Why Web3 Isn't Inevitable

Yesterday I wrote about why the metaverse is inevitable: generational turnover and the history of technology tell us that we'll have some version of it eventually. The other major development brewing in tech, however, has neither of those benefits of certainty. It may still prove important, but it's also just as likely to one day recede back into its roots in financial services.

First, a definition: web3 is an umbrella term for using blockchains to power software and services. This includes NFTs, DAOs, dApps, crypto wallets for identity and login, and a host of other use cases that haven't even been invented yet. The distinction here is that the blockchain isn't being used specifically to generate a financial asset — though financialization is often a motivating factor to use a blockchain.

Web3 ≠ The Metaverse

Importantly, web3 isn't inherently part of the metaverse. Blockchains might one day be used to authenticate ownership of NFTs and digital assets across compatible metaverses…or it might not. Right now, there is no metaverse application of web3 technologies in market that couldn't be built using a run-of-the-mill database and credit card processing system.

Decentraland is just a virtual world that has 0.01% of the daily users of Roblox, using web3 as a monetization scheme and marketing gimmick. It's been very successful for them, on both counts, and that means we'll see continued experimentation in the space, but that doesn't mean that the big metaverses of tomorrow will follow a similar path. In fact, Decentraland's web3 architecture would actually make it very difficult to scale up to the size of something like Roblox.

Web3 is An Implementation Detail

The hard truth about all web3 applications to date is that they're just technical implementation details — everything that's built on web3 technologies today could be built without using a blockchain. That doesn't mean it's without value: just as the shift from on-premise servers to cloud hosting made it easier to deploy and scale backend services, so too web3 might enable new kinds of software by decentralizing applications and baking payment infrastructure into identity.

Importantly, shifting the default infrastructure from current technologies to web3 won't become inevitable until we see truly breakthrough new business models and types of software. Unlike the metaverse, which can be situated in the history of consumer technologies as an inevitable evolution of communication, web3 is a developer-facing technology, which must justify its use as a business case for it to ever become the default. That may yet happen! But today it's an architectural decision, equivalent to choosing AWS over Azure — there are pros and cons to both, but the vast majority of software will run just as well on either.