How a Wikipedia engineer became a vocal Web3 critic
A new blockchain-based internet that hates huge tech platforms, embraces digital currencies, and puts people in control of their data and identity sounds like a great idea. But a growth Chorus of the skeptics say that Web3 – the term used to sum up these concepts – is at best very ambitious and at worst an outright scam.
Some of these critics voice their doubts about Substack, or in YouTube rants, or on corporate blogs. Others express their skepticism with their wallets, shorting cryptocurrencies like Bitcoin or Eth. Molly White, who works a day job as a software engineer at Wikipedia, has a simpler approach, and it’s a good one.
White has become one of Web3’s sharpest critics by simply compiling the daily mishaps and scams of Web3 – its non-theoretical real-world consequences – to Web3 is doing greata website (and Twitter account) that she created and organized. The steady stream of this news (many of which isn’t covered by mainstream media) strongly suggests that Web3, in fact, isn’t doing as well as its legions of cheerleaders would have you believe.
I spoke with White via email about his perspective on Web3 devices such as DAOs (distributed autonomous organizations), cryptocurrencies, and NFTs (non-fungible tokens). Our conversation has been lightly edited for length and clarity. (Disclosure: I own a modest amount of Bitcoin, mostly for research purposes.)
Why did you have to launch Web3 Is Going Great? What were you seeing at the time?
Although cryptocurrencies and blockchains have been around for a long time now, last year this “web3” shift really seemed to take off: this idea that blockchains will be the “future of the web”. The people pushing this were saying that before long everyone would be using crypto, many services would be built on one blockchain or another, and all web interactions would be financialized in a way – all things that seem like a pretty terrible “future of the web” to me. Last year also seemed to be the year the crypto space scam really took off, and also the year the people behind a lot of these projects really set their sights on the average layman (rather than the computer geek or the speculative investor) as their target audience. Ordinary people were being told they had to put their money into crypto in some form or another, and I was starting to see a lot of projects that I thought were targeting the particularly vulnerable: totally unregulated apps encouraging people to get sketchy loans to get out of a financial pinch, or projects promising to help people “invest” their retirement money in crypto, for example.
As I started to learn a bit more about the subject I also started to come across swindle after swindle after swindleand To hack after To hack after To hack. It seemed like every day a a huge project has been hackedor someone threw something and flee with all the money, or people were having their crypto wallets compromised by one technique or another. But the stories were all very fleeting – I would see them on Twitter or in a short news headline and then the social media/news attention span would go on and it was like it never happened. I realized that it could be very informative and meaningful to bring all of these disasters together in one place, both to show how unsuitable this technology is for virtually any use case and to show how people are get scammed when they try to dip their toes in it.
Why do you think we see such shocking amounts of scams around cryptocurrencies, NFTs, etc. ? What is it about these templates that makes them such a breeding ground for scammers?
It’s extremely unregulated, and the regulations that should apply have been slow to apply. People seem to have this opinion that because a cryptocurrency is involved, they can do whatever they want: operate a Ponzi schemeWhere sell unregistered securities. To a certain extent, they were able to do whatever they wanted, even the obviously illegal things, because the enforcement of the regulations was so slow. But I also think we’re starting to see a shift in that regard, and there’s probably more than a few people behind various crypto projects that have seen SEC Enforcement Actions and others on scams that were happening many years ago, and thinking “uh oh, that’s a lot like what I did”.
I think the amount of hype being pumped into the space also contributes to the problem. It comes from everywhere—the media, famous celebrities, ads on mainstream TV networks and, of course, social media. There’s a reason get-rich-quick schemes are so appealing, and because it’s usually the success stories that get the attention, I think people are starting to believe that it’s actually common for people to make money with these things. It’s also a bit of a perfect storm with the economic uncertainty facing fairly young people (who by far seem to be the ones drawn into these scams): they’re more likely to have the kinds of jobs that have been particularly hard hit by the pandemic, and many of them are facing huge debts from things like student loans.
Has your opinion on NFTs, cryptography and other blockchain models evolved since you launched W3IGG?
If anything, I probably have an even stronger opinion that these technologies enable a great deal of harm, with few promising use cases or benefits. I’ve spent the last two months pretty immersed in this stuff – both learning a ton of specific Web3 projects just so I can cover them in the site, but also researching the underlying technologies and issues that they try to solve, as well as talk with many other experts on the subject and hear their opinions.
It seems like a lot of VCs are very excited about blockchain and crypto. Do you have any ideas as to why this might be?
VCs are excited about blockchains and cryptocurrencies for the same reason VCs are excited about everything: it’s an opportunity to make money. People invest a lot of money in crypto, and despite all the ideological talk about how crypto could democratize wealth or take such outsized amounts of it out of the hands of a few big players (including some of the same huge capital corporations -risk investing in crypto), that’s not really what’s going on. Wealth is even more centralized in crypto, in many ways, and the space is beautifully designed for that to continue.
The crypto also promises the possibility of faster returns than many of their more traditional investments – if a VC’s stake in a project is represented in crypto, they can cash out at any time, rather than having waiting for a company to go public.
What is your impression of the DAOs?
My overwhelming impression is that most projects calling themselves DAO are neither distributed nor self-contained, and those that attempt to be were organized by people who have given a lot of thought to how such an organization might work in theory, but have little practical experience with such organizations.
In some of the reporting I’ve done on DAOs, I’ve gotten the impression that it’s not always practical or possible to create something totally decentralized and democratic.
If you take a look at a lot of groups calling themselves “DAO”, you will see that they are often just one person or a group of people controlling the project. Some of them apparently have governance tokens and community votes on project proposals, but we’ve seen more than one instance where a community has voted for one thing and the leaders of the so-called decentralized project have just decided to do something else. . In other cases, there is not even a nominal attempt to have some kind of community governance. Some of these projects say they have plans for community governance to be added later (usually after fundraising, of course), but it’s unclear if they actually deliver on those promises.
Do you think people could possibly find a way to make DAOs functional and useful?
There are many decentralized governance structures that have been around in society for much, much longer than DAOs have existed. Look at cooperatives, for example. You might even argue that shareholders of most public companies have similar rights to participants in DAOs. Outside of the business world, there are all kinds of examples of decentralized, leaderless groups: the Wikimedia movement, for example, or groups like Occupy Wall Street or Alcoholics Anonymous. Personally, I find it unlikely that anyone with significant experience in a group like this would ever argue that the goals or mechanics of these groups could be fully and reasonably represented in code.
DAOs are, I think, one of the best illustrations of the problem with a lot of these Web3 projects: they’re trying to come up with technological solutions that will somehow codify very complex social structures. Many of them also seem to operate on the assumption that everyone is acting in good faith and that the interests of project members will generally align – a disconcerting assumption given the number of bad actors in the crypto space.
I think a lot of people are trying to figure out if there are any real, practical use cases for Web3 models like NFTs and DAOs that will emerge after the initial hype and peddling fades away. What do you think? Is there a “there”?
No there is not.
Both NFTs and DAOs are great examples of solutions desperately looking for a problem. People have been trying to come up with ideas of how NFTs might be useful if interest in them as a speculative investment wanes, and the ideas seem incredibly unconvincing – using them for things like tickets events, which are already bought and sold quite adequately on existing systems.
I suspect the hype and peddling will die down when regulators step in, and it will be much harder for influencers to pump and dump tokens without disclosing their financial interests, or for people to promise impossible returns on this which are clearly Ponzi schemes, or for people to sell what are obviously unregistered securities. But when that aspect is removed, so is much of the incentive to use the technology in the first place. What you’re left with is a slow, expensive data store that doesn’t scale well, and some really complex privacy and data ownership hurdles to overcome.