Note: I wanted to get something out the door so forgive me for any errors or typos.
This turned out to be a long thought so I offer a tl;dr:
don't fool yourself/ourselves into thinking web3 is the savior to all, or any for that matter.
theres never been a greater time to get in the web3 landscape, at any level
blockchains are the infrastructure where the worlds economic center will hover around, the internet-adjacent
crypto is money and suffers only from belief, not function, which has preceded all great money, and money no longer requires centralized power and interest
identity and "zero-knowledge" are the backbone of all ledger based societies, bearer notes, privacy, etc.
decentralized social, the greatest civilizations have figured out how to 'get along' and socialize for coordination, through freedom frontiers, and it needs new leaders with greater strengths.
ai, natural language, may be the greatest abstraction tool to include the majority of civilization into an inclusive internet-onchain society
writing this has caused me to reflect of my positioning in all of this and how I want to pursue a path for 2025, god-speed to all, may the meme-lords be with you.
I wanted to write an end of the year post on what I think is right, wrong, and the future of our industry, "web3".
I use "web3" as an abbreviation for crypto, blockchains, decentralized social, zk, and all the crazy tech we touch and work with that makes the future so wildly exciting. Even AI.
To start, let's address the simple stuff. Where we are most likely wrong.
Our solutions aren't the things that make the future 'better'. The tech isn't the 'right' tech for all the problems in the world.
All the problems in the world are mostly self associated and described. Meaning that society, in collectives, divided by imaginary borders with regulatory capture, decide which problems are real and not.
Web3 is still statistically insignificant because not enough of those living within the 'borders of regulatory capture and their heads of state' deemed their problems a problem (a lot of commentary can happen here).
Where we are likely wrong is that web3 does not solve all societal problems, no matter how right we technically can be. Humans and their button pressing of phones and tech mostly happens on the other side of the curve.
This image captures us succinctly I believe.
Moving onto where we are likely right.
All the tech, is truly exciting. It's hard not to feel excited for us 'insiders' - those working in the web3 space. We are at the cusp of something emergent and big. On a massive collision course with the future.
However, as the above meme describes, most of the world operates within this middle ground. Which is a 'frictionless' economic center of gravity built over the last a century.
Where we are right, we are going to replace this old economic center of gravity, through the tech we touch and work. Generating a new economic center with distinct imaginary borders with new regulatory capture mechanisms.
As most of us insiders likely already know, it won't happen in one quick step, but for outsiders it will definitely feel like that. Because it happens in step-functions. Like climbing stairs. Each new step brings in this new euphoric high of, 'omg i'm on the edge', in reality it's already been twelve (12) plus years in the making. I felt this way when I first entered the space in 2020.
So I'll recap and provide opinions on some of the steps.
Blockchains, in the simplest form, provide the internet provenance and ownership.
Provenance is the ability to do record-keeping, accurately, and online. And as regulators, kings, and accountants would tell you, record-keeping is the essence of a well functioning society. It's been the 'mid-curve' since humans began to aggregate and stop being a nomadic species.
Record keeping of what?
The things we exchange, trade, and own. The internet and all of it's byproducts never had the proper allowances for ownership as we know in the physical space. Blockchains brought the allowance of "real" ownership online, paired with monetary exchange.
Most web3 insiders likely take the two characteristics for granted. I'd venture to say, outsider still struggle to wrap their head around these two drastically simple ideas. I don't blame them, it's a truly technical idea still.
The evolution of this layer (blockchains) and all of it's moving pieces of consensus, validators, MEV pools, smart contracts, chain-syncs, bridges, and all the nuances required for the hum-drumming of hundreds of chains still goes well beyond the heads of the some of the most technical people. Where L1, L2, L(nth), need to communicate and seem 'seamless' for end-user goes. And this is fine. We don't need to understand it all, so long as blockchains aren't going to 'rug' us.
At this stage, it's safe to say blockchains ARE NOT going anywhere except up. Especially those moving billions, if not trillions, of economic value.
Congratulations to all of you that got us here.
Leading us into crypto.
I normally like to describe crypto in a very short sentence.
"The ability to move money at the furthest edges of a network at speeds unknown to humanity."
The issue with the word money, it requires people to believe in crypto as money. Which is an okay problem to have. Every regulatory captured borders had this problem before they rose to prominence. Read Niall Ferguson's The Ascent of Money and you'll quickly see how chaotic and full of havoc the ascent of money has been throughout history. Practically, the only constant in the new formation of all money.
And with the continued rise of 'meme coins', which I strongly believe in the ideals of, the havoc and chaos seems to be the best predictor of the rise in the next super power of money.
Crypto is currently the biggest in-house battle.
From the outside, the narrative continues to be crypto is a sham or scam. With new believers forming with the new rise in price. From the inside, it's a battle of the casino house, against the gamblers, against the speculators, against the investors, against the builders, against the hopefuls.
Once again, not much different than any previous time in history.
At this stage, it's safe to say, and or assume the following of crypto:
Crypto is the fastest payment rail.
Crypto is used in exchange of goods and services.
Crypto has exchange markets.
Crypto has price movement.
Crypto is backed by belief structures.
In the end, mostly all crypto assets have the characteristics of modern day money, even the meme coins.
The last thing I'll say about crypto and where we are.
GDP is a metric used to understand how regulatory captured borders are performing in output with relation to a single visible number ie. USD, GBP, EUR, CNY, JPY, CAD, and so many others.
There are currently 180 legal tenders recognized around the world. Apparently around 1900, there were around 50 currencies around the world, a 3.6X growth in 100+ years.
Out of these 180 globally recognized legal tenders, 4 currencies make up 80% of the international swift system volume, for reasons that are mainly 'cost-prohibitive'. Many for valid reasons, others, due to deep centralization of power and interest. (I succumbed to outside stats)
It's the deep centralization and interest that crypto is up against.
In 2008, we had the first crypto-currency, Bitcoin. Since then, we've had over 9,000 crypto currencies generated, 50X growth. In just 2024, one team, which I think has two developers, facilitated over 27,000 crypto-coins, or meme-coins, launched.
The ease in which any currency can be launched and transferred around the world is no longer restricted by deep centralization of power and interest.
Regardless if one believes in the value, which makes you just like everyone else disbelieving in the creation of new money, you should 'ah and ooh' at the fact that it no longer takes nation-states to wield this kinda of power and ability.
Congratulations to all of you that got us here.
One of the core ideas of 'cost-prohibitive' money creation and movement is identity.
Identity is such a complex topic, it can lead in so many ways.
Personally, I have worked in this space. First, validating identities in the international banking world (yup, I've rejected PEP accounts). Then I moved into validating identities in the digital commerce and auth validation space.
Today, much of the artistic value in web3 identity is figuring out the zero-knowledge space. How do I validate and approve 'you as you' by knowing zero, or near-zero, about 'you'. Since blockchains are ultra-transparent mechanisms, and money is the underpinnings of a coordinated society, how we solve identity online is of the highest priority.
Why?
In all aspects of my work, and it's importance as the backbone of a ledger based societies, the easiest way to divide identity is to clearly identify the "good" and "bad". It's these two buckets that make up the entire financial system.
Why?
Let's call it the "99/1 Game". 99% of the world is mid and good. 1%, or less, of the world is edge and bad. 1% of bad can wipe out 99% of societies and corporations.
This essentially falls into the ideas of value-at-risk (a term coined by JP Morgan Chase pre-2008, but valuable here). Because of 'value-at-risk', regulatory captured borders go to great lengths at validating identities to ensure risk is managed properly. (Taleb is one of my favorites on the topic of risk.)
Throughout most of civilizations ascension, the creation of money starts as a 'bearer note' and matures into a society of 'validated identities', becoming registered. All currencies, Pounds, Dollars, and now crypto have, or had, the same arc.
What I find most interesting is how history repeatedly moves from a fringe anonymous economic society into a mature verifiable economic society. This is at stake with zero-knowledge and the art of web3.
Part of the reason, I believe, we must move into better zero-knowledge proofs is due to the overarching theme -- governments become corrupt with too much knowledge over time. It's this pattern that makes zero-knowledge paired with crypto the anti-pattern to a better balanced society, managing the '99/1 Game'.
Zero-knowledge only has to be GREAT at identifying 1%, which is no small feat, since it has to the ability to wipe out corporations or societies, and even rug an entire project.
I'm not sure how far we've come since I'm no longer working in the identity space. Overall, the state of zero-knowledge seems to be improving. Once crypto belief structures are more reinforced, creating a forcing-function on identity and zero-knowledge, our web3 space will have the necessary breakthroughs preventing corrupt entities, like governments or corporations, from blocking the good identities from operating within a properly free economic society.
At least until the next evolution of power, money, identity.
Congratulations to all of you that got us here and god-speed to all those still working on this problem
If power, balance, and money hinges on individual identity, what hinges on coordinated societies?
Social networks.
And boy, or girl, have we proven the importance of social networks in the last decade. We have also proven how terrible it is for any single entity to hold the keys to the kingdom of social networks. Especially when special interest is at stake ie. deplatforming and shadow-banning.
"Decentralized Social entered the chat."
I don't think there is a more important topic happening in our society today. Online social networks is the new frontier for 'freedom of speech'. As America once was the battleground.
To take this a step further, this problem is not just effecting the adults in the room dominating the conversation, it's also effecting our youth. As the book Anxious Generation argues, however my belief that the book is flawed in how it introduces the argument. The valuable component is the definite high-price we pay with social media and our mental health, both negatively and postively. But this has always been the case in society.
As a personal anecdote, when I tell people about homeschooling my kids, the most immediate argument raised is 'oh but what about having the kid experience social interactions?'. One can argue for or against how this takes place in physical or digital interactions. The point is simple, social is vital to a thriving society. Especially a society that requires coordination through communication to thrive.
So how does decentralized social play a part in our future?
I think the divisive nature of this topic leads it into the most interesting opportunity for society. My opinion is that we won't see the multi-billion or trillion social networks. Those are predominately already here, and they aren't what you think. It's not Instagram, Facebook, Twitter, etc.
It's actually the mediums that provide the protocols for which our social landscape can happen, unhindered by big corporations. Farcaster, Lens, Mastadon, Nostr, and all the others existing.
The opportunity is the clients that can be built to serve digital communities.
The problem?
Not enough leaders with the will or know how to lead communities. Even less leaders with the will and know how to lead digital communities. Much less leaders with the will, know how, and capabilities to build and lead digital communities.
These digital communities should serve highly moderated communities, equivalent to those within our physical communities eg. churches, golf clubs, etc. Highly gated, as gated as having to live, or visit, the physical constraints in which communities reside.
The state of decentralized social is, the technology is here and available. It's not as accessible and user-friendly as we need it to be. The last decade of social interactions have create a rot of community leadership with self-interested content creator community silos (this includes me to a certain degree). Current social too deeply meme's the old way of doing social. This is okay because we need to port the behavior but we need new leaders to step out of the shadows and either build their own clients or pick a 'city', Farcaster, Lens, etc. to begin curating.
The issue with building under someone else umbrella of clients, eg. Warpcast, is that your community is exposed to all the other noise and that defeats the entire purpose of decentralized social, highly gated community, and culture specific moderation needs.
The last point I'll raise, our youth also needs their social networks, and parents shouldn't have to worry about the exposure they would get from being online. The same way our children used to interact and be social in the physical world. We need to build a more societal friendly social internet, this is only possible through decentralize social networks like Farcaster et. al.
Congratulations to all of you that got us here and god-speed to all those still working on this problem, a special thanks to the Farcaster & Warpcast team for having such a great product vision.
So, where do we end? If you've made it this far, you're a trooper. 2,615 words in.
Although it may seem like a tangential idea to web3, AI, or as I like to call it, natural language tools, will be the medium in which most of world onboards and interacts with web3. This is a strongly held opinion.
As I have looked at mids, or normies, interact with technology, I can't help but feel hopeless on getting them to adopt the current state of web3.
On one side, we have normal citizens holding the most powerful device they have ever known in a single hand. On the other, they only use these magical devices to call, text, read the news, login to social media, or play games.
Of course there is much more functionality in them. I normally like to think, in a roundabout way, 80% of users only use 20% of their devices capability. And 20% of people use tech at 80% its capability.
So what happens with all this unused capability if the majority of memory becomes stale information, with little need for compute?
I think this is AI's opportunity.
Thank you for everyone that has worked in this space, according to some stats there are ~40k developers in web3. I'm sure there a lot more.
