Web3 enables decentralised DAOs which offer open source protocols that are funded by DAOs and NFTs.
No one owns the protocol. The community only exists to advance the protocol. This is bottom up by way of vote. Decentralised versions of major platforms such as Twitter have been put on the DeSo (Decentralised Social) blockchain. DeSo has the advantage of extremely low fees. It costs 1/10,000th of what other blockchains cost such as Polygon and Cardano so a Twitter post would run less than a cent. At this rate, decentralised crypto will eventually replace in part banks and social media monoliths.
Another blockchain which is one of the fastest and cost-effective is Velas. Transaction fees stand at $0.00001 or roughly what DeSo charges at $0.000017. The cost of storing 1 GB on-chain is about $80 with DeSo and $50 with Velas vs. $1 mil for Avalanche and $393 mil (!) for Ethereum. DeSo can handle hundreds of thousands of transactions per second (TPS) while Velas TPS is 50,000/s making it the world’s fastest EVM (Ethereum virtual machine) blockchain all with the potential to handle a higher TPS as their tech evolves.
This would make storing NFTs on the blockchain 100% secure at a relatively low cost. Currently nearly half of NFTs are stored on IPFS which is relatively secure for reputable NFTs as the companies backing them will unlikely go out of business. Still, there are no guarantees if the company dies and stops paying subscription fees to IPFS. The other NFTs making up nearly half are not even on IPFS so could easily be altered or ended if the website dies, rendering them worthless. This is where the saying “he bought a worthless jpeg for $100k” comes true. I wrote more on this HERE.
Massive upside: protection from censorship and cancellation while owning your content
Of course, the challenge will be to attract enough users to achieve a useful network effect that will attract more users. But this can happen over time, especially once major companies seeing big upside join in. Part of the big upside is convincing the public they cant be censored while they own their data which is fully portable between other Web3 platforms.
Certainly gamers will find this useful since they no longer have to leave their hard won items behind if they switch to a new game. Music users will find it a breeze to port over their countless playlists and folders from Spotify to other platforms such as Tidal that offer superior sound quality (1411 kbps vs 320 kbps). This drives competition as it pushes competitors to offer the best possible services to their users at the best prices.
Further, users can profit share in royalties, can build on others’ platforms and creations, and/or own a piece of the platform whether it is a game, a piece of music, real estate, a stock or any number of other possibilities.
Minimising the attack surface
Ads won’t exist otherwise you would have an attack surface for governments and advertisers to control. So all funding would be investor based via DAOs and NFTs with the most economic services winning the race. Such would offer the best products at the best prices. Since budgets vary, multiple services at various price points could co-exist. Such platforms may eventually render centralized services obsolete as “not your keys, not your content” becomes a memory. Further, such tokens could be traded p2p on DEXs such as Uniswap so “not your keys, not your coins” also fades to gray.
Web3 use cases
All that said, many are still wondering if Web3 is more hype than substance. Many evolutionary technologies start out this way as the hype cycle trumps real utility. But over time, the real uses cases emerge much as Ebay, Amazon, and other majors emerged victorious after the dot-com bubble burst from 2000-2002 in what became known as the FAANG stocks, a group of centralised big-tech companies with the power to censor and cancel anyone.
Web3 prevents this as decentralization and composability rule the day. Some Web3 platforms turn into hyperstructures which form part of the mutative internet DNA so exist as long as the internet exists with little to stand in their way.
For example, one of the majors in DeFi is Uniswap with its peer-to-peer decentralised trading platform which passed $1 trillion in volume in just three years. With numbers such as these, decentralised exchanges (DEXs) will co-exist with centralized exchanges (CEXs), but right now DeFi is just a drop compared to the ocean it will become. The valuation of DeFi vs. legacy banking is classic David vs. Goliath.
In DeFi, users see lending and trading value as real use cases. Platforms such as Compound, Aave, and Maker let people lend or borrow against their crypto holdings. Even in the throes of the current bear market, total value locked (TVL) stands at over $15 billion. But while many of these loans were based on uneconomic cryptocurrencies, Goldfinch is a decentralized credit protocol for crypto loans to real businesses in the developing world.
Much as some developing Asian countries leapfrogged landlines by going directly to mobile, such businesses can leapfrog traditional banking straight into blockchain-based loans. To date, over 200,000 borrowers have accessed credit across India, Mexico, Southeast Asia, and other countries which addresses the very real developing world credit gap.
Decentralised talent networks also offer real-world use cases. Braintrust (BTRST) is a user-owned talent network that connects highly skilled people with jobs at major companies. The average project on the network is worth $77,630 and lasts 217 days. Job seekers might stake BTRST tokens on a certain job opening to increase their chance of being hired while companies might stake BTRST to increase the visibility of their job listings to attract more talent.
As Braintrust grows, it won’t charge higher fees because for that to happen, the users would have to vote to charge themselves higher fees. Economic optimisation is achieved in such community driven, bottom-up DAO companies as opposed to conventional top-down corporations. Braintrust’s Gross Service Value (GSV) doubled to $74.4 million in the first half of 2022.
The decentralised wireless network is also a proven use case with Helium and its 5G network coming soon. 5G can download a 4 GB 4k movie in 4 seconds. Helium started as a long-range peer-to-peer wireless network in 2013, but failed to gain adoption. Tokens are the oil in the Web3 machine, so by introducing the $HNT token, its network grew exponentially. Hot spot owners earn every time their hotspot is used by the network. Today, there are nearly 1 million hotspots in the network.
In the theme of decentralised drivers, we all know how Google maps is far less accurate than Waze because Waze collects data from those who use the app. Waze can therefore constantly refine its accuracy as places are updated by its users.
We also have DIMO which is building a “network of drivers like you who collect and share their vehicle data to learn more about their vehicle, save money, and build better mobility applications.” Insurers can then bid on the coverage of drivers, matching price with driver profile. In the future, a decentralised version of Waze could build on top of the DIMO network. DIMO even partnered with Helium to let drivers earn rewards for verifying network coverage while driving.
In the stablecoin world, fully collateralised stablecoin USDC is a quick and cost-effective way to send money. While many people might feel more comfortable going through a bank that can reverse errors, USDC will become a more likely standard as test transactions with small amounts can first be sent.
Legacy financial rails are slow and costly so DeFi seems the logical replacement, at least once DeFi matures and potentially implements user-friendly and optional insurance funded transactions so the worry about losing funds vanishes. Indeed, insurance policies can insure against crypto errors much as we have fire, health, and auto insurance.
Ultimately, bleeding edge Web3 will become mainstream once its UI makes it easy for anyone to use while preserving the original advantages of the technology. This is how the internet achieved mass adoption first via AOL then Netscape. Major companies are doing the same for Web3. The next few years will be exponential regardless of where the valuation of the cryptospace goes. Stay tuned.
(͡:B ͜ʖ ͡:B)
Dr Chris Kacher, PhD nuclear physics UC Berkeley/record breaking KPMG audited accts in stocks & crypto/bestselling author/top 40 charted musician/blockchain fintech specialist. Co-founder of Virtue of Selfish Investing, TriQuantum Technologies, and Hanse Digital Access. Dr Kacher bought his first Bitcoin at just over $10 in January-2013 and contributed to early Ethereum dev meetings in London hosted by Vitalik Buterin. His metrics have called every major top & bottom in Bitcoin since 2011 to within a few weeks. He was up in 2018 vs the avg performing crypto hedge fund (-54%) [PwC] and is up well ahead of Bitcoin & alt coins over the cycles as capital is force fed into the top performing alt coins while weaker ones are sold.
Website 1 of 4: Virtue of Selfish Investing Crypto Reports
Company 1 of 3: TriQuantum Technologies: Hanse Digital Access
Interviews & Articles: https://www.virtueofselfishinvesting.com/news