Following his recent departure from Twitter, many suspected Jack Dorsey would be spending his time on Bitcoin after saying earlier this year, “I don’t think there is anything more important in my lifetime to work on”. While his plans remain under wraps, Dorsey ignited a Twitter storm after criticising Web 3.0 as being centralised and for the benefit of venture capitalists.
The Promise of Web 3.0
Web 3.0 envisions a future state of the internet based on decentralised public blockchains where users own and govern sections of the internet, rather than requiring access through centralised entities such as Google or Facebook.
Unlike Web 2.0 where users are the product and unable to own a piece of the internet, Web 3.0 is “owned by the community” and “trustless” in the sense that an intermediary isn’t required for transactions.
Among other things, Web 3.0 includes decentralised finance (DeFi), a favourite among venture capital firms at the moment and a sector into which enormous sums of money have been ploughed.
Web 3.0 Decentralised?
Web 3.0 promises a decentralised version of the virtual world featuring public blockchains, metaverse technology, non-fungible tokens and DeFi free from the grasp of centralised power sources. But how much of this is true?
One place to start is with the data. Earlier this year, Messari published a report illustrating the initial token allocations for some of the most popular blockchains. Evidently, insiders such as venture capital firms, founders and foundations represent the bulk of initial allocations in most cases, suggesting that they may not offer the promise of decentralised governance purported.
The crux of Dorsey’s criticism is simple. Venture capitalist firms (VCs) frequently fund Web 3.0 projects in direct competition with genuinely decentralised alternatives such as 100 percent initial coin offerings. By owning a controlling stake, they are able to pressure blockchain co-founders and influence the direction of the project. In addition, as insiders, VCs are well-placed to pump their bags and time their exit at the expense of retail investors.
Naturally, Twitter’s favourite billionaire troll couldn’t resist commenting too:
Taking a step back from the Twitter storm, it’s clear in the end that Dorsey feels as if Web 3.0 is decentralised in name only. While he quite obviously is not opposed to centralisation or venture capital – see Twitter and Square – he simply wants people to know what they are getting into.
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