54 The Economist January 29th 2022
Business
ThefutureofcyberspaceRewebbing the net
L
ike nearlyeveryone these days, Moxie
Marlinspike has created a nonfungible
token (nft). These digital chits use clever
cryptography to prove, with no need for a
central authenticator, that a buyer owns a
unique piece of digital property. Alongside
cryptocurrencies like bitcoin, nfts are the
most visible instantiation of “web3”—an
idea that its advocates and their venture
capital (vc) backers hail as a better, more
decentralised version of the internet, built
atop distributed ledgers known as block
chains. Technologists like Mr Marlinspike,
who created the securemessaging app Sig
nal, digital artists, celebrities and even the
occasional newspaper have issued and
sold them to collectors, often for hefty
sums (an immaterial version of The Econo-
mist’s cover image fetched over $400,000).
Although it looked as cryptographically
sound as any other nft, though, Mr Mar
linspike’s token could shift shape depend
ing on who opened it. If you bought it and
viewed it on a computer, it transformed
into a poop emoji. After a few days the nftwas taken down by OpenSea, a market
place for digital artefacts. This played into
Mr Marlinspike’s hands. For his aim was
not to raise cash but to raise awareness. His
token showed that nfts are not as non
fungible as advertised. And OpenSea’s re
action illustrated that the supposedly de
centralised web3 has its own gatekeepers. Can the centre hold?
The Marlinspike caper was the latest turn
in perhaps the biggest controversy to erupt
in techworld for several years. On one side
sit technoUtopians, firms offering assort
ed web3 services and their vcbackers. They
claim that web3 is the next big thing in
cyberspace, that it is truly decentralised—
and that it promises juicy returns to boot.
Globally, the value of vcdeals in the cryp
tosphere reached $25bn last year, up from
less than $5bn in 2020 (see chart on next
page). Last week Andreessen Horowitz,
one of Silicon Valley’s most illustrious vc
firms, its biggest web3 champion and a16z
for short, was reported to be raising a$4.5bn web3related fund, to add to three
existing ones worth a total of $3bn. A se
nior partner left a16z this month to set up
her own firm focused on web3.
Pitted against them are the sceptics.
They range from Mr Marlinspike, respect
ed even among the technoUtopians, to
Jack Dorsey, who founded two platforms of
the sort that web3 promises to supersede
(Twitter in social media and Square in pay
ments). They argue that a decentralised in
ternet is a pipe dream—“You don’t own
‘web3’. vcs and their [limited partners] do,”
Mr Dorsey warned last month. And a dan
gerous one at that for the unwary investor:
since November some $1trn of the value of
cryptocurrencies, the most mature prov
ince of web3, has gone up in flames.
The feud may seem abstruse. But the
stakes are big. It could change the trajecto
ry of the internet—and the multitrillion
dollar business models that it has enabled.
The history of modern computing is of
a constant struggle between decentralisers
and recentralisers. In the 1980s the shift
from mainframes to personal computers
gave individual users more power. Then
Microsoft clawed some of it back with its
proprietary operating system. More re
cently, opensource software, which users
can download for nothing and adapt to
their needs, took over from proprietary
programs in parts of the industry—only to
be reappropriated by the tech giants to run
their mobile operating systems (as GoogleS AN FRANCISCO
Some venture capitalists want to reinvent the internet. Good luck→Alsointhissection
55 Codingforthemasses
56 Newsupply-chainpains
57 Bartleby:Pickyourpurpose
58 Thechipboom.Andbust?
59 Schumpeter: The Mittal dynasty