Author: @Web3Mario

Introduction: Yesterday, I accidentally learned from a friend that they had made a considerable investment return in the field of BTC inscriptions, which deeply aroused my sense of missing out, causing me to feel anxious for two consecutive days. Recalling the time when the Ordinals technology architecture was just released, I studied the related documents. However, as a developer, I was quite skeptical of this technological path. At that time, my judgment was that it was simply reversing the encryption technology, as its design concept seemed similar to a distant altcoin project called Color Coin, which aimed to issue independent tokens using BTC's technology architecture. However, unlike Color Coin, Ordinals did not develop a new chain but chose to reuse the widely accepted BTC network. Compared to the proposal of on-chain virtual machines (such as EVM or other WASM), this architecture has been proven to be somewhat rudimentary and lacking in scalability in the market. Constrained by the fact that BTC does not have a Turing-complete execution environment, the development of related application layers is relatively difficult, and it is also very expensive! Even after reading the relevant documents on the so-called orthodox Runes technology release, I was also quite skeptical, as it only established some standards to make the so-called BRC-20 appear less rudimentary. However, these aspects are hardly worth mentioning in the on-chain virtual machine solution, as designing an ERC-20 is something that even a novice Web3 developer can accomplish… However, in the face of the tangible wealth effect, these judgments seem pale and laughable. After calming down, I have some related thoughts to share with you and to explore the core value of Web3.

The tangible fact at the root of all our thought-distinctions, however subtle, is that there is no one of them so fine as to consist in anything but a possible difference of practice. To attain perfect clearness in our thoughts of an object, then, we need only consider what conceivable effects of a practical kind the object may involve—what sensations we are to expect from it, and what reactions we must prepare.

----WilliamJames

Post-Snowden Web3 of Anarchism

Many of my friends are amazed by the emergence of Bitcoin, as if it were a non-conventional and inexplicable genius product from the golden age of ancient Greece. However, I do not agree with this view. I believe that the invention of Bitcoin was not accidental but rather an inevitable result in the network environment at that time.

In the previous introduction, we have reviewed the development history of the Web. In the era of classical liberal network, the principles of open, inclusive, globalized, and neutral Internet protocol design gradually formed. However, with the emergence of a large number of Web applications, the composition of Internet users underwent a significant change. It transformed from a subculture group of users who were also coders to a mainstream cultural group covering various people, prioritizing pragmatism with high efficiency and low cost.

However, this does not mean that the principles of open protocols have completely disappeared. Unlike political revolutions, the evolution of technology is non-violent, so the corresponding ideological evolution is a process of gentle integration. In fact, a group of developers, whom we can call classical liberal remnants, have been adhering to the principles of open protocols to carry out technical research and related concept promotion. We can easily find them, such as the Free Software Foundation, Electronic Frontier Foundation, Wikimedia Foundation, and other organizations. They have successively funded and promoted many interesting technical solutions, such as Tor, VPN, SSH, etc. They were also among the earliest users of Bitcoin, using Bitcoin for fundraising. Therefore, there is reason to believe that the design of Bitcoin must have come from this group of people, with the initial purpose of developing an unregulated, anonymous electronic cash system for payments.

With the huge success of Bitcoin, it aroused the interest of some computer experts. I believe that Vitalik and Gavin Wood both belong to this group of people. They used the most important original technology of Bitcoin, the POW consensus algorithm, to establish a decentralized, anonymous computer system, thereby completely changing the classical C/S Web development paradigm into a possibility.

With the sensational "Prism event," the credibility of both technological authority and political authority was greatly reduced. This provided an excellent opportunity for the promotion of new concepts. Therefore, we can see the emergence of Web3 with the latest semantics, which is Gavin Wood's proposal of Web3. Here, I think it is necessary to quote this classic description again:

Web 3.0, or as might be termed the “post-Snowden” web, is a re-imagination of the sorts of things we already use the web for, but with a fundamentally different model for the interactions between parties. Information that we assume to be public, we publish. Information we assume to be agreed upon, we place on a consensus ledger. Information that we assume to be private, we keep secret and never reveal. Communication always takes place over encrypted channels and only with pseudonymous identities as endpoints; never with anything traceable (such as IP addresses).

The core vision of this version of Web3 is to establish a network world that is free from authority, censorship, and fully protects individual privacy. This can be seen as a classic interpretation of anarchism in the online world. Therefore, I am willing to call it Anarchism Web3. It is worth noting that the reason for making such a clear distinction is that we need to understand what principles should guide our application design in order to achieve the ultimate vision and to construct the network that best meets our demands.

Under the guidance of such an ideological direction, the extreme pursuit of decentralization and privacy has given birth to a series of interesting Web3 projects. Successful cases in this category are usually focused on underlying infrastructure. I won't give specific examples, as you can find many well-known projects. However, there are not many at the application and protocol layers, perhaps ENS is an exception.

Financialized Libertarianism of Web3

Since 2013, after MasterCoin designed the ICO crowdfunding method, the crowdfunding financing model using cryptocurrencies as targets gradually became popular. With the improvement of protocol layers such as ERC20, it greatly reduced the threshold for issuance and participation. In 2017, the development of ICOs reached its peak.

Let's review a bit of history. As the target of Coin (also known as Token), it has evolved into different types, with the most representative being utility tokens and ownership tokens. The former is similar to an entry ticket, granting the holder the right to use the target project. In the early stages of ICO development, most tokens issued by projects belonged to this type, including Mastercoin, NextCoin, and even Ethereum (which did not include a POS plan in its early design).

The emergence and rapid development of ownership tokens, I believe, can be attributed to two key factors. The first is the introduction of ProofofStake (POS) by a geek named SunnyKing in 2012, along with the development of Peercoin. I believe the biggest contribution of this concept is that it proposed a paradigm design using tokens to carry the ownership of a specific network (although in this case, tokens carry more of a dividend right). This paradigm design around network ownership became a hot topic, and with the peak development of EOS's ICO in 2018, the excessive development bubble and the delayed explosion of applications led to a stagnation in development.

The second development opportunity for ownership tokens, I believe, can be traced back to Compound's issuance of Comp, which completely opened the era of financialized libertarianism of Web3. Prior to this, the focus of ownership token development had been mainly on the allocation of ownership of underlying networks, with seemingly little response at the application layer. In fact, the birth of some well-known Dapp projects was very early, and at that time, "administrator governance" + "pay-per-use" was basically the mainstream model. It wasn't until the appearance of Comp that the Dapp development model gradually gained widespread acceptance through token-based ownership of applications, achieving "community governance" + "Mining incentive" around the key use of the Dapp. Due to the lucrative financial returns, smooth exit mechanisms, and the characteristics of a free market environment, investors of all sizes entered Web3 with massive amounts of capital, similar to the transition of the classical liberal network, leading to changes in the industry with the change in the main user composition. The meaning of Web3 also underwent a significant transformation. Let's recall Chris Dixon's definition together:

Web3 is the internet owned by the builders and users, orchestrated with tokens. In web3, ownership and control is decentralized. Users and builders can own pieces of internet services by owning tokens, both non-fungible (NFTs) and fungible.

At this point, the distinction is very clear. Web3 has gradually shifted from the pursuit of decentralization and individual privacy to the redistribution of network resources through the use of digital assets to carry network ownership. Under this vision, the private ownership of digital assets and an absolutely free market are the ultimate goals, while decentralization and individual privacy have become means to guarantee these two goals. This is an important change, which is essentially equivalent to the pursuit of libertarianism in political philosophy (in fact, in political philosophy, libertarianism is basically equivalent to a specific form of anarchism).

Under this ideological guidance, innovation in the value categories carried by digital assets and the distribution of ownership will continue to be the main evolutionary direction for Web3. Basically, before the recent wave of deleveraging, the main innovations in the Web3 industry were focused on this. We need to be very clear about the differences between the two, as they will bring about completely different evaluation criteria. Some Web3 projects may be highly regarded by supporters of anarchism Web3, but may seem meaningless to supporters of libertarianism Web3, and vice versa. Ultimately, it's because of ideological differences.

Innovations around digital assets will continue to be the core driving force of Web3

After understanding the difference between these two claims, I hope to explore the core driving force behind the rapid development of the next wave of Web3. Personally, I tend to agree with some pragmatic viewpoints. In my opinion, the significance of judging a concept or idea lies in the effects it has on human behavior and the value it creates. Relying on metaphysical top-down thinking is usually not conducive to social development. From this perspective, I also agree with socialism.

Under this concept, I believe that the development of the online world will likely follow a compromise, low-friction path. Remember the network ideology map we mentioned in the previous article? In general, we can classify the classical liberal network, anarchism Web3, and libertarianism Web3 into the same category, which is a part relative to the technical authoritarian network. The future network world ideology will burst with greater energy in the blue shadow area. The core driving force behind this development is whether new, more universal value propositions will be discovered. Based on some existing achievements, I believe that digital assets essentially have the ability to do this, or that innovation around digital assets will continue to be the core driving force of Web3.

First, I need to clarify that I do not deny the value of work related to decentralization and privacy protection. On the contrary, I believe that the results are usually insightful. However, given the current practical situation, these two goals usually rely on the evolution of cryptographic technology. Constrained by the development of related technologies, many products based on this concept often do not perform well in terms of performance. Compared to some mature computer network technologies, these products still have a lot of room for improvement. Additionally, cryptography, as a fundamental discipline, requires significant investment and has a long output cycle. The current development status of Web3 enterprises does not align with this, and I do not believe that this situation will change in the short term.

However, the discussion around digital assets will be different. So far, I am still impressed by the ingenuity of the design of ownership of digital assets (or encrypted assets) in the Web3 world. The most direct impact includes three aspects:

• A method of ownership confirmation that relies solely on technical guarantees;
• A method of ensuring the exclusive control of the owner over digital assets in physical form;
• A method of transferring digital assets based on the network;

It is not an exaggeration to say that any previous technical solutions and specific products for the implementation of digital assets are not as perfect as Web3 solutions. This has brought more practical value to digital assets in Web3, namely high liquidity and low-cost trust guidance, injecting new vitality into the development of the online world. Therefore, I believe that the core driving force behind the rapid development of the next wave of Web3 will continue to be innovation around digital assets. In simple terms, innovation may proceed in the following areas:

* Paradigm Innovation: Similar to FT and NFT, the introduction of each new paradigm of digital assets has injected unprecedented development momentum into Web3. The introduction of a new paradigm provides a specific boundary for innovation and has guiding significance. On the surface, Fungible and Non-Fungible, this pair of opposing categories seems to cover all types, but I want to emphasize that this is not the case. Imagine gender; for a long time, we believed in the binary nature of gender, and look at the achievements we have made now. In fact, I think it is interesting to propose some token paradigms with different characteristics under specific conditions, and Fungible is just one dimension. There will be more dimensions to be discovered, and the recent introduction of new digital asset carriers such as Runes is a very good start.

* Value Innovation: Through a certain economic model or application design, combined with existing FT and NFT paradigms, carrying a new type of value. This is also a very meaningful direction for innovation. For FT, I believe that the value carried by current FT can be abstracted into several types: utility value, growth value, dividend right value, and governance value. In the following articles, I will analyze the differences between these four types of value in detail. Considering the current industry development, I believe that credit value is very likely to serve as the fifth dimension, which I will supplement.

* Business Innovation: This type of innovation usually starts with a specific business, attempting to solve old problems with new methods in order to achieve better results. I believe there are two potential innovative paths here. The first is the transformation of traditional internet businesses, optimizing or transforming existing business models using certain characteristics of digital assets to create new competitiveness. The second is the optimization and transformation of existing usage patterns combined with digital assets, or what can also be called innovation in the token model. This type of innovation can often act as a catalyst for industry development, similar to YieldFarming, X-To-Earn, and others falling into this category.

In summary, I believe that although protocols like Runes may seem like a technological regression, their value as a new digital asset carrier is still worthy of recognition. What the future development of Web3 will look like remains to be seen.

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