What is Web3? With Marieke Flament
What is Web3? With Marieke Flament
đžBlockchain technology, crypto and Web3 - you may have come across these terms, but what exactly do they mean, and how will they affect our lives? What is the technology all about and why have there been so many controversies surrounding crypto?
Please note an important point: cryptocurrency exchange FTX, at one stage the second largest company of its type in the world, filed for bankruptcy in November leaving many users unable to withdraw their funds. Its CEO, Sam Bankman-Fried, has since been arrested and charged with fraud. We recorded this episode prior to his arrest.
Regardless of the controversies, we thought it would still be valuable to understand the tech behind Web3, which is why today, I speak to Marieke Flament. Marieke is a French-born computer engineer and CEO of the NEAR Foundation, a Swiss-based non-profit that oversees the governance and development of its namesake blockchain.
Important disclaimer: Investing in cryptocurrencies is very risky as the nature of crypto can be highly volatile.
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BLOCKCHAIN, CRYPTO, WEB3 - WHAT IS IT?
One way to think about blockchain is it's an additional layer of infrastructure on top of the web. So today you have the web - the internet.
With the internet, you can open a web page, you can send an email. With blockchain, what you can actually do is start thinking, well, you can record transactions, basically on an additional layer of infrastructure.
Because you can record this information, you can know for sure who it belongs to at that point in time. So, in essence, the blockchain technology is additional infrastructure on the internet that enables to create new business models.
So, then, what is crypto? To function, most blockchains have their own token. Very often it can be compared to gas. So if you want to take your car and go on the road, you need to put some gas in it. If you want to participate on the blockchain and have your transactions recorded in it, then you need to use some of these tokens that belong to that blockchain.
These things they work in unison and are intertwined but they are actually different things.
The concept was that Web One was all about pushing and publishing data and messages on the internet that you could read. Web Two is when we as individuals were able to start to publish and exchange content ourselves.
So, for example, if I take a picture on my phone and I send it to people, and if I record something on YouTube, that's Web Two. However, when you do that, the world we're in now means that we have to go to central entities, give them our data, which means those entities own our content and data.
The idea of Web Three is to say, okay, let's go back to that initial thought process. How can we own our content and our data?
Imagine if Twitter doesn't exist tomorrow - all the content and the efforts and the brand that we've built on that and our reputation would be gone, because there has been a central entity that has decided that it will shut down. With Web3, the idea is that if one platform didn't exist tomorrow, you could take your data and content and have it in another place. That's why it matters, because it's just like going back to basics of how can we can really own our own content.
THE FALL OF FTX
There is new information coming out about this fall every day, but at the core, what happened was that FTX is a centralised exchange. It's a website and an entity where you go to buy or exchange crypto. It's not a place where actually, if you own crypto, you really own it because it's really yours. You have to rely on that central entity to say, okay, I'm going to trust you, I'm going to send you some money and then you're going to send me something back.
What has been happening with that is that there's been a lot of misuse of funds and mingling of several different entities. FTX had a sister company, which supposedly was meant to be independent (Alameda, which is a crypto exchange - a provider of larger amount of liquidity within the crypto space).
And that entity, which should have been completely separated, actually has been using some of the funds of users who were going on the FTX exchange. If you and I were going to the FTX exchange, we trust that our money is there and that actually is being used for that. However, it was actually being leveraged by another entity that should have had nothing to do with it - so it and actually gambled with that money and lost it.
It's bad governance. These are failings of us as humans basically not doing the right thing.
This is why Web3 is important - the idea of decentralisation and of removing those third parties that ultimately have too much power and then end up doing bad things. The effects of FTX are going to be terrible for the overall reputation of the space.
The best regulation will probably be to use blockchain to force everything to be transparent and that everybody can actually look at whatever is happening anywhere.
THE IMPORTANCE OF USABILITY
What matters at the end of the day is real use cases. No matter what we do and what we say, even if everybody says it's a really great innovation, it needs to prove that it does something.
Ultimately, at the end of the day, we shouldn't have to talk about crypto because it's like the internet - we are not saying hey, we need an http page just to open it - you just want to go on Google and you open it and it works.
It's about really building fundamental, new, different use cases. So think about all this as a technology, rather than a crypto asset.
The entire industry has been very focused on the price of the token and the total value locked - those are the two metrics that have been used and but they are fundamentally wrong. What matters is the number of active users and engagement of these users.
Before thinking about investing, think about whether it is usable, can you use it? Because if it's not, and it does not solve a problem, then it's not going to get anywhere.
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