The Web Challenges Cycles

Understanding the evolution of the Internet and how it has culminated on the Web3.

The origin of the Web, this decentralized, open, neutral, and permissionless platform, was very powerful and has unlocked a lot of innovation and content, but not without its own limitations.

The 3 main problems were:

1. difficulty in publishing content,

2. lack of discoverability, and

3. no built-in finance feature.

1. As you can imagine, setting up a web server in the 90s, and creating and sharing content was hard. It was needed to buy a server, write program code, and do a lot of nerd stuff. There was no WordPress or Aws. So, yes, the Internet reduced the ‘political’ barrier of entry to content publishing, but there was yet a technical barrier. If you weren’t a computer scientist or at least tech-savvy, all you could do was read content over the Web.

2. In the early days, there was no discoverability, i.e algorithmic timeline suggesting new content, which increased drastically the difficulty of content distribution. You had to discover new sites by asking directly to your friends or searching on Google-like Web-search tools, limiting the potential of this open platform.

3. The last limitation was the absence of financial features built into the Internet. There was no way to transfer money natively on the Web. 

These technological flaws lead to an explosion of solutions that ushered in what we call Web 2: centralized platforms focused on good UX, seamless content creation, convenience, network effect, scale, and content discoverability.

The Rise of Web 2.0

This phase represents mainly the birth and growth of Social Media, Marketplaces, and Finance led by companies like Amazon, Facebook, Apple, Paypal, eBay, and many others.

They allowed users to be able to, for the first time, easily create content and personal pages, build and influence large audiences, trade globally, and have access to free financial services.

Web2 was the true responsible for connecting billions of people on this open global network. The Internet finally took off, went mainstream, and changed the global economy forever.

But, again, this has not happened without its own tradeoffs.

What used to be an open and neutral environment, became several closed giant private silos built on top of the open Internet.

Users gave up ownership and privacy in exchange for convenience and scale, leading to problems such as:

1. lock-in data,

2. surveillance,

3. lack of neutrality, and

4. biased algorithms.

1. In the Web2 environment, users were not able to host their own data, which make them hostages of the platforms. They can’t move their content or follower list to another platform. Once they created the audience, they are locked in that platform forever. The only way of using another service is to create an audience from scratch.

2. Since the Big Tech business model is targeted ads, they are incentivized to collect the most data they can from users. Location, use pattern, navigation history, contact list, and so on. And this clearly generates tension between users and companies, mainly because the rules are not transparent at all. It’s a black box that no one externally can have access to. Users have no idea which data are being collected and how and where they are being used.

3. Several services, like Zynga (Farmville), built on Facebook, and Meerkat on Twitter, had their business model completely destroyed overnight due to abrupt and unethical changes in the Facebook/Twitter APIs, mostly motivated by a conflict of interest. For instance when Twitter restricted its APIs, used by the ascending Meerkat (live streaming platform) because it just had acquired the competitor Periscope.

4. And, again, because Big Tech’s main business model is target advertisement, the incentive is to create strategies that increase the time users spend looking at the screen. And turns out the most engaging content is those that reinforce the users’ point of view or triggers outrage. This has created echo chambers and polarized part of society.

Given such problems, we needed some breakthrough innovation to give users back ownership and control over data without losing the awesome benefits of Web2 features like great UX, discoverability, network effect, and scale.

And this innovation came along in 2009 through the whitepaper of Bitcoin, a peer-to-peer digital currency running over a decentralized Blockchain, kicking off the gold age of the Internet.