What is web3?

Introducing the first Read Max Report (and a paywall)

Feb 11, 2022

You're reading Read Max, a newsletter about the future. Today: an announcement!

I've been publishing Read Max for about three months now, sending out an email or two a week to — as of today — a little more than 5,700 total readers, 350 of whom are paying subscribers. (Bless up!) This isn't so bad, for a newsletter written by someone who is resolutely Not On Twitter, and therefore missing out on a lot of promotional opportunities (i.e. picking fights), but it's also not nearly enough (yet) to turn Read Max into the kind of sustainable career proposition I would like it to be. That's OK: I have a runway, and I'm planning on using all of it, and possibly even continuing on past the runway, driving the plane into the jungle and allowing it to burst into flames and consuming me alive, or whatever, because I really enjoy writing this newsletter — which pleasure I hope is reflected in the newsletter itself — and would like to do what I can to make it a real full-time job for years to come, instead of just a fun little experiment before I have a full-on mid-life/career crisis.

This is all a long-winded way of saying that, as a way of trying to convert more of those readers into paid subscribers, I'm introducing a partial paywall to Read Max. To that end, starting next week, at least one newsletter a week will be for subscribers only.

I also want subscribers to feel like they're getting something more than just the same newsletter for their money. So, for the last few weeks, I've been working on compiling a bunch of writing, reading, research, bad charts, stoned thoughts, and terrible jokes into a new paid subscriber-only product: The Read Max Report on Web3.

The report, which runs about 10,000 words, acts as a combination glossary-explainer-burn book-reading list for the world of crypto and web3 — an idiosyncratic, highly biased, and intermittently funny guide to the world of web3 for both the uninitiated and the slightly initiated. The report combines updated material from previous Read Max writing on web3 with brand-new writing on topics from a16z to yield farming; even better, it will be continuously updated with new entries and writing as web3 continues to slouch toward us, waiting to be born. Think of it like an even less rigorous Wikipedia, or the kind of research report a hedge fund would pay thousands of dollars to access, only with less math, uglier charts, and available to you for only the cost of a Read Max subscription.

Current paid subscribers can click here to dig in. Free subscribers can read a sample entry — the one for "web3" itself — below. My hope is that this will be the first of many such Read Max Reports, compiled and made available to paid subscribers according to some occult schedule.

Two final notes: First, If you like Read Max, would like to see it continue, and want to support it, the best thing you can do is tell friends, family, former roommates, etc. about it. I don’t have much in the way of a promotional platform these days, which means it’s not always easy to get new readers. Personal recommendations from people who like the newsletter go a long way. If you’re so inclined, please Tweet/Instagram/email/dark social about Read Max to people you think would like it.

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What follows is a sample from the Read Max Web3 Report, a 10,000-word research document on web3 available to paid subscribers. This is the report’s glossary entry for “web3,” which acts as a standalone explainer for web3. Paid subscribers to Read Max can read the entire report here.

Web3

If you ask a devoted web3 believer to explain the object of their obsession, they will often provide you with an infographic. For example, here's one from Goldman Sachs; here's one from the DeFi platform Binance; here's one from something called DexChain. Here's a proprietary one created via the use of Read Max's sophisticated neural networks and spruced up by Read Max's top-notch design team:

If you are not a practiced interpreter of Business Thought, it can be a little hard to know what to do with infographics like this. Web3 is … a bunch of words in a world cloud??

Web3 is a bunch of words in a word cloud

Well, sort of, yes: web3 is a bunch of words in a word cloud. Specifically, it's a collection of supposedly interrelated technologies and values, slickly repackaged as a utopian vision and investment opportunity, around which a speculative frenzy and messianic fandom have coalesced.

Let's pick that apart a little bit:

Web3 is a collection of supposedly interrelated values and technologies …

At the core of the web3 imagination is a set of technologies that have been developed over the last decade-plus in the wake of the creation of Bitcoin, such as

the blockchain,
crypto tokens,
smart contracts,
NFTs,
DAOs,
avatars with laser eyes,
etc.

Within the context of the web3, these technologies are supposed to both enable and enforce, at the structural level, specific values, like

decentralization,
sovereignty,
getting really rich,
ownership,
being positive on Twitter,
really fucking rich,
etc.

At its simplest, the idea here is that software built on the blockchain — which is synchronized and held in common across multiple computers, instead of on servers owned by a single company — will be naturally decentralized, by virtue of how the blockchain works.

… slickly repackaged …

Read Max's cleverest readers will note that the technologies and values listed above are for the most part those that have always been ascribed to "crypto" or "cryptocurrency." Indeed, Read Max does not think it would be particularly misleading to describe web3 as a slick rebranding of "crypto," designed to appeal to humanities majors, artists, and other people who have so far been turned off of "the blockchain" by the single-minded bloodlust of Bitcoin true believers. (If you hate "crypto" because your younger brother talks about it too much at Thanksgiving, you might still be talked into loving web3 because it's about "creators getting paid" or whatever.)

There are some subtle distinctions between how "crypto" and "web3" are used in practice, and between the kinds of people who think of themselves as belonging to one group or the other, mostly centered around use: "web3" people are more focused on changing the internet and making a ton of money, while "crypto" people are more focused on making a ton of money and kidnapping and executing Jerome Powell.

But, in general, it is not even contradictory to understand "web3" as both a coherent technological-ideological package and as marketing hype intended to generate interest and investment in blockchain-based businesses and funds from venture capitalists and retail investors who worry about missing out on the next big wave of tech unicorns.

… as a utopian vision …

Web3 gets its name from, and is defined most often (see the above and other infographics) in opposition to, its predecessor, Web 2.0, the name given to a broad shift in website design and business in the late 1990s and early 2000s. While Web 2.0 had noble, utopian aims — Collaboration! Google Maps! Every website gets a comment section for some reason! — in practice its products have built the depressingly centralized, heavily surveilled, highly annoying leviathan on which we argue about Nicki Minaj's cousin's friend's balls and tell our friends to subscribe to Read Max.

The stated aim of web3 is to change that paradigm and reverse the trends of Web 2.0, using the distributed, secure technology of the blockchain to re-decentralize the internet and give users power over their data. (It seems worth mentioning that the stated values of Web 2.0, as recorded in the definitive Web 2.0 "Meme Map," included "radical decentralization" and "You control your own data." So, uhh, I don't know.) Just as Web 2.0 ushered out static websites and Geocities in favor of dynamically updating websites and Facebook, web3 will correct the errors of Web 2.0 and replace data-siphoning advertising companies and monopolistic social platforms with distributed, user-owned apps and clubs of guys who own JPEGs.

(In this sense web3 is less a specific thing we can define, and more a condition that we seek. It is what people on Twitter used to call a "big mood" and what French theorists would describe as a "utopian horizon" — an Eden toward which we can travel, but may never ultimately reach, like full communism, or the release of the Avatar sequels.)

… and investment opportunity …

Of course, the rise of Web 2.0 wasn't simply a tale of triumphant ideology and bitchin' web design. It was also a period during which certain people made a ton of money. One appeal of "web3" to the people who buy into the framework is the possibility of ground floor–-level investment opportunities in a coming restructuring of consumer web infrastructure as totalizing as the one that occurred in the 2000s.

One important difference between the regular old startups of Web 2.0 and the "DApps" and "DAOs" of web3 is that anyone can invest in a web3 startup, simply by buying the crypto tokens produced by the startup's blockchain. These tokens generally give their owners voting rights in the company's decisions, the way owning stock would, and for the most part they can trade them as you could any cryptocurrency. This means even you, who is just some guy, can act as a venture investor in what a bunch of Twitter guys with pixel-art avatars say is the future of the web. You're not just flipping crypto tokens based on what you heard in some Telegram chat;, you're investing in the next Facebook. Or at least, that's what you can tell yourself and your spouse.

… around which a speculative frenzy and messianic fandom have coalesced.

Some combination of pandemic boredom, gambling addiction, excess savings, desire to be extremely rich, and even genuine belief in the possibilities of a truly decentralized consumer web has turned the "investment opportunity" presented by the web3 market into a speculative frenzy, in which tokens (and the crypto market as a whole) undergo wild short-term swings as speculators rush into (and out of) hot currencies and tokens.

(For some people, even describing web as "speculative frenzy" [(let alone "marketing scheme"]) gives it too much credit: for them, the entirety of web3 is a straightforward pyramid scheme or Ponzi, a scam designed to get suckers to buy into an expensive vision of the web's future based on bullshit tech, only to be left holding the bag when it inevitably collapses. One difficulty with assessing this claim is that the lines between Ponzi scam, pyramid scheme, "legitimate" multi-level marketing, and straightforward capitalist investment are not really as clear as you might assume or hope.)

As in any speculative bubble, web3 market swings are driven as much by crowd logic and media hype as they are by "systematic evaluation" or "empirical research," which means that talking loudly about your web3 investments is a good way to make those investments go up. In this way the "utopian vision" component of web3 and the "investment opportunity" component reinforce each other: if you believe in web3 as the future, you will tout your investments in it; if you tout your investments in it, they'll increase in value; if you make money from web3 investments, you become even more committed to the utopian future vision of web3.

Thanks to this cycle of investment and reward, the best way of understanding web3 in actual real- life practice might be as a Twitter-based fandom. A lot of the hype, attention, and investment in web3 has been generated not by any particular impressive apps or proofs-of-concept but by relentless Twitter activity of web3 fans; just as K-pop stans promote their bands, swarm haters, and make fancams of their favorite idols, web3 adherents flog their favorite coins and apps, quote-tweet skeptics, and write endless fanfic threads about how web3 will change the world.

OK, but what does this even look like, though?

The above is a broad definition of "web3" as a financial-cultural-technological phenomenon. It doesn't really answer the basic question most normies mean when they ask "what is web3?" which is something like, "what does web3 look and feel like?"

First, a caveat: While there is a lot of consensus among web3 guys about the fact that web3 will transform the world, liberate humanity, and make everyone extremely rich, there is not the same level of consensus about what web3 actually looks or feels like in practice. Do users have to actually interact with an app's blockchain for the app to count as "web3"? If they don't, doesn't that undermine the values of decentralization, privacy, and ownership promised by the web3 vision? If they do, isn't that extremely annoying? Read Max is more concerned with examining web3 as a socio-cultural object with porous boundaries than it is with defining the ideological-technical specifications of web3, and therefore will punt on these questions.

Universal, decentralized identity

At the moment, the broad idea behind the "feel" of web3 is that crypto wallets — where you store the private key that allows you to do stuff on the blockchain — serve as universal, transferrable identities. This image gets a lot of play on web3 Twitter:

chel$ea @chhlss

We like the UX

At its most expansive, the idea here is that each wallet could act as a kind of transferrable online identity. Because it's connected to your blockchain address, it's a record of what crypto you have, which NFTs you own, where else you have memberships, and what posts you've made. You can extrapolate out an imagined future where your list of friends or contacts is written permanently into your blockchain record, and is available in any social networking app you log into with the wallet associated with that address, rather than held by a centralized company like Facebook. You're not tied to that wallet, either: If you're sick of those friends, or you made a bad post and want to escape opprobrium, or you want to log into whatever web3 PornHub looks like, you can use a different wallet with a different private key and different blockchain address. This is why you see a lot of web3 guys tweeting in a really impressed tone of voice about, like, how they logged into some web3 game and the game knew which NFTs they owned.

Is this realistic?

Nothing about the world described above is technically or technologically impossible. But it's worth considering that (1) software crypto wallets are coded and operated by a handful of companies, (2) most software crypto wallets often interact not with the blockchain itself but with a small number of third-party companies that make it easier to read and communicate with the blockchain, and (3) the kind of interoperability that's required for the vision of "transferrable identity" will need a level of multi-party coordination to ensure compatibility.

All together, this sounds an awful lot to Read Max like centralization, which is what web3 is supposed to not be.

This, for that matter, sets aside the question of whether or not universal, cryptographically secure, decentralized, transferable identity is truly something that most web users want or care much about.