Transcriber: Alexey S. Reviewer: Anna Sobota
Hello. My name is Jan Liphardt,
and I realize my title may appear a little bit awkward:
“Is Web3 a scam?”
What I will do today is I’ll try to give you some basic tools, principles
that you can use to evaluate Web3 as a space
and projects in the Web3 space.
There’s many different opinions about Web3.
Some of those opinions are precise, technical and practical.
For example, Gavin Woods, “A decentralized online ecosystem based on blockchain”,
that’s what Web3 is.
Other people, like Michael del Castillo from “Forbes”, have said,
“Web3 is an Internet without Amazon, Google, and Microsoft” -
again, that’s precise and actionable and practical.
Other people use Web3 as being synonymous
with something new and exciting that somehow involves blockchains.
Other people, like Elon Musk, have said
that it’s more of a marketing buzzword than reality.
And of course, Web3 has a long history as an effective snake oil
for unsophisticated MBAs and VCs.
And what I’ll do today is I’ll spend some time on really simple ways
you can tell fact from fiction in the Web3 space.
If you’ve ever tried to build a Web3 company or a blockchain company
and you have users, a thousand users, 100,000 users, a million users,
you know that blockchains are exceptionally painful
to actually use in the real world -
you have congestion and cost and limited transactions,
limited compute, limited storage.
But there are some things
that are absolutely unique and beautiful about blockchains.
And those things are trustless event ordering, transparency, and immutability.
Because of how painful blockchains are to use,
the only situation it makes sense to actually use a blockchain
is when trustlessness, transparency and immutability are absolutely essential.
Here are some examples of where blockchains make sense:
some combination of international borders, war, disagreement, lack of trust,
absence of courts and police;
employees and customers scattered all across the world;
corruption and theft and powerful monopolies.
The more of these attributes get together,
the more of a compelling blockchain and Web3 use case there probably is.
Let’s go through some really simple, basic examples.
So here's the most obvious one.
If someone comes to you and says, “18 % guaranteed returns using Web3,”
we don’t even have to dig into the technology here.
And that’s because there is absolutely no obvious connection
between trustlessness, immutability and transparency
and high guaranteed annual returns.
There’s simply no connection.
In particular, in fact, there is probably an inverse correlation here
because Bernie Madoff certainly would not have wanted to use
a technology which is both transparent and immutable.
Presumably, this would have presented a difficulty for his operation.
So this is a situation where, as an outsider,
you can immediately discredit this as probably being a scam or fraud
because of the lack of a basic connection.
So, let’s look at some things that are completely different.
Let’s look at some situations where blockchains and Web3
begin to make a lot of sense.
So, here’s an example from the UN Children’s Agency.
Imagine, for example,
you want to support Internet access across South America and Africa;
across dozens of countries, different jurisdictions,
different legal systems, different court systems,
different regulatory environments, different currencies;
and you want to build a transparent system
where donors can watch the funds exactly flow through the system
and go directly to the right place,
which is schools that provide Internet access.
And imagine you want to roll this out simultaneously
across several different continents.
Well, in that case, a smart contract built on a decentralized system,
which connects real world events to the flow of money,
begins to make perfect sense.
So, this is starting to look like a really good use case for blockchains or Web3.
Here’s another example.
Imagine you want to construct a global,
multi-generational effort to address climate change.
Is climate change a two year problem or a four year problem?
No, it’s a 40 year problem, probably more like a 100 year problem.
So, this is a problem where, all across the world,
people will have to come together, they will have to work together
over many decades
to solve global warming and reduce CO2 levels, presumably.
So, in that kind of problem statement, how do you prevent fraud and theft?
How do you get everyone to agree and stop arguing?
How do you build a purpose engineered economy around CO2 reduction?
And how do you make the system really durable so it lasts not for two years,
but hopefully for a lot longer than that?
This is a second example of a use case where Web3 begins to make sense.
And finally, imagine artists and programmers, patients, refugees
scattered all around the world, want to come together, want to interact,
want to coordinate, want to work together productively and quickly -
again Web3 begins to make a lot of sense.
Just imagine, for example, opening bank accounts in 98 countries.
Imagine having all these people agree on which country is the special one
where the headquarters should be.
Imagine all these people needing to argue and agree about who's in charge.
And imagine also making the system transparent enough
so that it’s easy to comply with local rules and regulations.
So, this is a third example of a combination of attributes
where a decentralized system and all the extreme pain and delays
and cost that are incurred when moving to a decentralized system,
all of a sudden make complete sense
because there is a compelling purpose here.
I’ve alluded to this several times: blockchains are absolutely beautiful.
Putting on my computer science hat or cryptography hat or game theory hat -
[they are] absolutely beautiful,
but of course very painful to use in the real world,
especially if you have a large amount of actual users
because then, you will encounter like
the nuts and bolts infrastructure type problems related to scaling,
limited compute, limited storage, carbon footprint.
You have this really strange things going on in blockchains,
typically you have inverse unit economics -
as soon as people start using your blockchain,
then your token appreciates
and then, you price all those users back out of the market.
So, once you start using blockchains,
you have to contend with all these practical issues.
And fortunately, however, there is a large increasing number of companies now
working on sort of basic plumbing, basic infrastructure
to address the set of problems.
So, summarizing:
if someone comes to you and promises you a lot of cash quickly and easily,
that’s not really a Web3 project.
Instead, what you’re looking for are combinations of attributes
that are forcing that project to use decentralized systems
despite all their problems;
and again, you’re looking at for combinations
of dealing with monopolies,
dealing with borders, dealing with users and engineers and patients and educators
and many different countries scattered around the world;
and you’re dealing with situations where there’s no obvious way
for those people to agree, come together and build something interesting,
and so then it makes complete sense to use a blockchain, to use a Web3 approach.
So as you noticed, I’ve completely avoided
answering this question because there isn’t a simple question.
It really depends on the purpose of the project.
It depends on the community.
It depends on exactly what the goal is.
But what I’ve tried to do today
is give you a few simple principles and rules
that will help you better categorize Web3 projects
and develop a better sense of how to make good judgments
as you approach Web3.
Thank you for your time.