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AAX Trends

What Jack Dorsey May Have to Say about Web 3

What Jack Dorsey May Have to Say about Web 3

Explainers

07 Feb 2022

Jack Dorsey is the co-founder and former CEO of Twitter, and one of the vocal public figures that support crypto, tweeting things like “Bitcoin will unite a deeply divided country and eventually the world”. But he is less supportive of the wider Web 3 movement which proposes a decentralized, user-owned alternative to the current Web 2 state of the internet.

It may be odd at first, but once you dig a little deeper, you’ll see that it’s not the theory of Web 3 that Jack rejects, but rather, the reality of how it is currently being built.

Two crypto camps

Jack’s Web 3 rejection is part of a battle of minds that has been going on for years in the crypto space.

On the one side, you have ‘crypto people’ that advocate for anything built on decentralized systems. This group expanded with the launch of Ethereum in 2014, and now includes all the Ethereum-killer communities that branched off the original smart contract project such as Solana, Luna, Avalanche, Fantom, and more. These are the same people that make up most of Crypto Twitter, led the DeFi boom in 2020, the NFT craze in 2021, and GameFi and DAO projects this year.

Smart contracts are the engine of all these applications and platforms, replacing centralized gatekeepers with self-executing code that enforce transparent irreversible transactions. These systems need utility tokens to work, which is why there are over 14K+ tokens currently trading in the crypto market. Web 3 is not a single application, but rather a much broader application of this design to the full online world we live in today. In a Web 3 internet world, applications would be decentralized, tied to blockchains, and populated with user-owned assets like NFTs across art, entertainment, gaming, social media, and more.

On the other side of this debate, are what we call the Bitcoin Maximalists, or the Maxis. This group firmly believes that the original cryptocurrency Bitcoin is the only real, legitimate decentralized currency, blockchain, and infrastructure. This camp tends to believe that most altcoins compromise too much on decentralization in favor of things like speed and convenience. While Web 3 and concepts like the metaverse still require exact definition, Maxis already know exactly what Bitcoin has to offer:

  • Data security, you can’t hack the Bitcoin network
  • Censorship resistance, anyone can use Bitcoin and nobody can stop you
  • Privacy, but not necessarily secrecy
  • Trustlessness, it all runs on code in a fully decentralized system

As a testament to its decentralization, it took years to reach consensus across miners to effect an upgrade like Taproot, and then even more time to actually implement the upgrade. And while some countries have banned Bitcoin mining and or trading, no country can stop the global Bitcoin network. In the eyes of Maxis, Bitcoin is the only ‘real’ blockchain as there is not a single centralized party that can be targeted or that can effect change unilaterally. That’s a different story than say, a stablecoin like USDC which is administered by Circle.

How this relates to Web 3

So you have two camps in the crypto world, one that experiments with this new technology seeking to democratize any and all applications, and another camp that says these new systems are not sufficiently decentralized to gain any real benefits of a real blockchain - and only stands to make the creators and financial backers of said projects rich.

Those firmly in the crypto camp rightly point out that much of what is currently being built and envisioned in the Web 3 space simply can’t be done using the Bitcoin blockchain. The bullet-proof security and decentralization of Bitcoin come at the cost of storage space and transaction speed. If you’re loading up your newest in-game NFT asset in the Sandbox, and it takes more than 10 minutes for the Bitcoin blockchain to confirm that you indeed now have a Snoop Dogg-themed jacuzzi, there won’t be many players lining up to join this glacial metaverse game.

Of course, Jack Dorsey would realize that. If the current infrastructure is not decentralized enough, and if Bitcoin as the only real blockchain is not fast enough, then there currently isn’t really a viable alternative route to realizing the vision of Web 3. So maybe this means Jack just doesn’t see the point of a half-baked somewhat decentralized Web 3 universe. It would either have to be scaled back significantly so that it could work on the Bitcoin blockchain, or abandoned altogether.

But perhaps trading NFT profile pics doesn’t have to be underpinned by the world’s most decentralized and robust cryptographic network - although some would argue that the Lightning Network or other second layers on top of Bitcoin could be suitable.

Maybe a system that is somewhat decentralized, and provides everyday users access to a slice of the financial pie, ownership of their assets and data, is still better than what we have today in Web 2. Even if that makes early investors like VCs incredibly rich in the process, it could still be an improvement and if anything, educate more people about the true value of the real, original, golden number 1, “no-country-can-stop-me-now” Bitcoin blockchain.

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