TheEconomistJanuary29th 2022 Business 55
doeswith Android) or cloudcomputing
data centres(including those owned by
Amazon,MicrosoftandGoogle).
The web3 movementisareactionto
perhapsthegreatestcentralisationofall:
thatoftheinternet.AsChrisDixon,who
oversees web3 investments at a16z, ex
plainsit,theoriginal,decentralisedweb
lastedfrom 1990 toabout2005.Thisweb1,
callit,waspopulatedbyflatwebpagesand
governedbyopentechnicalrulesputto
getherbystandardsbodies.Thenextitera
tion,web2,broughttheriseoftechgiants
suchasAlphabetandMeta,whichman
agedtoamasshugecentraliseddatabases
ofuserinformation.Web3,inMrDixon’s
telling,“combinesthedecentralised,com
munitygovernedethosofweb1withthe
advanced,modernfunctionalityofweb2”.
Thisispossiblethankstoblockchains,
which turnthecentralised databases to
whichbigtechowesitspowerintoa com
mongood thatcanbe usedby anybody
without permission. Blockchains are a
specialtype ofledger thatisnotmain
tainedcentrally by a single entity(asa
bankcontrolsallitscustomersaccounts)
butcollectivelybyitsusers.Blockchains
haveoutgrowncryptocurrencies,theirear
liestapplication,andspreadintonfts and
othersortsof“decentralisedfinance”(De
Fi).Nowtheyareincreasinglyunderpin
ningnonfinancialservices.
Theportfolioofa16z offersa glimpseof
thiswildnewworld. Italreadyincludes
morethan 60 startups,atleasta dozenof
whicharevaluedatover$1bn.Manyarede
velopingtheinfrastructureforweb3.Al
chemyprovidestoolsforotherstobuild
blockchain applications, much as cloud
computingmakesiteasyfordevelopersto
createwebbasedservices.Nym’s“mixnet”
isa decentralisednetworkthatmixesup
messagessothatnooneelsecantellwhois
sendingwhattowhom.
Othera16zbetsareservingendusers.
DapperLabscreatesnftapplicationssuch
asnbaTopShot,awebsitewheresports
fanscanbuyandselldigitalcollectables
likedepictionsofkeymomentsinbasket
ball games. Syndicate helps investment
clubsorganisethemselvesinto“decentral
isedautonomousorganisations”governed
by“smartcontracts”,whicharerulesen
codedinsoftwareandbakedintoa block
chain.AndSound.xyzallowsmusiciansto
mintnfts tomakemoney.
Whatallthesecompanieshaveincom
mon,explainsMrDixon,isthatitishard
for them to lock in customers. Unlike
GoogleandMetatheydonotcontroltheir
users’data. OpenSea(inwhicha16zalso
hasa stake)andAlchemyarejustpipesto
theblockchain.Iftheircustomersareun
happy,theycanmovetoa competingser
vice.Evenifhewanted,hecouldnotkeep
themfromleaving,saysNikilViswanath
an,Alchemy’sboss.“Asa business,I would
lovetohaveproprietarychokepoints.But
therearen’tany.Wetriedtofindthem.”
Theideaisthatthismakesweb3com
paniestryhardertosatisfycustomersand
keepinnovating.Whethertheycandothis
whilealsomakingpotsofmoneyisanoth
ermatter.It isnotclearhowmuchdemand
existsfortrulydecentralisedprojects.That
wastheproblemofearlyweb3offerings
(thencalled“peertopeer”or“thedecen
tralisedweb”).ServicessuchasDiaspora
andMastodon,twosocialnetworks,never
reallytookoff.Theirsuccessorscouldface
thesameproblem.AservicelikeOpenSea
wouldbemuchfaster,cheaperandeasier
touse“withalltheweb3partsgone”,says
MrMarlinspike.
Amore fundamentalproblem isthat
evenifweb3workedassmoothlyasitsim
mediatepredecessor,itmaynevertheless
lenditselftocentralisation.Lockin,reck
onsMrMarlinspike,tendstoemergeal
mostautomatically.Thehistoryofthein
ternethasshownthatcollectivelydevel
oped technical protocols evolve more
slowlythantechnologydevisedbya single
firm.“Ifsomethingistrulydecentralised,
itbecomesverydifficulttochange,andof
tenremainsstuckintime,”hewrites.That
creates opportunities:“Asure recipefor
successhasbeentotakea 1990’sprotocol
thatwasstuckintime,centraliseit,andit
eratequickly.”
Centralisationandlockin havebeen
incrediblylucrative.Infact,a16zhasmade
billionsfromMeta,inwhichit wasanearly
investor;oneofa16z’sfounders,MarcAn
dreessen,sitsonMeta’sboardtothisday.
Web3’s vcboosters maybe countingon
somethinglikethishappeningagain.And
toa degree,italreadyis.Despitebeinga
relativelyrecentphenomenon,web3isex
hibitingsignsofcentralisation.Becauseof
the complexity of thetechnology, most
peoplecannotinteractdirectlywithblock
chains—orfindittootedious.Ratherthey
relyonmiddlemen,suchasOpenSeafor
consumersandAlchemyfordevelopers.
AlbertWenger ofUnion Square Ven
tures,avcfirmthatstartedinvestingin
web3firmsa fewyearsago,pointstoother
potential“pointsofrecentralisation”.One
isthattheownershipofthecomputing
powerthatkeepsmanyblockchainsupto
date is often very concentrated, which
givesthese“miners”,astheyarecalled,un
dueinfluence.Itcouldevenallowthemto
takeoverablockchain.Inothersystems
theownershipoftokensisheavilyskewed:
at recently launched web3 projects, be
tween30%and40%isownedbythepeo
plewholaunchedthem.
These dynamics, combined with the
latestcrashthatmaycoolinvestors’appe
titeforallthingscrypto,suggestthatweb3
willnotdislodgeweb2.Instead,thefuture
maybelongtoa mixofthetwo,withweb3
occupyingcertainniches.Whetherornot
peoplekeepsplurgingonnfts,suchto
kensmakea lotofsenseinthemetaverse,
wheretheycouldbeusedtotrackowner
shipofdigitalobjectsandmovethemfrom
onevirtualworldtoanother.Web3mayal
soplaya roleinthecreatoreconomy,an
otherbuzzyconcept.LiJinofAtelier,avc
firm,pointsoutthatnfts makeiteasier
for creators of online content to make
money.Inthislimitedway,atleast,even
themastersofweb2seethewritingonthe
wall:onJanuary20thbothMetaandTwit
terintegratednfts intotheirplatforms.n
More than a token effort
Crypto venture-capital deal value, $bn
Source:PitchBook
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Rest of world
United States
Softwaredevelopment
Going codeless
I
n 2018 a field technician working for Tel
stra, an Australian telecoms firm, built
an app that unified 70 messaging systems
for reporting phoneline problems. The
technician did this despite having no cod
ing experience. The interface may look
cluttered: the landing page jams in 150 but
tons and a localnews ticker—the app
equivalent of an airplane cockpit, quips
Charles Lamanna of Microsoft, who over
sees the software titan’s Power Apps plat
form that made it possible. But it has been
a hit. Some 1,300 other Telstra technicians
employ it, saving the firm an annual $12m.
Professional developers (pro devs)
might poke fun at the technician’s diyapp.
But the trend it exemplifies is no joke.
Since well before 2017, when Chris Wan
strath, cofounder of GitHub, a codingcol
laboration site, declared that “the future of
coding is no coding at all”, socalled low
code/no code (lc/nc) tools have bur
geoned. They allow anyone to write soft
ware using draganddrop visual interfaces
alone (no code) or with a bit of code creep
Firms are letting all workers write
software, not just the geek elite