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Web3 is a terrible name

Crypto, Dunning-Kruger4 min read

The world of crypto has a branding problem. Not only is there a lot of negativity towards it, but very few people outside the industry know what it's for. Crypto's potential to revolutionize various aspects of society makes it all the more important to address this issue.

Labelling it "Web3" epitomizes this problem. It implies that Crypto is the next evolution of the web. Rather than an evolution, I argue that Crypto is solving a different species of problem.

Different, but potentially no less important.

What is Web2?

Web 2.0 refers to the second generation of the web, where static web pages gave way to dynamic, user-generated content and social networking features. You know, the stuff that makes your online experience way more engaging and interactive.

Think blogs, wikis, social media platforms, and other web-based applications that allow users to generate and share content. It's a far cry from the early days of the Internet when we were all just passive consumers of information.

What does the Crypto Industry call Web3?

Web3 refers to the next generation of the web, which is being developed and built. While there is no single, agreed-upon definition of Web3, it is generally understood to be a decentralized web built on blockchain technology and other decentralized systems.

The goal of Web3 is to create a more open, trustless, and permissionless internet, disrupting traditional centralized systems and empowering individuals with greater control over their digital lives.

Why is this a bad name?

The currency of the web is information. From documents linked together in the 1980s to streaming services such as Netflix, the web is the democratization of information.

Innovations that could be considered Web3 include:

  • Decentralised protocols such as IPFS
  • AI chatbots
  • Metaverse platforms

These innovations improve the distribution and accessibility of information. Crypto does not do this. Instead, Crypto is an evolution of a different part of our society - coordination.

Coordination

Where the Web is information, Crypto is coordination.

Coordination is the process of organizing people or groups so that they work together effectively and achieve a common goal. To achieve this, you need to make it in everyone's best interest to work together.

Creating coordination is about aligning incentives.

Money

Let’s start with the ultimate mechanism for incentivising coordination: Money.

Money aligns self-interest with the common good

Bob is a builder, Peter grows potatoes and Chris chops wood. Money creates a means of exchange so all 3 can eat and sleep under a roof.

And it Scales - money works for 3 or 3 billion people.

However, money isn't perfect. Individual incentives don't always align with the common good, leading to inequality and the tragedy of the commons.

Moreover, Money relies on trust that everyone plays fairly.

If Bob, Peter or Chris decide to cheat, steal or use violence, the coordination offered by money breaks down. You need rules and a way of enforcing them.

Rules & Governance

This is where Governments come in. From Monarchies to Democracies, they’re simply a way for a society to agree to a set of rules on top of money.

What’s Communism? An idealogy where all assets (and by extension money) are owned by the state. What’s capitalism? An idealogy that allows the incentives dictated by money to guide society within a set of liberalist rules. Governments also have flaws. Corruption, bureaucracy and short-termism to name a few.

That's it! All that is required for coordination at scale is a:

  • system for incentivising people to work together
  • set of enforceable rules to fix misalignment in the underlying system.

Crypto

Crypto has many properties that can help societies align incentives with the common good:

  1. Trustless exchange: Crypto allows people to transact without trusting counterparties or intermediaries.
  2. Coded rules: Smart contracts can automate and enforce agreements, reducing the need for trust.
  3. Governance can be run on-chain that reflects any type of social structure.

These properties open up the possibility of entire civilizations being run on blockchains in the future.

Whether Crypto is a better mechanism of coordination than the status quo is a topic for another day.

But calling it “Web3” is wrong.

Crypto addresses a different aspect of our society. By fixing these misunderstandings, we can help the world differentiate Crypto and understand what it can do.