[ih] Some of the people who built the internet think it’s time for a reboot—starting with social media

[the keyboard of geoff goodfellow]

*Members of the tech elite are banding together to bring the Web back to
its idealist origins. They call their vision ‘Web3.’*

*Jack Dorsey and the Unlikely Revolutionaries Who Want to Reboot the
Internet*

The internet hasn’t turned out the way it was supposed to.

In its earliest incarnation, before some Wall Street Journal readers were
born and the rest had fewer automatically renewing digital subscriptions,
it was supposed to be distributed, user-controlled and, in a word,
democratic.

Then came Big Tech and the attendant centralization, windfall profits,
culture wars, misinformation campaigns, Congressional hearings, EU rulings,
antitrust battles and techno-nationalism that have characterized the past
decade.

What if there was another way?

What if, to take but one example, users of social networks collectively
owned them, or at least could vote on how they were run and what kind of
speech they allowed? And what if similar questions could be asked of just
about any tech company whose primary product is software and
services—whether financial, cloud computing, or even entertainment-related?

These are the questions investors, engineers and more than a few
starry-eyed tech dreamers are asking themselves—among them former Twitter
Chief Executive Jack Dorsey, whose interest in these questions helps
explain his sudden departure from Twitter.

The answers are taking the form of services and apps that are the first
outlines of what their creators hope will someday eat the internet
completely: a distributed, democratically ruled “Web 3.0” or “Web3” that
will rise like a phoenix of 1990s-era Web 1.0-idealism from out of the
ashes of the corporation-controlled Web 2.0 that all of us currently
inhabit.

Here’s the basic idea: New technologies like blockchain present the
opportunity to loosen the centralized stranglehold that companies and
governments have over everything from internet platforms to intellectual
property to the creation and distribution of money. These technologies
operate by spreading responsibility or ownership among a group of users,
who, for example, use their computing power to electronically fabricate—or
“mine”—cryptocurrency, or record transactions for digital art.

These technologies represent an evolution of cryptocurrency beyond
bitcoin—which some in crypto communities now deride as mere “digital gold.”
In addition to monetary value, the “tokens” that make up these systems are
each also encoded with information that has some other use, whether it’s
membership in a club, the right to vote on how a company conducts itself,
or even just data.

The blockchains that underlie all this are just ledgers of information
stored on many different computers at once. This lets any given blockchain
be resistant to control by a government or corporation, and lets people
exchange tokens on that blockchain securely and transparently.

This future, a second chance to use technology to upend traditional power
structures, is being trumpeted by silver-tongued hype-people of every
stripe, from venture capitalists to armchair oracles on social media.

Others see the entire enterprise as worse than a waste of time. They view
bitcoin as a currency with an outsize (and, many argue, completely
unnecessary) energy and carbon footprint
<https://www.wsj.com/articles/crypto-miners-struggle-to-cut-carbon-emissions-11634808781?mod=article_inline>.
And they see crypto broadly as a classic, doomed to fail techno-solutionism
<https://www.publicbooks.org/the-folly-of-technological-solutionism-an-interview-with-evgeny-morozov/>
(the
belief that technology can solve any problem) Ponzi scheme pushed by
latter-day medicine-show hucksters eager to exit their investments in
unregulated securities before the market collapses or the Securities and
Exchange Commission gets around to regulating them.

Mr. Dorsey, no quack, is clearly in the believers’ camp—and is, indeed, one
of its most prominent members. In July he told investors bitcoin would be a big
part of Twitter’s future
<https://techcrunch.com/2021/07/22/jack-dorsey-says-bitcoin-will-be-a-big-part-of-twitters-future/>,
and in August he tweeted
<https://twitter.com/jack/status/1424854924194729984>that it would unite
the world.

His departure from Twitter reflects the allure that Web3 has for many of
those in the tech elite. Mr. Dorsey is now full-time at Block—the new name
he gave to Square, his digital payments company, where he is
enthusiastically championing cryptocurrency.

Block—the name was inspired partly by the blockchain
<https://twitter.com/Square/status/1466158911413760004>—owns Cash App,
which allows users to buy and send bitcoin. It also created a patent
alliance to share crypto-related intellectual property and funds Spiral, an
independent team of open-source bitcoin technology developers whose most
recent promo video includes a muppet version of Mr. Dorsey
<https://www.youtube.com/watch?v=oOT78Bgy1Qw>answering the question “When
did you know something was wrong with our financial system?”

Other famed tech seers are excited about Web3, too. In June 2021,
Andreessen Horowitz, the venture-capital firm co-founded by Marc
Andreessen, announced a $2.2 billion fund—its third—to invest in blockchain
and crypto-related startups. Globally, investment in blockchain startups in
2021 has shattered all previous records, topping $15 billion so far this
year, a 384% increase from total investment in all of 2020, according to CB
Insights
<https://www.cbinsights.com/research/report/blockchain-trends-q3-2021/>.

Almost every company with “Web3” or “blockchain” in its pitch deck
describes its mission as a user-centered quest to empower—and just as
often, enrich—its users, making them owners and investors as much as
customers.

DeSo—which, confusingly, is simultaneously a not-for-profit foundation
<https://www.deso.org/>, a blockchain and a cryptocurrency token, but
explicitly not a traditional for-profit corporation—is in many ways typical
of the form. The idea behind DeSo is that everyone should be able to create
their own social media service, but also that they could be interconnected
in ways that, say, Facebook <https://www.wsj.com/market-data/quotes/FB> and
Twitter would never be—including shared accounts and other shared data.

“The thesis behind DeSo is that if you can mix money and social, you can
create new ways for creators to monetize,” says Nader Al-Naji, founder and
head of the DeSo foundation. “Instead of creators monetizing from ads, they
can monetize from DeSo coins.”

DeSo has created a new cryptocurrency (named DeSo) that, for example, could
be used to “tip” other users for their posts, replacing likes with actual
money—or at least DeSo tokens that can be traded for dollars on the usual
cryptocurrency exchanges. Like other next-generation cryptocurrencies,
inspired by Ethereum, these tokens also can store the data that actually
makes up a social network, such as the text of posts (one of Ethereum’s
inventors, Vitalik Buterin, was involved with bitcoin early on and in 2013
proposed the Ethereum protocol in part because he wanted to create a world
in which no single company could control digital assets). This dual
function illustrates the inspired weirdness that is Web3: If money can
become code, then money can be way more than a means of exchange; it can
also do anything that other software can do.

This core insight, a sort of E = mc² equivalence between money and
software, is why true believers in Web3 think it could have such a huge
impact. Suddenly every activity humans engage in, from buying and selling a
house to liking a post on social media, can be made part of a token-based
financial system of a scale and complexity that makes today’s look like an
antique.

Paul Meed, CEO of Moonbounce, one of the startups building an app with
DeSo, thinks that using crypto to create new kinds of exchange between
creators and their fans on social media will ultimately work, but that it’s
still early days for the idea and technology. Making every interaction
between friends on a social network into a monetary transaction still feels
strange for most people, and he sees a great deal of pushback from young
people and fans of creators whenever the idea comes up.

“I have a friend with a couple million subscribers, and he made one test
video on YouTube where talked about NFTs, and it was his most downvoted
video of all time,” he adds.

Rather than funding DeSo in the traditional manner—by creating a startup
and asking the wealthy mandarins of venture capital to part with money in
exchange for partial ownership—DeSo instead sold early investors, including
Andreessen Horowitz, some of its crypto tokens. Any social media service or
app built atop the DeSo blockchain—there are more than 200 of them so far
<https://bithunt.com/explore>, all of them tiny—must use the DeSo token.
The more people and groups build, the more valuable the DeSo token could
become. That’s the company’s business model, rather than charging licensing
fees or selling advertising.

Analogies fail in corporate arrangements as novel as these, which is one
reason blockchain startups remain obscure to most investors. Critics claim
such obfuscation is deliberate, and is as much about hiding suspect
financial and technical engineering as it is a consequence of any supposed
innovation in business models.

“The current blockchains are like woefully underpowered computers that can
only do a very, very small amount of transactions, and the things they can
do are shockingly limited,” says Stephen Diehl, a programmer in London whose
frequent essays about the pitfalls of blockchain technology and Web3
<https://www.stephendiehl.com/blog/web3-bullshit.html> have made him one of
Web3’s most visible and cogent critics.

Even many of the longer-standing attempts to refashion the internet into
Web3 are still too inchoate to tell if they’ll ever amount to anything.
Before Mr. Dorsey’s obsession with crypto reached its current apotheosis,
he announced in 2019 a project begun by Twitter, called Bluesky, to
“develop an open and decentralized standard for social media.”

The goal was to make Twitter or some new service into a flexible and easily
accessed repository for things known as tweets, which people could sort and
view in a variety of new apps built by outside companies. Bluesky—which is
to be independent of Twitter, though it currently has no partners other
than Twitter—would be more like a service for developers, a role like that
of Amazon Web Services. In this way it would be different than a
consumer-facing company with the implicit responsibility for everything
that happens on it and the ability to ban current presidents, as Twitter
did on Jan. 8 to then-president Donald Trump
<https://www.wsj.com/topics/person/donald-trump>.

Bluesky was spearheaded by Twitter’s current CEO
<https://www.wired.com/story/parag-twitter-crypto-dorsey/>, Parag Agrawal,
but appears to have made little progress since it was announced. Twitter is
hiring for BlueSky and remains committed to the project in the long term,
said a Twitter spokeswoman. Blockchain could be integral to how the project
is made real, she said.

Twitter’s halting attempts to reinvent itself, and its co-founder’s
abandonment of it in search of new ways to reinvent the internet with
blockchain at Block, illustrate the promise and pitfalls that drive much of
the interest in this technology. “Everybody sees the problems with the
malign influence of social media these days, and Web3 has become the
messiah technology that’s going to fix all these things,” says Mr. Diehl.

Grand promises notwithstanding, it’s not yet clear whether Web3 and its
supporting technologies will be soon-to-be-forgotten vaporware, or the next
world-wide web.

In the future everyone might be able to mint a new crypto “coin” at will,
whether they’re using it to raise capital for a business, monetize the
popularity of social-media creators, or collect money for their school’s
PTA. Or it’s possible regulators, who this month called crypto startup CEOs
<https://www.wsj.com/articles/crypto-ceos-to-testify-before-lawmakers-weighing-greater-regulation-11638959403?mod=article_inline>
to
appear before Congress, will decide that the downside of companies issuing
what can look like securities outweigh the opportunities for new kinds of
financial and technical engineering they might enable.

Whatever happens in the coming years, the torrent of money and interest
flowing into Web3 companies and projects, and the mainstreaming of
blockchain technologies by Block and its competitors
<https://www.cnbc.com/2021/12/08/visa-launches-crypto-consulting-services.html>,
are a measure of just how dissatisfied even many of those who built the
current internet have become with it—not to mention how much they think
they can profit from solving the very problems they created.

Write to Christopher Mims at christopher.mims at wsj.com

Appeared in the December 18, 2021, print edition as 'The Unlikely
Revolutionaries.'
https://www.wsj.com/articles/jack-dorsey-and-the-unlikely-revolutionaries-who-want-to-reboot-the-internet-11639803654

-- 
Geoff.Goodfellow at iconia.com
living as The Truth is True