Stanford University’s Blockchain Review blog editor and renowned crypto venture capitalist a16z partner Chris Dixon recently discussed his latest book, “Read Write Own,” which primarily describes the long-term significance of Web3 in the digital industry and the development challenges it currently faces due to speculative culture.
Table of Contents
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Understanding the value of Web3 requires an understanding of network architecture
Protocol networks
Corporate networks
Corporate networks win with abundant funding
Opportunities and challenges of Web3
Opportunity: Blockchain enables protocol networks to compete
Challenge: Conflict between computer culture and speculative market
Blockchain will reshape the digital industry
“Read Write Own” begins with stories commonly heard in the community—most of the value on the internet is currently dominated by tech giants like Google, Meta, and Amazon, and blockchain will be a turning point. To understand the technical and cultural significance of blockchain, one needs to understand a broader history of the internet.
Because most of the value on the internet, including social networks, financial history, and medical records, is recorded and captured on these interconnected network structures. Therefore, to understand the modern internet, one must first understand network design, as it directly influences how money and power flow within the network system.
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Before the emergence of blockchain technology, there were two primary designs in the internet economy: protocol networks and corporate networks.
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There are mainly two types of network architecture: protocol networks and corporate networks.
Protocol networks are defined by a set of open-source rules that describe how different participants interact with each other on the network. Since the protocol is completely open-source, any participant can independently launch a similar application, and all the value belongs to the participants of the protocol, not any centralized entity that charges high fees.
One of the most classic examples of a protocol network is RSS, which is a truly simple aggregation protocol that allows users to subscribe to content they are interested in.
Corporate networks, on the other hand, are closed networks, such as Facebook or Twitter, designed and maintained by a single company to promote their own interests.
Although many corporate networks support APIs and ecosystems for external developers and creators on their platforms, the interests of users are still secondary to the interests of the company. Therefore, the vast majority of value for creators, developers, and other users on the network belongs to the platform, not the users themselves.
Closed corporate networks like Facebook or Twitter have surpassed open protocol networks like RSS. Twitter initially aimed to support RSS and provide an easy-to-use frontend, but gradually users began to rely entirely on Twitter’s platform and network rather than RSS. Eventually, Twitter decided to end its support for RSS in 2013 and captured user value.
These corporate networks can replace open protocol networks primarily because they have abundant funding and are carefully designed to advance their strategic interests. Platforms like Amazon, YouTube, and Uber are willing to burn money in the early stages to subsidize users’ growth.
On the other hand, many protocol networks lack systematic funding to sustain the development and maintenance of projects due to their decentralized nature, and many developers maintain networks purely out of goodwill, creating a stark contrast.
Open protocol networks cannot compete with the funding of corporate networks. This greatly disrupts the founding spirit of the internet as an open public space for sharing and advancing knowledge for everyone.
Blockchain introduces a new form of network economy that combines the openness of protocol networks with the financing mechanisms of corporate networks, which may help fundamentally address the aforementioned issues.
Blockchain can achieve the business model of open protocols through “tokens,” which represent ownership and value units in open-source programs.
Unfortunately, blockchain and tokens often have a negative connotation due to their speculative and gambling nature, which is actually due to the existence of two cultures in the blockchain industry:
Computer culture: Developers, entrepreneurs, and visionary individuals place cryptocurrencies in the broader history of the internet and understand the technical significance of blockchain in the long run and pursue ideals.
Casino culture: Speculators, traders, and others focus on short-term gains and profiting from price fluctuations in the trading market.
Dixon believes that it is possible to mitigate the short-sightedness and harmful effects of the casino culture through enhanced regulation and increased legal clarity. One potential solution may be to fully utilize ownership schemes and timeframes, locking tokens for a specified period through techniques like staking or traditional legal means through contracts. This can promote longer-term thinking in the field and enable blockchain technology to become a force for social good.
In fact, this is the culture of Web3’s pursuit of freedom and value, as well as the conflict between capital and speculation as motivations in crypto culture. There are fundamentally different views, and some believe that speculation is the main obstacle to the development of Web3.
The existing internet culture is dominated by corporate networks, where users, developers, and participants are relatively deprived of value, while the network structure of blockchain has the opportunity to bring back the culture of protocols to the market and improve this situation.
For blockchain to truly change the current internet culture, it needs to reduce the proportion of casino culture by leveraging the flexible design framework of computer culture and tokens, allowing open-source projects to have the opportunity to complete cold startups in the early stages with a new business model. Eventually, with the advantage of network effects, they can become long-term competitive open-source projects.
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Blockchain and token frameworks address the disadvantages of early-stage open-source projects.
With the completion of infrastructure, the above situation may occur, and killer applications that truly land in the industry may emerge in the crypto field soon.
(“Read Write Own” is currently not available in Chinese)
a16z
Chris Dixon
Read Write Own
Web3
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Further Reading:
Funding project Protocol Guild sees the problems and how to ensure the long-term development of the Ethereum ecosystem
DaoDao recognizes that Web3 wallets by Binance are still “unfinished products,” and He Yi’s tweet recruits developers.