With Web3 promoted as follows evolutionary stage From the internet, businesses and investors are getting on the bandwagon with impatience. Technology giants like Alphabet, the owner of Facebook, Meta and Microsoft, are claiming their claim emerging blockchain-based economysome non-consumable chip companies are already valued at billions, and cryptocurrency trading platforms are experiencing hockey-stick-like growth.
To make matters worse, CBS MoneyWatch spoke with Tim O’Reilly, a tech savvy who, among other things in his long career, is known for publishing the world’s first website and coining the term Web 2.0. While he believes the technology behind Web3 is promising, “it’s a long way from prime time,” he said.
“It’s very hard to convince someone of something when the financial gains depend on them believing in it,” says one tech luminaire. @TimOREillythe publisher that coined the phrase Web 2.0, of web3 products such as cryptocurrency and NFT pic.twitter.com/i2pXR303hP
– Dan Patterson (@DanPatterson) February 7, 2022
In fact, the turmoil around cryptocurrency, NFTs and metavers, including high ratings for startups, has a familiar ring to O’Reilly, who sees echoes of the rise and fall of points as in breathless boosterism around blockchain.
“Get ready for the crash,” he said bluntly about Web3’s biggest claims. The interview is slightly edited for clarity and brevity.
Where do you put web3 on a timeline of development, in relation to the historical advances in computing?
Tim O’Reilly: As a metaphor, I personally put web three around 1983. This has been my impression for a long time. In many ways, before the explosion of points like in the days when we had FTP and Telenet before the web was introduced, we had this incredible valuation bubble of a technology that is not really ready for the peak audience time. With the failure of the dot com, the web came and really exploded. Things were really made possible that were not possible before. By the year 95, you were seeing some really important innovations in the media, and you’re starting to see innovations in e-commerce with Amazon. The capabilities you could already see deploying were quite large.
In the case of the blockchain, it is greatly overshadowed by the speculative value of cryptocurrencies, which are basically a speculative asset.
Is all the money poured into blockchain and Web3 a bubble?
Tim O’Reilly: I think there are a lot of interesting things about the blockchain, in theory. But when you really like it, a lot of technicians have said, “Hey, there’s not much.”
Now, this was also a response that many people had on the World Wide Web. To the existing software developers of the time, it seemed trivial. So while technology is slow and very expensive, and it is difficult to use distributed databases, there is a lot of investment in space and people are trying to figure out real things that can be useful. And I think for sure it’s possible.
Web3 is credited with the idea that there will be a new decentralized website based on cryptography and the blockchain. I defined this term “Web 2.0” 17 years ago, and my idea was that Web 2.0 was the second arrival of the web after the bus point like, that’s how I defined it.
When people ask me about Web3, I say the same thing: we won’t know what Web3 is until after the current bubble appears, because we’re in the middle of a bubble, just like the dot-like bubble, where everything is. kind of crazy startups that get outrageous ratings, with less to show for it.
What is the difference between blockchain technology, cryptocurrency and NFT?
In the case of the blockchain, it is greatly overshadowed by the speculative value of cryptocurrencies, which are basically a speculative asset. They are not intrinsically valuable or useful. And then you get that layer of NFT, which are that, just more. In fact, they do not even have a technical basis, they are not even fully part of the blockchain. Look at OpenSea
the largest NFT market and has 600,000 users.
When the web came to this kind of ratings, we were talking about hundreds of millions of users. So I think it’s really a pretty serious speculative bubble on a very small footing. That said, once you get those bubble ratings, it attracts a lot of capital and talent, and people can really start building something on top of it.
With cryptocurrency, you just have to think of it as a game of chance. You’re on the race track and there’s some horse you think will come out first. Sometimes you are right and you may make a lot of money. But don’t really think of it as an investment.
What is your advice to the most ardent proponents of cryptocurrency and NFT: true believers?
In my opinion, there are two categories of true believers. Some, for example, are building a new decentralized financial system that empowers users. And to them, history teaches us that there will always be new ways to centralize power. In fact, the whole history of the computer industry was a radical opening, which led to a lot of innovation, which later led to its closure.
For example, IBM released the computer specifications. Anyone could build a computer. Michael Dell was a college student and started Dell from his dorm, which was a radical decentralization. And then Microsoft figured out how to re-centralize the software. Later, we have the Internet and open source software. And guess what? Along with companies such as Amazon, Google, Microsoft and Facebook. Find out how to centralize on this basis.
So even if you truly believe in blockchain technology as a powerhouse for decentralization, you should look for the next vectors of recentralization.
We already see them. Blockchain turned out to be the fastest recentralization of a decentralized technology I’ve seen in my life. It took a decade to re-centralize in the case of the PC. It took a decade in the case of the web. But it only took a couple of years with bitcoin before most of the value was held by a very small group of people.
It’s like a pyramid scheme. So I think if you really believe in technology, look for ways in which your beliefs will be undermined.
There is a second class of true believers, and that is really cryptography. You know, a believer in cryptographic valuations. If they have diversified, they may have diversified Dogecoin into another currency that they expect to appear in the same way.
Whatever you do, don’t borrow against the value of your cryptocurrencies. If you do, you will be seriously underwater. Not only will you lose your imagined fortune, you will be bankrupt in the real world. The financial innovation of being able to borrow against your crypto, boy, this is very bad, bad, bad, bad for a lot of people
How long does it take for the metavers, which as expected today is basically a massive virtual reality social network, to be ready for prime time?
The metavers itself is full of bubble exaggeration. Meta Quest2, of course, sells a lot, but technology is a long way from prime time. If you were to compare it to where the web was before it became very useful, we are a long way from that. I think the metavers is probably a decade or more away from being really useful. And even, how long will people spend in this online virtual reality space? I really do not know. Financial, cultural and political norms are changing.
Explaining Web3, the next potential phase of the Internet
07:09
I could be wrong about all this. We are in a period of great fluidity around the rules. We see this in politics, where things that were previously unthinkable are now widely practiced. And I think we’re seeing the same thing in investing. With cryptocurrency, what we would have previously called stock manipulation is becoming, in a sense, part of a drum cycle. As a society, we are trying to find new rules.
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