Karthik Pasupathy (aka KP)

Web3 Doesn’t Have a Future Unless It Excites People Like You and Me

The success of any technology lies in its adoption numbers. For that to happen people should see value in it – even from the initial days. Also, the excitement of the early adopters should be contagious to the people who come after them, and the crucial part is the people who come after should also feel the same excitement for a technology to succeed. This happened with the internet, smartphones, WiFi, AI, and every other piece of technology we use in our day-to-day lives. But, unfortunately, this is not happening for web3.

Why Web3 isn’t able to cross the early adoption barrier?

When countries started laying lines for the internet, people were excited about the possibility. Because they knew they can use the internet to shop, watch movies, send emails and attachments, interact with their friends, and search web pages from across the globe – all without spending money. Thanks to the advertisement model, the internet became a major phenomenon. Today, we can’t imagine a world without the internet. Right to internet access is deeply tied to freedom of expression today.

The same happened with AI. People are excited about the possibilities and are reaping the benefits of the technology like driverless cars, low bandwidth video calls, computer-generated images, personalized movie and music recommendations, etc.

But, people aren’t seeing such possibilities with web3. A small group of enthusiasts are really vocal about the benefits of web3 and are building some phenomenal solutions on the blockchain.

But, when I tried some of these services, I couldn’t feel the same excitement. Instead, I found web3 to be even more confusing. Since all web3 services are built on a token infrastructure, they have a steep learning curve, confusing terminologies, and a discord server that is too overwhelming for anyone.

Let me give you an example. But, before that, let’s see a bit about what is web3

What is Web3?

Web3 refers to a decentralized internet powered by the blockchain and token economy. The information and services are not centralized i.e. no single organization has control over the data. The information is hosted in a network of computers owned by users who’re part of the web3 ecosystem. The incentive for those who host and manage this information is provided in the form of tokens like Bitcoins, Ethereum, etc.

You can learn more about Web3 from here. A three-part podcast series on Freakonomics radio is also a great listen if you’re new to Web3. Now, let’s get back to that example.

I almost paid a $163 USD transaction fee for a $5 product

During the beginning of this year, I saw a lot of Twitter profiles with names ending with “.eth”. When I dug deeper, I found out that you can get your decentralized website domain (they call it “ENS”), from a website called ENS a.k.a Ethereum Name Service. If you have an ENS address, you can use it instead of the lengthy wallet address to send and receive money. I also read that I can use such domains to host a webpage on the blockchain using IPFS. It was a really cool idea. It still is. But, how’s the experience for an end user like you and me? Let’s look into it.

I tried to buy an ENS address in my name and the website said it would cost me $5 USD per year. It was affordable. I was excited. But, when I tried to buy it, I realized there were so many restrictions. You’ll have to have a set amount of Ethereum to complete the transaction. You might think that it can be $10 or 20. But, the total price came to $168 USD. It said $5 for the domain and $163 was the gas fees. A gas fee is the transaction fee required to execute a contract on the blockchain. That was crazy! When I looked for answers, many mentioned that since the price of tokens keeps changing the gas fees will too. One has to look for the right time to execute the contract at a nominal rate. Since the price of ETH has dropped 2/3rd of its value, the total cost comes down to $13 dollars (as on August 9, 2022).

Everything costs you money on web3. Loading tokens, withdrawing tokens, swapping tokens – you can see the numbers decreasing in front of your eyes. I loaded $50 into my wallet and I paid $20 in transaction charges for a failed transaction. It was crazy and painful to watch.

My point is that things like this are a huge barrier for early adopters. When the cost, terminologies, and process scares them off, the chance of them coming back are really slim. That’s what happened to me. Another confusing thing I’ve come across in web3 was DAOs.

DAOs or chaos?

Decentralized Autonomous Organizations a.k.a DAOs are communities of like-minded people with a shared bank account. The members get voting rights on important decisions of the community, which makes it a community powered by decentralized governance. But, I don’t see anything significant coming out of DAOs, at least for the moment. I came across a couple of DAOs which made me ask “Why? What’s the point?”.

Nation3 – Nation3 is a sovereign cloud nation. They are building a community of like-minded people by creating a nation on the cloud. To become a citizen you’ll need to have 2 $veNATION tokens (~$2126 USD). If I am a citizen I can mint an NFT passport. But, what will I do with it? To even be part of a community, I’ll have to spend $2126 USD. There’s no trial. There is no sneak peek of what I’ll get, and most importantly, what if I don’t like being a citizen? So many questions.

Constitution DAO – A group of people came together and raised $42 million dollars to buy one of the original copies of the American constitution. They lost the bid, but the question I had on my mind was “Why buy it in the first place?”

I also came across DAOs with meaningful applications like the Ukraine DAO which managed to donate $7 million to Ukraine during the war and they help in fact-checking and documenting the events of the war. They could’ve done it in web2 (the current version of the internet), but the decentralization concept works here because it prevents them from getting shut down by any government. Kinda makes sense.

Despite all the improvements, DAOs have to go a long way in order for them to be used by the general public.

Services that excite me about web3

Sia Coin – The decentralized data storage service is one of the most practical web3 uses I’ve come across. Their file upload service Skynet (name kinda scares me) is fast and easy to use, it makes you wonder if it’s really part of web3. The data you upload is stored as chunks among a network of computers and can be accessed by the user whenever required. Those who maintain data on their computers will be rewarded with Sia coins. This is similar to Limewire – a software I used to use in the early 2000s to download movies and music. To put it simply it is similar to downloading files via torrents.

Arweave – A web3 version of the Wayback machine. You can store documents and applications on a blockchain permanently. They also offer free credits for you to start using the service. Something that every other web3 service should start doing.

Unstoppable domains – You can buy crypto domains for a one-time fee. The prices of the domains start from as low as $20 and you can buy them using your credit card or using tokens. The practical applications are quite nice too. You can map your wallet addresses to your domain, you can upload your personal web page in IPFS and link it to the domain, and you can also create a private email address to receive and reply to emails from others without revealing your personal information.

Mirror.xyz – A web3 publishing platform where you can write and publish your content on the blockchain. It is fast and easy to use. I’ve tried it myself and its nice.

I tried Audius, the web3 music streaming platform. But, I never got to the listening part. The website was too slow (both the web and the mobile app).

Services like these are a good start. The ecosystem needs more of this.

What does web3 need?

Internet for all vs. Internet for few

The cost aspect of the technology will definitely be a barrier. It will bring the benefits of web3 to a selected few instead of everyone. Sometimes, it makes me wonder “has decentralization, data ownership, and privacy got more expensive with web3?”. But, that’s a topic for another time.

Web3 is great on paper. It is. And, it has got potential. But, it doesn’t excite end users like you and me. And, it won’t become a thing until it does.