January 30, 2023
What's missing in Web3?
Many argue Web3 is a collection of ponzi schemes based on a flawed and inconvenient technology. We disagree. But you can't deny, there's still something missing...
Web3 is touted by many as the next evolution of the Internet, the onset of a new age of technology, a utopia by which true ownership of digital assets frees users from the bonds of centralized platforms. However, plagued by a series of high-profile scandals, collapses of some of the most prominent cryptocurrencies and exchanges, and a general feeling of skepticism, it has failed to convince large swaths of users.
Many would argue that historically revolutionary technologies were able to disrupt their respective industries in a much shorter time than blockchain has been around. Yet, for over a decade, blockchain believers have sworn up and down that the revolution is coming, with often underwhelming real-world results or applicability.
Does this mean Web3 is all smoke and mirrors, a collection of ponzi schemes based on a flawed and inconvenient technology? Many would passionately argue that this is exactly the case.
Yes, the behavior of some significant players in the space has ruined the lives of many and severely damaged the reputation of crypto overall. Yes, a general lack of regulation and accountability has allowed fraudulent projects to flourish. And yes, the perseverance of arguably useless or hard-to-use applications and projects has led to a general perception of blockchain technology as a solution in search of a problem.
So why are so many people (including us) still onboard with it?
Because the challenge of true ownership of digital assets is finally actually being solved. For the first time, it is possible to transparently and accurately verify who owns what without trusting any central entity to just do the right thing. Anyone can check when an asset was created, sold, for how much, to whom, and where it was subsequently transferred.
And when we say “digital assets,” we’re not just talking about tradeable JPEGs and crypto. We’re talking about anything that can be represented by an NFT... which basically means anything. This opens up a world of possibilities for a multitude of industries. We truly believe Web3 is the next iteration of the Internet, and we haven’t lost any steam in light of the recent media drama.
But it begs the question, what’s missing in Web3?
If so many people are still so passionate about the technology, why hasn’t everyone caught on yet? In addition to the negative attention we’ve mentioned, here are several crucial areas that could be improved to facilitate the mass adoption of blockchain technology and spur the next evolution of the Internet.
- Fiat onramps
- Legal frameworks
So let’s dive into each one of these in a bit more detail…
The Internet has come a long way since its early days. Clunky user interfaces and horrible user experience have evolved into stunning and immersive websites and full-blown platforms where users spend much of their waking lives. And with these massive improvements, user expectations have also increased exponentially.
Gone are the days when people would suffer through poor user experiences just because of their persistent drive to use the Internet. If any steps in the UX/UI are frustrating, slow, confusing, or ugly, people stop using them. The bar has been set incredibly high, and users have come to expect premium UX/UI as a given.
And this is one huge reason Web3 is having a hard time catching their attention.
A lot of Web3 app UX/UI feels like a blast from the past. While so much attention has been focused on blockchain integration and the value of this novel technology, corners have been cut, time and money saved, on creating seamless, smooth, and visually pleasing UX/UI. Most wallets and blockchain explorers are confusing, NFT metadata loads unpredictably if at all, and many blockchain games tout potential earnings as their main attractor. The fact is, to use most Web3 apps at this point in time, you have to be a pretty knowledgeable blockchain veteran.
It’s not hard to see why Web3 newbies aren’t flocking to the apps. The focus has become the fact that they can have the privilege of being able to use blockchain technology, not on making the experience of doing so an enjoyable activity.
Until Web3 UX/UI is on par with or surpasses what users have come to expect in 2023, it will continue to detract them from logging in the frustrating and toilsome hours necessary to wrap their heads around the technology and platforms built upon it.
The utopian dream of cryptocurrency is founded upon the idea of abandoning fiat currencies and centralized financial systems to attain absolute independence from the bonds or interference of any central entity. It sounds great, but it overlooks the fact that the vast majority of the world uses and is familiar with traditional financial systems.
To follow the previous point about UX/UI, buying, selling, and trading crypto is not exactly easy. While many blockchain wallet apps make the experience less painful than interacting directly with blockchains with code, it’s still much more tedious than buying groceries with your smartphone or ordering from e-shops online.
This needs to change. Ordinary users with no experience need to be able to interact with Web3 apps without even knowing they’re using blockchain technology. The benefit of the experience shouldn’t be that they have the privilege of using the blockchain. Rather, it must be that they are engaging in an immersive experience, and yes, blockchain is the underlying technology (but this is just a side note).
With more and better fiat onramps (i.e. payment gateways that allow everyday users to use blockchain-based apps and cryptocurrencies with their trusty and familiar current payment methods) more and more users will be able to effortlessly slip into the world of Web3. The transition must be as smooth and painless as possible, as easy as ordering from Amazon, with most of the benefits of using blockchain technology.
The crypto utopia envisioned by true blockchain believers is still a long way off. Full decentralization and independence from legacy financial systems is not something we are likely to see within the next 20 years. Most people aren’t ready for it, or don’t even have any idea why they might want it. Expecting large swaths of the population to take a leap of faith into crypto, especially given the unfortunate recent scandals, is expecting too much. For the time being, and much of the foreseeable future, a hybrid period of transition seems like a much more practical route, and improving fiat onramps is a crucial step on this path.
Over its existence, the Web3 community has evolved into a distinctly independent entity. There are traditional Web2 services and platforms used by the majority, and then there is a tiny sliver of Web3 applications used by a loyal, albeit infinitely smaller, group of Web3 enthusiasts.
What’s lacking here is the crossover. The aforementioned issues with UX/UI and fiat onramping play a large role in this lack of Web3 integration with Web2 platforms. However, the notable lack of integration of blockchain technology with existing Web2 applications is also a “chicken or the egg” issue. In order for there to be more integration, there must be more user demand, but in order for more users to be interested, they need to experience the benefits of seamless integration of Web3 and Web2 platforms. Until they experience it, they won’t know that they want it.
Fortunately, there are several major platforms experimenting with Web3 integration. Instagram and Reddit have launched NFT profile pictures and avatars. Several high-profile music distributors are getting their feet wet in NFTs as well. As more established players test the waters, more users will start trying out the new features, and more demand will snowball.
At the peak of the first NFT boom, just the mention of the word “NFT” was enough to conjure armies of potential buyers, frothing at the mouth to get in on the gold rush. After one of the most severe crypto and NFT crashes in history, and a prolonged bear market in its aftermath, the term doesn’t exactly carry the same weight. In fact, for many people, any mention of the word “NFT” evokes skepticism and caution.
Now, people want NFTs which have value beyond simply being digital assets. They want NFTs they can DO something with, that gives them something back. They need NFTs with real utility.
And the projects that are implementing real utility are gaining momentum fast. Opportunities to meet celebrities, recoup real-world rewards, interact with exclusive communities, stake assets, and engage in real-life experiences are giving projects that have made the extra effort to push the envelope a leg up on the competition. The expectations of the Web3 community have been significantly raised, and other projects will have to adapt to keep up.
However, many Web3 builders have been slow to catch on. While many collections at least mention the utility they offer, often their offerings are lackluster. Many collections are now trying to offer mediocre “utility” just so they can say they offer something beyond ownership of JPEGs. They’re not pushing the envelope in terms of innovation, and they’re not raising eyebrows with the value they’re offering. Time will tell whether projects relying solely on generative JPEGs can keep up with the “utility trailblazers” in the space.
As it stands, leveraging verifiably unique digital assets to create new ecosystems of functionality with true ownership is still a largely unexplored technological frontier. As more and more projects that tap into this vast potential emerge, users and brands alike will take notice.
For all of the media hype and FUD, figuring out what Web3 is, how blockchain technology works, and why anyone should care, is no easy task. There is a notable lack of high-quality educational resources in the space, and without them, it’s no wonder the outspoken detractors draw such a large and passionate audience.
It’s a lot easier to dismiss a technology associated with scams, fraud, and massive liquidations of wealth than it is to look past the early-stage faltering to understand its underlying value. Without more, higher quality, and widely available educational resources, many people will continue to fall into the comfortable position of total dismissal of Web3.
Fortunately, this particular issue is starting to be addressed by influential players like a16z, Bankless, and Alchemy, which have launched podcasts, e-learning courses, and events geared towards deepening users’ understanding of Web3 and blockchain technology. In collaboration with several Web3 leaders, Artiffine has launched an initiative called NFT Insights which seeks to educate newcomers and stimulate the growth of the Web3 community through a series of events, online e-learning content, consultations, and seminars.
As it becomes easier to understand the benefits of Web3 and how to use the underlying technology responsibly, users will no longer be intimidated by sensationalized headlines and will be more eager to participate in the next iteration of the Internet. Educational resources will be a crucial tool to gradually shift the public perspective from skeptical to intrigued.
Even the most die hard Web3 builders often have a hard time answering legal questions about blockchain technology and how it relates to intellectual property (IP) law and other legal areas. Many purists would like to believe that Web3 is exempt from traditional legal rules, but unfortunately, they are wrong. Traditional legal norms very much apply to the blockchain environment, it’s just a question of how, specifically, it is applied to each particular case. And the most important (and the most overlooked) in that sense is IP law.
The thing is, in many situations, the courts don’t even know, either. Web3 is such a new and emerging field of technology that legal precedent has not been established for many situations, and the necessary legal frameworks do not yet exist. As a result, the jurisprudence fumbles on how to apply traditional legal rules. It’s just a matter of time until such precedent and frameworks are established, but until then, this “Wild West” legal environment further contributes to the skepticism and hesitance to adopt blockchain technology.
Until creators and users can be sure of what their rights are, how cases generally play out, and understand the legal terrain of Web3, many of them will continue to have reservations about investing time, money, and effort into the technology. An uncertain legal environment understandably presents risks for brands considering moving parts of their operations on chain, so many will most likely hold off until they can be sure where they stand.
In the meantime, groups like the Harvard NFT Task Force (of which Artiffine is a founding member) are exploring ways to implement legal frameworks in Web3. Top IP legal minds from around the world are considering how IP law can and should apply to blockchain technology, and soon enough cases will inevitably arise that set legal precedents for the future. Artiffine co-founder Dr. Jan Zibner is advising law students on diploma theses relating to Web3 and actively giving expert opinions to courts in cases involving blockchain technology. The frameworks and precedents may not exist yet, but the gears are in motion for a legally certain future to emerge.
Web3 has gotten a bad rap, and the chorus of critics and skeptics are not completely out of line. However, rather than dismissing the technology as a whole, we believe it’s important to honestly reflect on what’s lacking in Web3 and how to move forward and improve these areas of weakness. Once the areas discussed have been sufficiently addressed, blockchain mass adoption will be a natural and organic process for creators, brands, and ordinary users. As the education and awareness of the general public increases, and more and more projects emerge with thoughtfully simplistic designs, this adoption will inevitably accelerate.
The potential benefits of leveraging digital assets on distributed networks are numerous and the implications are far-reaching for a wide range of industries. We believe that one day, the vast majority of the world’s population will be interacting with blockchain networks on a daily basis without even thinking twice about it. And we are convinced this will result in a brighter future for everyone.
January 30, 2023