Web2 Is a Cryptographic Breakthrough That Reduces Transaction Costs

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Blockchain is a cryptographic breakthrough that allows for openness but very careful editing permissions. It's one of those kind of like little bit esoteric inventions that once it's implemented has super wide-ranging effects. The communication really broadly brought us social networks, marketplaces to way communication unlocked things like Uber where you could communicate your location the car could communicate its location.

This week’s podcast is my second SoloCast, and during the episode, I share my thoughts and some predictions on the potential impacts and implementations of web3. The blockchain can be basically defined as a cryptographic breakthrough that allows for openness but with very careful editing permissions. While web1 resulted in costless publication and web2 in costless communication, web3 allows for costless transactions. This will likely increase the number of transactions we make. Web3 can also create cheap digital scarcity which may help authenticate originality in the digital world.

Why does this all matter? My answer to this question regards the implications of web3 on the cost of trust and decentralization. Currently, the cost of trust in the market is relatively high, and with increasing transactions and original creations occurring via the blockchain, we will have to pay less for trust. Also, there will be less need for centralized parties such as brands or centralized banks, though it’s too early to say which authorities will all be affected.

Next, I make some predictions about what will happen as the blockchain gets deployed. The first to be impacted is the management of digital items, with finance and gaming among the earlier industries. Also, we will likely see digital components getting separated from analog components so that they can be managed on the blockchain. Another trend that may happen is that the blockchain may be implemented to manage atoms in the real world.

To wrap up the SoloCast, I explore the implications of web3. It will probably impact managerial culture, and DAOs (distributed autonomous organizations) will likely take over some market share from companies. I also believe the biggest networks will be bigger than the biggest companies, in part because there is no cap on involvement in web3 networks and ecosystems.

My goal in sharing my thoughts is not just to tell you what I think will happen but to provide some notions and rough directions so that you can hopefully overlay some of these lessons into your own experience and expertise. Web3 is still not easy to navigate, and it is still early in its implementation, but it provides incredible opportunity, and it is fun to get involved.

Links:

Eric’s Blog

Eric’s blog post on digital scarcity

Eric’s Blog post on The Cost of Trust

Technological revolutions and Financial Capital by Carlota Perez

SquidDAO

Additional Episodes If You Enjoyed:

Jason Hitchcock: Your Guide to Web3

Simon Judd: How Index Coop is Building Crypto Index Products

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