HN ()I'm having trouble "getting" web3 or crypto. I'm looking for an explanatory model, with examples.
As a contrast, I "get" the internet. In a single page or a short discussion, I think I could explain the internet to someone from the 1950s. I could leave them with an explanatory model they could use to understand the coming change in industry.
My attempt would look something like this:
"The internet lets any individual broadcast a message to one person or a billion people instantly and at zero marginal cost. A "message" can be text or some form of media, like a photo, video, or document."
From that foundation, you can build into Ben Thompson's Aggregation Theory. Aggregation Theory is the derivative of zero marginal cost distribution. I think it's a powerful explanatory concept. You can use it to understand the transformation of industry wrought by the internet. For example:
- Amazon: Prior, we had aggregation via the Sear's catalog. Sears looked very similar to Amazon in the beginning of the 20th century. But Sears' growth was capped by (a) the practical size of the catalog and (b) the distribution frequency of that catalog. Distributing 100k page catalogs every day would have been too expensive, and the catalogs themselves a UX nightmare.
- Aggregation theory explains how that changed: each marginal "page" or product in the catalog costs nothing to make or distribute. And it happens instantly. From a UX perspective, things got better with more products in many respects (more options, ranked by customer reviews!)
- Because of zero marginal distribution costs of their catalog, Amazon's distribution got extremely big. Then, they were able to aggregate most of the world's brands and products. "Everything store."
- Netflix: Imagine trying to make Netflix before the internet: you'd have to block out a whole television channel for one family. Then that family could phone into the station and request specific programming ("Hey – can you put on the Brady Bunch?"). Extremely high marginal cost.
- Internet: Now costs almost nothing to stream a thousand different programs to a thousand different households.
- Facebook/Google/Youtube: Anyone can create any form of messages or media and broadcast them for the world to see. These platforms are the distribution networks, where one person or entity goes to broadcast and individuals go to consume.
- The NY Times becomes "just another entity" among billions (all the people on the planet) on these platforms. Their power diminishes substantially.
- Apple: this is the device you use to send and receive these messages, and interface with all the companies above.
I'm trying to incorporate an explanatory model for web3, but I'm having trouble. I think the following makes it hard:
First, there are a lot of bad actors running dubious schemes (lots of distracting noise).
Second, I always tend to read about potential use cases as opposed to actual ones. Somehow, I've yet to come across a company or a value-proposition that was already proven. The only exception, of course, is turning money into more money via embedded growth obligations (as in over-collateralized lending).
I'm having a lot of trouble finding comparisons like the ones above: "Well before, with X company, they were limited by Y. Z company doesn't have those limitations." I know we're early, but you could compare Amazon to Sears pretty early on. And then tell me why it was going to be even bigger.
Third, there are some perverse incentives here that didn't exist with the internet. When Bezos tried to convince you the internet was the future in 1997, he obviously had a big incentive for you to adopt. But just buying AOL and logging on wasn't enough. He then still had to sell you on Amazon. He had to deliver tangible value to you to win you as a customer.
In web3, you interface with a ton of crypto pumpers. The dynamics require caution and skepticism on your part, because you participating (buying the token) is a win for them. It would be as if Bezos was also selling you your modem and internet subscription.
And, importantly, outside of e.g. a return on your portfolio, you don't experience any real tangible benefits (see above). So that "aha" moment is harder to come by. The first time that Amazon book arrived in the mail, or you received a video from a friend on your iPhone, or received birthday validation on your Facebook wall – these are "aha" moments. In my limited crypto circle, the only "aha" moments I see are casino winnings.
Fourth, I often feel like the "web3" version of something is a marginal improvement from the internet version, whereas the internet version was the huge leap from offline. A DAO feels like a potential marginal improvement from a Kickstarter/Gofundme/Patreon/etc. But the Kickstarter/Gofundme/Patreon feel orders of magnitude more significant than their analog analogues. The internet is still so early, and we've yet to see so many of these stories play out. In this example, is the DAO version going to really usurp the "centralized" internet one? Or might it just be one of many solutions to crowd-funding the internet will bring to bear over its long life?
Last, no one wants to be the guy that was "wrong" about crypto (✋). So I think a lot of skeptical voices are silent. But this skepticism is part of the process that helps someone like me come to understand something deeply.
"Decentralized" doesn't feel as powerful as eg "zero marginal cost", because for most people and businesses that alone is an implementation detail. The true compelling explanation is probably a derivative or two up from that.
Can anyone help me see it? I know I'm not alone. When I feel like I have a great explanation, I'll post it here.