With Web3 being advertised as the next evolutionary stage Internet companies, investors and investors are jumping on the bandwagon. Technology giants such as Alphabet, Meta, Facebook owner and Microsoft are betting on their claim. emerging blockchain-based economysome non-tradable badge companies are already valued at billions and cryptocurrency trading platforms are experiencing hockey stick-like growth.
To reduce the advertising campaign, CBS MoneyWatch spoke with tech-savvy Tim O’Reilly, who in his long career is known for publishing the world’s first website and coining the term Web 2.0. While he believes the technology behind Web3 is promising, “it’s a long way from the start,” he said.
“It’s very difficult to convince someone of something when the financial benefits depend on what they believe in,” says the technical luminaire. @TimOREillythe publisher who coined the phrase Web 2.0, web3 products such as cryptocurrencies and NFT pic.twitter.com/i2pXR303hP
– Dan Patterson (@DanPatterson) February 7, 2022
Indeed, the hype surrounding cryptocurrencies, NFTs and metaverse, including high-value start-ups, has a familiar ring to O’Reilly, who sees the echoes of the dot-com explosion and collapse in suffocation. around the blockchain.
“Get ready for the crash,” he said bluntly about the biggest claims made about Web3. The interview is slightly edited for clarity and brevity.
Where do you place web3 on a development timeline in relation to historical computer discoveries?
Tim O’Reilly: As a metaphor, I personally put the web three around 1983. That was my impression for quite some time. In many ways, before dot com collapsed when we had FTP and Telenet before the actual introduction of the Web, we had this incredible valuation bubble in a technology that is not really ready for the first time. With the failure of dot com, the web arrived and really exploded. Things really happened that were not possible before. Until ’95 you were, you saw really important innovations in the media and you started to see innovations in e-commerce with Amazon. The possibilities you could already see unfolding were quite large.
In the case of blockchain, it hides so much from the speculative value of cryptocurrencies, which are merely a speculative asset.
Is all the money in blockchain and Web3 a bubble?
Tim O’Reilly: I think there is a lot of interest in blockchain, in theory. But when you really scratch, a lot of technicians say, “Well, there’s not much.”
Now, that was also a response that many people on the World Wide Web had. To the existing software developers of the time, it seemed insignificant. So, although technology is slow and very expensive, and it is difficult to use distributed databases, there is a lot of investment in space and people are trying to figure out real things that can be really useful. And I think it is definitely possible.
Web3 is committed to the idea that there will be a new decentralized web based on cryptography and blockchain. I coined the term “Web 2.0” 17 years ago, and my whole idea was that Web 2.0 was the second web presence after dot-com – so I coined it.
When people ask me about Web3, I say the same thing: We will not know what Web3 is until the current bubble bursts – because we are in the middle of a bubble, just like the dot-com bubble, where there are all kinds of crazy startups receive outrageous valuations, with less to show for it.
What is the difference between blockchain technology, cryptocurrencies and NFT?
In the case of blockchain, it is so obscured by the speculative value of cryptocurrencies, which are essentially a speculative asset. They are not inherently valuable or useful. And then you get some of that NFT level, which is it – just more. They do not even have a technical background. They are not even fully part of the blockchain. You look at OpenSea
the largest NFT market and has 600,000 users.
By the time the web reached such estimates, we were talking about hundreds of millions of users. So I think it’s really a very serious profit bubble on a very small basis. That being said, once you get these bubble ratings, it attracts a lot of capital and talent – and people can really start building something over it.
With cryptocurrency, you just have to think of it as gambling. You are on the track and there is a horse that you think will come in first. Sometimes you’re right and you might make a lot of money. But you do not really consider it an investment.
What is your advice to the most ardent champions of cryptocurrencies and the NFT – the true believers?
There are two categories of true believers in my mind. There are those who, for example, are building a new decentralized financial system that empowers users. And for them, history teaches us that there will always be new ways to concentrate power. In fact, the whole history of the computer industry was a radical opening, which led to many innovations, which later led to its closure.
For example, IBM published the specifications of the computer. Everyone could make a computer. Michael Dell was a college student and started Dell from the dorm room, which was radical decentralization. And then Microsoft figured out how to reassemble the software. Later, we have the Internet and open source software. And guess what? Companies like Amazon, Google, Microsoft and Facebook come along. They understand how to concentrate on this foundation.
So, even if you truly believe in blockchain technology as a force for decentralization, you should look for the next sources of concentration.
We already see them. Blockchain turned out to be the fastest reassembly of a decentralized technology I’ve ever seen in my life. It took a decade to reassemble in the case of the PC. It took a decade in the case of the Web. But it only took a few years with bitcoin before the majority of the value was held by a very small group of people.
It’s something like a pyramid scheme. So I believe that if you truly believe in technology, look for ways in which your faith will be undermined.
There is a second category of true believers, and that is the secret. You know, faithful to cryptographic valuations. If they have differentiated, they may have differentiated Dogecoin into another currency that they hope will appear in the same way.
Whatever you do, do not borrow from the value of your cryptocurrencies. If you do, you will be seriously under water. You will not just lose your imaginary fortune, you will go bankrupt in the real world. The financial innovation of being able to borrow against your encryption, boy, is a very bad, bad, bad, bad thing for a lot of people
How long until metaverse – which is currently envisioned as a huge virtual reality social network – is ready for prime time?
The metaverse itself is full of bubble advertising campaigns. Meta Quest2, yes, they sell a lot of them, but the technology is a long way off. If you were to compare it to where the web was before it became extremely useful, we are a long way from that. I think metaverse is probably a decade or more away from being really useful. And even then, how much time will people spend on this VR website? I do not really know. Economic, cultural and political patterns are changing.
Explaining Web3, the Possible Next Phase of the Internet
07:09
I may be wrong about all this. We are in a period of great liquidity around the rules. We see this in politics, where things that were previously unthinkable are now widely applied. And I think we see the same thing in investment. With cryptocurrencies, what we used to call stock manipulation is, in a sense, becoming part of an advertising campaign cycle. As a society, we are trying to find new rules.
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