This is the second in a series of threads of "The Product thinkers guide to Web3". Please leave me feedback @viksit on Twitter!
1/ In this thread, we'll build upon WHY web3 matters with the HOW -- what are its building blocks and what is a framework to think about them from a product builder's perspective? 🧵
Why Web 3 matters 🧵
— Chris Dixon (@cdixon) September 26, 2021
2/ First, if you haven't read my earlier thread on why blockchains are important for anyone thinking about building web products -- check it out to set context!
1/ A thread on why blockchains are important for anyone thinking about building web based products. 🧵
— Viksit Gaur (@viksit) October 19, 2021
3/ The internet's organic evolution from an academic communications platform has led it to never natively supporting the capabilities needed for the web apps of today.
4/ For instance, logging into websites, proving ownership of digital assets like videos or images, or even paying a friend for dinner via your phone.
5/ These problems have been repeatedly solved by companies that build web applications, giving them immense power -- and smaller players must now play by their rules or face the risk of being banned from their platforms.
6/ This has stifled a lot of the innovation that the original vision of a decentralized internet imagined.
7/ Web3 creates native building blocks to manage identity, asset ownership and payment that are not controlled by any one corporation or entity, and weaves them into the fabric of the internet itself.
8/ Doing so enables us to port our identities, assets and payments across platforms, and frees us from operating within the walled gardens of large tech companies, which often have misaligned incentives from their customers.
9/ This can enable the creation of new business models that don't rely on big-tech, and result in an explosion of startups -- something that we're seeing already!
With that, let's get into the details of how web3 actually makes this happen.
10/ (Note that much has been written about how blockchains work from a technical perspective, and is beyond the scope of this thread. Instead, we'll focus on its product elements.)
11/ A blockchain is an auditable, immutable, and decentralized ledger of transactions between multiple entities (eg, people). Each entity has a wallet associated with it, which can hold tokens (eg, bitcoin), and each wallet has a unique identifier — its address.
12/ A wallet address can be thought of as a username. In fact, it can also be linked to a human readable username in the same way we link domain names to IP addresses — forming the basis of a decentralized identity system.
One of the most powerful but under-used features of @ensdomains so far is *reverse resolution*. 🔁
— brantly.eth (@BrantlyMillegan) April 26, 2021
This enables a key component of web3: portable usernames, and more.
I think this may actually be ENS's most used feature long-term.
Here's how it works & how to use it 👇
1/
13/ Wallets can store not just regular fungible tokens like Bitcoin or Ethereum, but also non fungible ones (NFTs). An NFT can be thought of as a proof of ownership certificate of an asset (say, a video file that is permanently stored on your Dropbox).
Consolidating the beginner’s guides I've written on DeFi, NFTs, and DAOs which are 3 very important areas in crypto to learn about!
— Linda Xie (@ljxie) March 15, 2021
- DeFi (Jan 2020)https://t.co/x7CuyRxyLo
- NFTs (Jan 2021)⁰https://t.co/1YJbdClili
- DAOs (Mar 2021)https://t.co/SKiEHrLsNg
14/ By owning this NFT in your wallet, you become the legitimate owner of that particular video file, and anyone can verify this ownership via the blockchain — forming the basis of a decentralized asset ownership system.
15/ Tokens like @ethereum or NFTs like @cryptopunks are stored and transferred between wallets through transactions. Each transaction has a variable cost (known as the gas price) associated with it depending on how busy the blockchain is at the moment.
16/ For instance, I could pay a friend for (an expensive) dinner by simply transferring 0.025 ETH from my wallet to theirs. This forms the basis of a decentralized payments system.
17/ But the blockchain has another critical piece of functionality -- it allows code, known as a "smart contract", to run every time a "block" of transactions are written to the ledger. This allows us to write code to solve all kinds of real world problems.
18/ For instance, how could I buy an NFT painting of an artist I want to support, but make sure that both sides are protected from fraud?
The traditional way to solve this problem is to introduce a third party (an escrow) which both parties can trust.
19/ They both send their assets to the escrow, which after the right verification process, releases the respective assets. The blockchain however allows us to replace this trusted third party with an escrow smart contract that has the same functionality.
20/ The buyer and seller both agree upon a price (say 1 ETH), and send their assets (the 1 ETH and NFT painting respectively) to the smart contract's wallet. Once both assets are received, the contract then transfers the NFT to the buyer, and the funds to the seller.
21/ In the event that these conditions are not met, the transaction just reverts back to status quo.
22/ Since this code deployed on the blockchain and is open, anyone can independently audit this code and verify that it does what it is expected to do; or find and publish bugs to make sure that subsequent versions of this code can be fixed.
23/ Smart contracts can thus open up more sophisticated use cases beyond just identity, asset ownership or payments, and allow for things we are just beginning to imagine -- for instance, earning royalties on secondary sales of digital goods.
Introducing https://t.co/5wI4yVVIhE - On-chain royalties made simple 🥳
— manifold.xyz (We are hiring!) (@manifoldxyz) October 22, 2021
Royalties are a big part of the NFT eco-system, but they can be confusing and painful to manage. We aim to change that today.
1/ Read on for details about our open source and collaborative initiative 🧵👇
24/ To recap, a few fundamental product building blocks of web3 today can be thought of as,
25/ In upcoming threads, we'll cover a few different ways in which web3 can impact various industries like finance, corporate governance, collaboration, art auctions and galleries, publishing, the creator economy, advertising, activism, and gaming.
This is the first in a series of threads of "The Product thinkers guide to Web3". Please leave me feedback @viksit on Twitter!
1/ A thread on why blockchains are important for anyone thinking about building web based products. 🧵
— Viksit Gaur (@viksit) October 19, 2021
1/ A thread on why blockchains are important for anyone thinking about building web based products. 🧵
2/ In 2009, @Bitcoin's blockchain technology successfully solved a fundamental problem in finance — the ability to transfer a digital asset between two peers anywhere in the world in a trusted manner, but without intermediaries like banks.
3/ Why is this problem important to solve? Because a solution to it allows the internet itself to be used to transfer money between people, as opposed to via banks and financial payment networks like SWIFT or ACH. Think email vs a USPS owned "E-Letters" service.
4/ It makes financial transactions more accessible to the unbanked, more transparent for auditors, more secure, and also more efficient — ultimately showing us what a replacement of our 1960s era financial rails can look like.
5/ (It also has potential for misuse but that's a thread for another day.)
6/ As Bitcoin grew, so did the demand for doing common financial transactions (like issuing loans) on its blockchain.
7/ However, its single focus as an alternative payments network meant that this was not easily possible — the code needed to facilitate these would have to be written off the blockchain network, removing the very guarantees of trust and security that one would want to use it for.
8/ The @ethereum project was started in 2013 to evolve blockchain technology in a way that would allow any arbitrary financial primitive to be built on top of it, and solve the problem described above.
9/ Ethereum (and a slew of other blockchain projects) offer the ability to run any kind of code on top of them — not just finance — opening up all kinds of applications historically not possible on Bitcoin.
10/ Moreover, by also being open source, community focused, and open access, they allow anyone to build on top of them, compounding the rate of innovation.
Composability is to software as compounding interest is to finance.
— Chris Dixon (@cdixon) October 14, 2021
11/ "I think the big difference between Ethereum and Bitcoin is that Bitcoin is a platform where the value of the ecosystem comes from the value of the currency, but in Ethereum the value of the currency comes from the value of the ecosystem." - @VitalikButerin
12/ So why are blockchains important for someone thinking about building products on the internet? A simple analogy is that they do for our current payments infrastructure what email did for physical letters — makes it obsolete.
13/ As the latest in a line of fundamental innovations that supercharge people's interactions with each other, blockchains are going to have second order effects that we can't even imagine yet.
14/ For instance, In 1995, this newsweek article about the Internet couldn't even imagine the concept of "Cyberbusinesses" and attributed talk of the "obsolescence of physical stores" as part of "fawning techno-burble". https://www.newsweek.com/clifford-stoll-why-web-wont-be-nirvana-185306
15/ Years later, the author, Cliff Stoll, wrote to The Next Web saying "Of my many mistakes, flubs, and howlers, few have been as public as my 1995 howler".
16/ Most importantly, blockchain based decentralized networks (also termed "web3"), offer new ways to re-imagine the internet without the control of large technology companies, banks and governments.
17/ They have come a long way from being only about speculative crypto currencies, and it is near impossible to truly fathom what can be built using them in the future.
18/ In the next thread, we'll dive deeper into the fundamental primitives of web3, and a framework for how they have the potential to transform the current version of the internet (termed web2) for the better.
1/A centerpiece of humanity's cultural evolution is our ability to preserve important artifacts like paintings and books in museums and libraries.Our archival techniques, however, haven't kept up with the pace at which we create digital content.
2/With Web 1.0, companies like Yahoo created content and earned money off it.With Web 2.0, people create content and companies like Instagram possess and earn off it by creating walled gardens and "charging" for access.
3/Companies like Youtube and Patreon allow people to create content AND earn off it, but own the underlying systems that facilitate this.Which means that creators legally "own" their content, but don't actually possess it.
4/The sheer volume of photos and videos has fundamentally changed what we perceive as being culturally significant.Creator communities are not "mass culture" but digital connectivity makes them widely accessible.
5/As creators increasingly rely on their content as primary sources of income, it becomes important for them to guard against being "de-platformed" due to political or policy reasons, even if in error.
6/Possessing their content rather than being at the mercy of any one platform is thus important.This is also true for their list of followers.
7/Web 3.0, powered by decentralized crypto networks, is emerging as an excellent solution for creators to possess their content and own their users and be free of platform tyranny.
8/Further, much of this content needs to be permanently archived for purposes of historical cultural record, much in the way we store paintings in museums.
9/Relying on centralized platforms not a good long term solution — the average of a fortune 500 company is 61 years, and their incentives are to shareholders not customers.
10/Blockchains are great to act as systems of record for actions, identities and other metadata, but are not built to store actual content like files and photos.
11/Decentralized, blockchain powered storage systems like Filecoin and Arweave allow for storage of content on their systems, but suffer from one major issue — permanence.
12/If content stored on these networks is not accessed at regular intervals up to a specific time, it gets "aged out" and becomes unavailable — not great for storing data for centuries.
13/This aging out happens for cost reasons - it is expensive to store data on disk and keep it accessible.Centralized storage providers solved for this by charging subscription fees.
14/But expecting this from creators to store their content for hundreds of years is to expect Van Gogh and his descendants be billed yearly for his paintings at the Museo D'Orsay.
15/Traditional museums acquire and keep paintings not just because they are culturally valuable, but because they are expected to appreciate in value over time.
16/What if creator content could similarly appreciate and offer incentives to a decentralized museum network to host it?
17/NFTs of creator content — videos, images, text, et al — by virtue of being tradable, offer economic semantics similar to traditional art.
18/By being able to offer secondary sale proceeds to not just the author but also to its patrons and possibly to the archive network itself, the NFT'd content can pay for itself over time.
19/We can imagine a system where the economics are designed to keep content that pays for itself on long term storage, thus aligning everyone's incentives.
20/For instance, an NFT owner could lend their NFT to a decentralized museum in the same way owners of physical art often lend it to traditional museums.
21/Decentralized Museums could also charge by impression, and offer a payment to the NFT owner.
22/Much like traditional museums, these decentralized museum networks must have governance structures that determine how much of their endowment is used for new acquisitions, vote on new streams of incomes, create contracts to lend NFTs out, and so on.
23/Decentralized Autonomous Organizations (DAOs) that allow stakeholders to vote on governance becomes quite relevant here.As their stakeholder membership can evolve over time, they can potentially exist for hundreds of years.
24/I imagine a MuseumDAO that issues MuseumTokens to members who are interested in being governing members.These tokens can be bought on DEXs like Uniswap, and used for votes et al.
25/MuseumDAO runs a gallery page which charges viewers, either as a one time fee or per impression.
26/Moreover, MuseumDAO can be integrated into the VR world for immersive virtual experiences as well.If anyone is working on something like this, would love to chat!
1/ As technology, standards, and incentives evolve, all software applications will eventually move to the web -- with the browser serving as the operating system. We are already almost there today. But there are some challenges.
2/ Software today is written in 2 parts - code that runs on your client (the browser), and code that runs on the cloud (the servers). Because of the way the internet has evolved, a lot of effort is spent in linking the two pieces together, since they're effectively mirroring the data model and functionality.
3/ As client side code has gotten more complex (imagine gmail or figma), it has pushed browsers to do more, and consume more resources on the local computer. And with the fragmentation of web applications, the number of tabs in use has ballooned too. It also means that more and more native OS functionality (like accessing the web cam) will eventually be available to the browser.
4/ What if we we could create a system where this code only had to be written once, on the cloud and streamed, much like how Netflix streams movies? (Assuming of course that it had parity with all the features we expect of such applications? It would have a ton of benefits.)
4a/ The browser would simply become a terminal used to access remote services, and perhaps start to serve more as a container of user data and a way to grant online applications permissions to use it, vs having them collect it by default.
5/ Code would only have to be written once, and deployed without worrying about the client side. This would make things much more secure and packaged. It would mean that app stores would not be as relevant in the long term, since every application would be available simply via a URL.
6/ Since there would be barely (if) any client side code, each website would be very secure, removing the spectre of cross side scripting attacks.
7/ Imagine needing to add on a background image to your camera feed - rather than doing it on the browser like today, the video would simply be sent to one location, filtered, and streamed to whoever needed it without causing any more resource usage on your laptop.
8/ Machine learning models that are today run in large cloud based systems could be run specifically for each user, in their own silos, without worrying about end user hardware capacity, or data privacy issues.
9/ Rather than building hacky client side integrations of other applications via chrome extensions, real APIs could be built that all run in clean silos and with access controls directly on the cloud. This means that integration between disparate apps can become much easier and help reduce some of the fragmentation that has crept up on us.
10/ All your content can be live indexed in your own silos - a whole new generation of search engines can come up where they request permission to index your data, putting you in control. They can then run powerful algorithms to give you a much more pleasant search experience that is integrated into your daily workflows.
11/ @suhail's @mightyapp that launched last week offers a peek into such a future. It's an impressive technical achievement, rooted not only in solving a real user need today, but shows that a future like this is only constrained by time.
11/ In the same way that NVIDIA CUDA like SDKs allow us to offload significant mathematical computation to dedicated GPUs, I expect @mightyapp to start offering libraries where developers can offload significant computing to the Mighty cloud.
12/ Since Mighty is centralized but does not own your data, their SDK in the future could complement OAuth and other identity systems to give more granular control of user data to applications.
13/ A final thought on pricing. While there is a lot of skepticism around a 30-50$ a month price point, the analog in my mind is this. Photoshop users invest in more RAM, a better Wacom tablet, better GPUs and other accessories to get their work done. These resources are fixed costs and need to be upgraded at regular intervals given the rate of innovation. Power users of web applications on the other hand don't have such resources available to them - the best they can do is RAM or a better laptop, but the browser is still a fundamental bottleneck. MightyApp offers them a way to get constant ugprades on all the things that matter, and prices itself in a SaaS model rather than a fixed "licensing" model. Over time, I expect this price to drop as economies of scale and efficiency start to play in the mix.