Web3 and Web5: a story of technological determination

The chicken-or-egg question goes far beyond poultry, and includes the relationship between a society and the technology it produces. Or is it the other way around? You might ask: is society a product of the technology it comes into contact with every day?

Just as wheels and steam engines changed the way people move, impacting entire economies and global cross-cultural exchange, the internet and apps now shape the way we do countless other things, including our culture and history. The idea at play here is aptly dubbed “technological determinism” and has been very present in some of the recent debates around Web3 and blockchain.

The pendulum swings

Web3, a more decentralized internet of data and digital assets owned by users, is what most people in the blockchain space are striving for. In some ways it’s still an idea at this stage – and some think this idea has become obsolete before it’s even come to fruition. Enter Web5the project of Twitter’s former CEO Jack Dorsey, an idea so forward-looking it skips Web4 in its path.

Dorsey has long disliked the direction the Web3 industry is taking, once famously stating that this new generation network much like Web2, but with VC funds at the helm. While the industry isn’t perfect indeed – nothing is, let’s face it – such a view might lead the more hateful to wonder if Web5 would be over Web3 with the VCs overthrown by Dorsey.

Essentially, both of these questions also betray a certain kind of determinism. By claiming that “You won’t own Web3,” Dorsey assumes that current social, political, and economic relationships will shape our future technology. The same goes for a similar question on Web5, as it rests on the same intellectual foundation.

Blockchain is a curious case study from the deterministic perspective, especially when you look at its origins. While many of the underlying concepts and algorithms date back to the last century, the work leads to their use for reliable peer-to-peer exchanges of value – Satoshi Nakamoto’s famous Bitcoin whitepaper – appeared at the end of 2008, at a time of turmoil in the financial world. The zeitgeist exposed the many flaws of the financial system at the time; it was the cause and Bitcoin was the result, born of the world’s socio-economic condition.

Now that the jack is out of the box, the pendulum swings back. Once a product of a society seeking a more effective financial system, cryptocurrencies are now having their own impact on society as their adoption and popularity grow. And while this process indeed lends itself to a deterministic revision, today’s prism may not be the most appropriate for looking at tomorrow.

Blockchain is what you make of it

At its core, blockchain is a permissionless, peer-to-peer technology that relies on community support and participation. As such, it defies pessimism by its sheer design: There are no kings in a peer-to-peer network, just early investors who scoop up the bountiful profits in the same way they would with any other industry or individual company that shoots skyward. Despite Lake centralized now that it was at the start, Bitcoin still has no central bank or authority. The unintentional centralization is a natural trait of any moving system, and the rules of the game are laid out in the protocol, allowing anyone who thinks they can do better to split it up and give it a fair shot.

There are other ways blockchain can drive our society in terms of our larger governance and other frameworks. The blockchain space lives and breathes community spirit, with individual builders and enthusiasts uniting around the projects and causes they enjoy. This may indicate a gradual, greater societal transition towards decentralization, with local communities gaining more autonomy in the face of centralized powers.

According to the same story, the emergence of DAOs hints at the way we could do business in the future. We will scrap the traditional management vertical and revenue distribution models in favor of a system where every project participant has a share and control and enjoys more individual property.

That said, just as the impact of automation on the job market depends on how companies implement it, blockchain’s societal impact will depend on more than the technology itself. As we know from TradFi, money loves company, and this law of gravity is already very present in the crypto space, due to the outrageous impact whales have on fluctuations in the market to the creeping centralization of Bitcoin mining.

Pitfalls, present and future

In some ways, with its code-is-law maxim, the blockchain space runs like codified, executable capitalism, and for all the good it can do, there are pitfalls the community should be aware of. Take the story of the BadgerDAO hack, where an adversary used a flash loan to hijack the governance mechanism and snatch up the project’s coffers.

Imagine a real election being hijacked like this, not even via a loan per se, but by the sheer financial strength of an old-era whale; or a company that takes control of a DAO tasked with keeping terrorist communications off the web in order to silence its rivals. Something similar may or may not happen in the Web2 room alreadyand blockchain could just set up a more convenient framework for that.

By its design and its underlying values, blockchain has the ability to fundamentally transform our society for the better, giving more ownership and autonomy to ordinary people at the expense of centralized powers. However, as we work toward that, regardless of the number behind “Web,” it’s important not to allow the flaws of the current financial, socio-economic, political, and other systems to carry over to the new system.

Leonard Dorlöchter is an entrepreneur who is a co-founder peak