New York Times: Web3 Has Arrived. Here’s What You Need to Know.

Original Title:《Welcome to 'Web3.' What's That?》

Original Translation: 0x137, 0x76, BlockBeats

Crypto enthusiasts have successfully anticipated that a future Internet based on blockchain is gradually transitioning from vision to reality. In some areas, bold experiments have already begun.

Image Source: The New York Times; Photo by Dado Ruvic and Rick Wilking/Reuters

At the beginning of 2020, the price of one Bitcoin was only $7,000. Today, a single Bitcoin is priced as high as $50,000, and the total market cap of all cryptocurrencies, including Bitcoin, has exceeded $2.3 trillion. This growth has allowed people to glimpse a radically different future financial landscape and has raised questions about the mainstream view of value that society has held for so long.

Bitcoin, the original cryptocurrency project, relies on a publicly maintained ledger by an open-source computational network, later known as blockchain technology, enabling people to engage in peer-to-peer payment settlements without the need for mutual trust. Today, the market has seen the emergence of thousands of cryptocurrencies built on blockchain technology, with these tokens circulating non-stop within different regulatory frameworks and trading markets 24/7.

This decentralized internet built on cryptographic technology is what people refer to as "Web3." Its proponents argue that Web3 will democratize everything, reshape the future of art, commerce, and technology, and ultimately replace traditional business intermediaries, allowing individuals to take control of their own destiny.

If you still find the above claims somewhat tenuous, consider the following PitchBook data: this year, venture capital investment in cryptocurrency and related projects has reached $27 billion, surpassing the total investment of the past 10 years.

Currently, major investment institutions and blockchain industry players are actively lobbying in Washington, hoping to influence policymakers to introduce industry-friendly policies conducive to the future development of the Token economy. The so-called "Tokenomics" has already been widely adopted in many emerging crypto communities, indicating that Web3 is no longer an abstract concept but an essential part of people's daily lives in the future.

Exploring the NFT Economy

An NFT, or Non-Fungible Token, is a unique line of code on the blockchain linked to an image, video, audio, or anything else. In October of this year, artist Cam Rackam sold 10,000 NFTs of meme images from the "Wall Street Bets" Reddit board, earning up to $2.5 million. Cam Rackam said that in his "moderately successful" 18-year career, he had never received an invitation to Art Basel in Miami Beach. However, last week, he was invited to the event and remarked that traditional artists feel left out amidst the NFT craze.

According to Chainalysis data, in 2021 people have already spent around $27 billion equivalent cryptocurrency on mainstream NFT platforms compared to just $114 million for the whole of 2020. What are people getting from NFTs? NFTs can grant public ownership of an item and prove its authenticity, but this may or may not include copyright. Frank Gerratana from Mintz law firm said, "It's like in the real world, an artist might sell his work but retain the intellectual property."

Just last month, Miramax sued renowned director Quentin Tarantino for proposing to auction an NFT generated from a high-resolution scan of the original script of "Pulp Fiction" (a film directed by Quentin Tarantino). Miramax claimed that this use of the movie's brand and imagery infringed upon the company's rights. For Gerratana, this was one of the first lawsuits related to NFTs, and the outcomes of these cases could have significant implications. Meanwhile, their corporate clients are still trying to figure out what NFTs are and why people are buying them. Gerratana said, "These clients want to know, is NFT really the future? Do we have to sue?"

However, for artists like Cam Rackam, the new revolution has long arrived. Rackam said, "The most laughable are those clueless 'baby boomer' types." Perhaps he wasn't referring to the older generation, but to an outdated mindset that refuses to accept new ideas about art and value. He noted that people were once reluctant to accept Andy Warhol's promotion of mass-produced prints, including the ultimately popular Campbell's Soup cans print.

Exploring Decentralized Social Media

Another concept within Web3 that challenges traditional notions is decentralized social media platforms, where users can earn and trade cryptocurrency.

On a blockchain application network called DeSo, users can earn rewards based on their popularity, engagement, activity, and content. Former Google engineer and DeSo platform founder Nader Al-Naji believes that internet users will eventually bypass platforms like Twitter and TikTok, which rely on pushing ads to them for profit, and instead capture that revenue directly for themselves.

Al-Naji's first cryptocurrency project was Basis, an attempt at creating a "decentralized Bitcoin," but due to regulatory concerns, he eventually halted the project and returned the funds raised from mainstream investors like Andreessen Horowitz, Sequoia Capital, and others.

His second project, BitClout, allows users to trade Tokens that are similar to or associated with popular culture figures, with the value of these Tokens fluctuating based on their usage. This project stirred controversy upon its launch in March, with some even calling it a "dystopian social network."

However, the developers of BitClout and its community see it as an ongoing "renaissance" of money. Here, any user can earn Tokens or "frictionless tips" based on their ideas, music, or even just their presence, where if a user's actions or words are appreciated by others, those users can send them Tokens through the "diamond" button in the BitClout app.

Al-Naji said, "The small creators that fans have always wanted to support are the ones that will benefit the most on BitClout, where users can directly tip them with 'diamonds' or invest in their creator coins."

Is All of This Feasible?

Gary Gensler's role at the U.S. Securities and Exchange Commission (SEC) is to ensure that cryptocurrency companies operate within the regulatory framework. However, as the chair of the SEC, Gensler believes that traditional regulatory rules still apply in the emerging field of cryptocurrency, a stance that has caused headaches for many Web3 proponents. This implies that crypto assets will be treated as securities, requiring SEC registration to ensure adequate disclosure and investor protection, along with bearing all associated costs and scrutiny.

However, regardless of whether these projects are compliant, there is still much debate about the use cases of many blockchain systems today. Gensler pointed out that the decentralized ledger maintained by thousands of computers comes with a "cost," stating, "There's a reason people would like to have a centralized ledger."

Shifting to the macro topic of money, Gensler revealed to us that, compared to Aristotle, he personally aligns more with Plato's view of money. Aristotle believed money has four attributes—portability, durability, divisibility, and intrinsic value. Plato acknowledged the first three attributes but argued that money lacks intrinsic value and is merely a "symbol."

Prior to serving as SEC Chair, Gary Gensler taught a course on cryptocurrencies at MIT, prompting his students to ponder, "Where is the value proposition of cryptocurrency? Are all cryptocurrencies that claim to compete with the dollar, or tokens of applications, truly valuable?" Gensler believes the answer may be "potentially yes," but the market is unlikely, if not highly improbable, to accommodate over 6,000 similar projects.

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