Web3 Could be Even More Disruptive than You Think

Putting the Hype in Historical Perspective

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Tl;dr:

• Is all the web3 hype warranted? In a word, yes. Web3 will trigger a shift in cost structures, business models and the distribution of bargaining power (and value) across a very broad proportion of the economy. It could prove as disruptive as the Internet itself.
• To show why requires a little theory and a little history.
• The most disruptive technologies are those that invalidate incumbents’ fundamental assumptions about which resources are scarce and which are abundant. When these disruptions occur across a sufficiently large cross section of the economy, they are considered technological revolutions.
• The Internet has been so disruptive, across so many industries, because it unbundled information from costly infrastructure and changed it from scarce to abundant. The companies built on the assumption of scarce, expensive information were disrupted. The most successful web2 companies, by contrast, gave away information to obtain the new scarce resource, networks.
• Web3 promises to upend critical assumptions again by making networks fluid and abundant. This is a profound shift.
• It is hard to comprehend all the implications, but this framing helps explain some of the most important trends in web3, each of which probably deserve a separate essay:
• * Loyalty will become the new scarce resource and business imperative — just as successful web2 companies gave away information to build networks, the most successful web3 companies will give away networks to engender loyalty;
• * At the application layer, entry barriers will be even lower than in web2, which is good for the pace of innovation but will also make it harder to create defensible moats;
• * Value pools will shift: to consumers; from the application layer to the protocols below; and from gatekeepers to those who create information;
• * The advertising economy will be radically altered;
• * The opening up of proprietary siloed databases will present almost unimaginable opportunities.
• A lot has to go right for web3 to reach its potential and it will take time. But there’s good reason for the hype.

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