coins or real money? It’s far more difficult with web2 and web3 inherently has more trust in the system though the blockchain. Shameless plug to use my BrainTrust affiliate link if you want to sign up :)
Thanks for sharing.
I'm exploring a lot of examples in my podcast - Minted: NFTs, Creators, and Web3. It's on Spotify, Apple etc.
It's a good question you raise - I'll add it to the list that I'm trying to address on the podcast :)
Trust. You can't build trust on local servers or the real world.
You upload all your pictures to FB and IG. You put your money on PayPal. You send private messages using Gmail on servers in the "real world" (I don't know what did you mean).
Isn't that trust?
The most exciting part of web3 to me is building websites that are resistant to censorship using technology like NFT domains and IPFS/Internet Computer as hosting services.
Lol. The last thing I’m looking for is yet another person on the internet who is critical/negative about crypto. The haters are currently at a fever on par with the “what good is the web anyway?” crowd from the mid 90s. Luddites gonna luddite.
Better resource: A16Z podcasts and Naval. Listen to people who actually understand and build in the space.
A16Z, looks pretty interesting - will check them out, thanks!
Sorry, I think you mean: "Listen to people who are actually balls-deep invested in crypto and want to drive up demand so they can sell at a higher price".
And don't get me started on Naval. He thinks he is the Socrates of the 21st century just because he is good at making money. Please.
Being "good at making money" is legitimately impressive. It's hard and it's not like getting good at some niche little game or hobby. There's fierce global competition when it comes to making money.
That Naval has excelled, despite being a poor immigrant from India raised by a single mom is epic and I applaud it. The fact that he's worked hard for years to help other founders (with venture hacks, then angel list and now his crypto funds) is even better.
I've listened to all of his podcasts and it's clear he's no slouch in terms of technical chops or understanding of crypto.
Yeah this is hilarious, this dude mentions A16Z as his source of truth... 🤦🏻♂️🤦🏻♂️
A16Z is far from dumb money. The founder, pmarca, built 3 billion dollar companies a couple of decades ago when that was very, very hard to do.
He also pioneered the web browser. The very thing you're typing into to disparage his tech investing firm!
I'm familiar with him and never claimed that he is dumb.
With that being said, him and his VC firm are heavily invested in Web3, so he is incredibly biased (and a hype man).
I also know that he instantly blocks anyone that even attempts to challenge his views on Web3/Crypto on Twitter.
It has gotten so out of hand, that being blocked by him on Twitter is a meme badge of honor.
So yeah, you're referencing the definition of an echo chamber.
I agree with blocking the trolls. Life is too short and there are an endless number of them on Twitter aiming for prominent people like him. From all accounts I've heard, he welcomes spirited debate. Just not from twitter randos or journalists with an axe to grind about capitalism, tech, crypto or something.
TBH, I'd say only a very closed minded person would be incapable of learning much about crypto from his interviews and various A16Z media.
The worship is ridiculous. He is just a VC.
A thread of “prominent” profiles that have been blocked by him.
I don’t see any trolls among them, including the co-founder of Twitter.
Jack is a total bitcoin maximalist and was being a troll in the very tweet you shared! His previous tweet that lead to getting blocked was a mean spirited comic caricaturing pmarca!
Nobody is entitled to your, my or pmarca's twitter feed.
Especially people with millions of followers who can light up your DMs and send countless other trolls your way as they mock you. It boggles my mind to think how someone should be obligated to make themselves available for that kind of abuse!
You can build something that does absolutely nothing but yet raise millions ;P
I jk i jk
This has been done, ad nauseam, in web2 as well.
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Newspaper / media have been complaining about lack of revenue yet sitting on their ass and doing nothing about microtransactions. I don't want a subscription but i'll pay a bit of money to access an article as long as there's zero friction (don't ask me to sign up).
Not to mention other economies where a 30 cent fee can be a day's wage.
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