Web3 technologies are clearly the future of the internet. Blockchain has created a thriving capital market and DeFi promises to revolutionize finance. However, the limitations and excesses of crypto have also discouraged many individuals and most institutions from participating. The Ethereum merge to proof-of-stake removes a huge obstacle for climate concerns, but deeper technical issues for data, identity and governance still remain.
Blockchains were designed to represent money and the overhead cost of the consensus inherent in blockchain technology makes it slow and expensive for ordinary data. Smart Contracts work for token distribution logic where the activity is entirely on-chain, but can’t actually represent or facilitate most complex legal agreements needed by society.
Requiring that an entire system agree on state through redundant activity is a source of tremendous overhead, complexity and delay. That may be justified for financial activity, but there is no version of reality where it forms a sensible platform to use as the basis of all other information exchange on the internet.
Web3 is based on smart contract business models where slow adoption could also be a sign that many people don’t really want to pay for tokenized services which require wallets and fees that add cost, complexity and risk to their lives.
Most of the world does want an internet that liberates people and businesses from the centralized platform dominance and surveillance of Web 2. For a mature Web 3 to fulfill that potential it will also need a data, identity and agreement layer for everything that isn’t tokenized currency, and is not intrinsically well represented as a token.
The decentralized network we actually need to represent society, needs to represent society. In other words, the individuals, organizations and groups that make up real networks of social, commercial and governance activity need to be reflected in the structure of the network.
The nodes in the technological information network should map to the actual parties in society. Then the activity between these nodes can directly represent communication, identity, decision making and other human activity, where value exchange is one component of that activity, but the design of the system does not attempt to tokenize and therefor monetize every aspect of life. This is possible and indeed relatively straight forward compared to the path that much of web3 has assumed up until now.
To scale, a pure data layer must decouple data and identity from gas fees and speculative coins, support human-readable agreements, be interoperable across Web 2 and Web 3, and provide truly decentralized cryptographic control to every participant across a network of nodes that actually mirror the social, legal, and commercial structures of society.
