3 minute read

I find the discussion around Web2.0 vs Web3.0 quite humorous. After all, it’s clear that the twitter-verse has no clear agreement of the boundaries of Web2 and an even less clear definition of web3. All we can agree on is that they are different, and there are strong camps on both sides.

I tend to stay away from these debates, especially as someone who was not really building during the dotcom bust or the following web2 platform takeover of the world. However, the discussion of web3 and the new generation of software tickles my inner-entrepreneur. There are clearly differences in architecture, philosophy, and mindset. As a product leader, I really want to know which customer base would find this shift the most valuable.

Part 1: Decentralization creates “Forever Data”

Blockchains leverage decentralization which makes data last forever.

A principal pillar of web3 is the value of decentralization. In web3, this decentralization is primarily powered by or incentivized by a blockchain. The blockchain is simply defined as a ledger of data that is maintained and cross-regulated by decentralized parties. The blockchain can serve as the actual product (Bitcoin, Ethereum), or it can simply be an incentivization layer on top of another product or service (Helium, Filecoin). But the raw ingredient that makes blockchain data different is its decentralized nature. For the sake of this discussion, the data on the chain is… permanent. Immutable. It’s forever.

Permanent data is different than how we see data today in tech.

Forever data? When put under a microscope, that is a really novel feeling. In the era of terabyte+ cloud data storage, unlimited download speeds, and ephemeral information like Snapchat, digital 0’s and 1’s being permanent feels incongruent with how we see technology. For a long time, the beauty of technology was that it boiled everything down to 0’s and 1’s and that it could be wiped out and started over at any time. You can wipe a flash drive, wipe a computer, wipe a server, hell, you can wipe a whole company off the map with a simple terminal command.

Once data is on the chain, the architecture makes it as good as truth.

But thats where the chain is different. Once the data is put on the chain. It’s likely to outlive you. And arguably by the current market-cap of the crypto markets, it may live as long as civilization itself. Now why’s that the case? Simply put, the data on the chain is a ledger (which means it contains every transaction, both adds and deletes, from the beginning of time), and that ledger is simultaneously synchronized across multiple computers, called nodes. Anyone can become a node and join the network. Blockchain technology verifies that everyone has the same picture of the chain and that no-one can tamper with that chain, through an aptly-named term: consensus. Once data has reached consensus, that data is immutably forever on the chain. And because the chain is run by multiple computers, in many cases thousands of them, all run by different people, in different geographies, there is no way to take it down or remove it. It effectively becomes truth.

Value is derived from the use-cases of increased trust.

But let’s move back up the stack. “Forever Data” is effectively a form of social truth. And that social truth is protected by cryptographic consensus protocols and thousands of computers which are run by thousands of different people. It is “forever” because we trust that it will be forever, and the incentives are there for it to be there forever. So it’s pretty darn reliable, if a bit uncomfortable. Arguably, it’s a lot of work for just a little bit of “forever data”.

Why could this whole thing valuable for an end-user? Whats the value of trusting that data is forever? What’s the value of introducing an innocent 3rd party (the chain) for a user? Well, for that we have to define the need and value of that trust.

We explore this in the next part.

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