Web3: Charting the Internet's Next Economic and Cultural Frontier

Dedication

For Eleanor, Josephine, and Amy

Contents

Cover

Title Page

Dedication

Introduction

Part I: Disruptions

Chapter 1: The Web Is Entering a Third Era

Chapter 2: Blueprint for the Ownership Web

Part II: Transformations

Chapter 3: Assets

Chapter 4: People

Chapter 5: Organizations

Chapter 6: Decentralizing Finance and Digitizing Money

Chapter 7: Gaming

Chapter 8: The Metaverse

Chapter 9: Civilization

Part III: Leadership

Chapter 10: Web3’s Implementation Challenges

Conclusion

Acknowledgments

Notes

Index

About the Author

Praise

Copyright

About the Publisher

Introduction

Silicon Valley was once called a tech Galápagos for the unique blend of talent, money, technology, culture, and government research and development that led to the diverse species of tech entrepreneurs who went on to found today’s mammoth Internet companies.¹ The World Wide Web was invented by English computer scientist Sir Tim Berners-Lee at CERN, or the European Organization for Nuclear Research, in Switzerland, but it was commercialized in America.

This time is different. Web3, the subject of this book, is emerging at a time when technology tools and human capital are more distributed than ever. In 1993, as the Web’s pioneers were forging the first frontier online, half the world had never placed a phone call. Now more than two out of every three people on earth has a smartphone connected to the Internet.² To build on science fiction author William Gibson, the future is already here, and its talent and technology are almost equally distributed. If Web1 and Web2 democratized access to information and made it easier to meet and collaborate online, Web3 equips us with a more powerful toolset to earn money, own assets, and build wealth on a globally level playing field, decentralizing power and influence in the process. If the spread of technology truly makes the world flatter, then Web3 will be a steamroller.

I first started writing about Bitcoin in 2014, before the word Web3 entered the vernacular. An investment banker by trade and a CFA charterholder in traditional finance (what my Web3 friends would call a TradFi person), I thought I was investigating a new financial technology.

In 2015, I began a much larger research project with Don Tapscott, my father. We published our findings in a book, Blockchain Revolution. During that research, I had the epiphany that this new general-purpose technology was ushering in a new Internet of value that would change everything. That was not obvious to outsiders at the time, and we faced many doubters then as now. In 2016, when Blockchain Revolution came out, the entire market value of all digital assets, what we refer to as tokens in this book and the foundational asset class of Web3, was about $10 billion. If the whole industry had been a publicly traded company, it would have barely cracked the S&P 500 index. The Gap, seller of khaki pants, was worth more than the whole Web3 industry. Today, Web3 assets are more than 100 times that. The book struck a chord and benefited from impeccable timing (hey, better lucky than smart!), with twenty translations worldwide.

Since 2016, I have traveled to nearly forty countries, visited every continent except Antarctica, and met with local entrepreneurs, policymakers, business leaders, and everyday people. What has struck me most is how globally distributed Web3 innovation is. Airplanes have become time machines, shuttling me to various futures: To Istanbul, where many citizens prefer to transact and store value in digital currencies. To Singapore, the beachhead of Asia’s burgeoning Web3 industry. To Thailand, where Internet users are experimenting with Web3’s toolset to bootstrap new jobs online. To Dubai, where the government has made Web3 the linchpin of a broader plan to attract global talent and capital. To London, where in June 2023 British Prime Minister Rishi Sunah shared his determination to turn the UK into the world’s Web3 centre.³ Wheels down in Toronto, which was a leader in Web3 for a moment, I feel like Marty McFly landing in a 1950s cornfield.

In my travels, I’ve also seen how common misconceptions of the technology have spread, propagated by some media, business, and government leaders. They’ve raised the barriers to Web3 entrepreneurship. This, too, is a global phenomenon, with old-paradigm power brokers everywhere struggling to embrace the new. They point to the 2022 collapse of FTX, a prominent cryptocurrency exchange, and the bankruptcies of crypto lenders like Celsius and Voyager, to justify their concerns about Web3—that this new technology, while innovative and useful when controlled by central banks or big companies, is a net negative to society when left to the free market.⁴ It gives speculators new ways to gamble and criminals new tools to evade law enforcement. In actuality, we can blame the collapse of these companies not on the technology but on the hubris of those wielding it.

The events of 2022 have smeared new mud on the windshield, increasing my sense of urgency for a comprehensive analysis of what’s going on. As with any new industry, many startups are trying to build this future, and many will end up as footnotes to the transformation. That’s normal. Though this book features the stories and insights of dozens of creators, builders, and dreamers, it’s not about the fortunes of any one organization, person, or company. I won’t be sharing industry gossip or predicting the price of any asset in this book. To be sure, tokens are key to Web3. Many of them will grow immensely valuable, especially those that represent ownership in the underlying protocols or some of the most disruptive organizations. But if you are looking for price targets or investing advice, look elsewhere. This is a book of enduring concepts, not of buy-in/cash-out strategies. I use data as points of comparison in time. This is such a vibrant and volatile space of innovation that readers will need to consult my sources for the latest data.

This book is also not an exhaustive study of every player in this new industry. To do so in the time allotted would be impossible. A decade ago, book authors could call up every founder in the space during manuscript development. No more. In this book, I attempt to bridge the islands in the archipelago of Web3 knowledge, to paraphrase historian Irene Vallejo’s library metaphor.⁵ In layperson’s terms, I connect the dots.

That said, this book draws from half a decade of research, investment, practice, and collaboration in Web3. In 2017, Don and I launched the Blockchain Research Institute, which has conducted more than a hundred research projects on the impact of blockchain and Web3 on every industry, from healthcare and financial services to energy and entertainment. This research has informed many of the ideas in this book.

I also conducted more than fifty interviews for this book. Web3 is first and foremost an economic frontier, and so I wanted to speak to the business-minded pioneers like Yat Siu, cofounder of Animoca Brands. Siu got his first job as a teenager at Atari in the 1980s, and stumbled into Web3 in 2017, later staking his company’s future on it and underwriting many of Web3 gaming’s biggest innovators. A decade ago, Jeremy Allaire had the idea of creating the HTTP for money, an Internet-native payment tool for dollars and other currencies. His company, Circle, created the stablecoin USDC, which through 2022 powered a cumulative $8.6 trillion in on-chain transactions.⁶ Another pioneer, Sunny Aggarwal, dropped out of the University of California, Berkeley after a computer science teacher refused to let him skip a test to attend a Web3 meetup. He went on to found Osmosis, a decentralized exchange that powers frictionless peer-to-peer transactions in dozens of different assets. On my podcast, DeFi Decoded, yet another inventor, Anatoly Yakovenko, explained how he realized that Apple and Google’s smartphone monopoly was choking off Web3 application development on his platform Solana. So Yakovenko launched a competing phone and operating system.

We spoke with technologists, and so-called core developers who are building the essential infrastructure of Web3. We caught up with Tim Beiko, a core developer at Ethereum, who worked with others to roll out a network upgrade known as the merge, roughly like swapping out the engines of a supersonic jetliner carrying $200 billion in cargo midflight without upsetting the drink cart. Our discussion with Kevin Owocki and Scott Moore of Gitcoin, which has provided millions in grants to social entrepreneurs in Web3, was illuminating and inspiring. Jimmy Wales, the founder of Wikipedia, was open-minded about Web3 but skeptical about Wikipedia’s benefitting from it. Several executives told us how they have evolved from thinking that closed-ended enterprise blockchains were the killer app of this technology, to realizing that public networks were the real innovation, as with the Web. Web3 skeptics shared their gripes (some legitimate) with me.

Venture capitalists Jesse Walden of Variant Fund and Arianna Simpson of Andreessen Horowitz described how their own personal journeys led them to Web3. Chris Giancarlo, the former chairman of the US Commodity Futures Trading Commission, weighed in on the direction of Web3 regulation and policy, as did Sheila Warren and Kristin Smith, who head up advocacy groups Crypto Council for Innovation and the Blockchain Association, respectively, in Washington, DC.

Web3 is also a cultural frontier, something apparent in conversations with Web3 artists like the pseudonymous pplpleasr, who is reimagining storytelling, and Jessie Nickson-Lopez, a screenwriter for hit shows like Narcos: Mexico and Stranger Things, who moonlights as a Web3 entrepreneur with her startup MV3. She wants to remake Hollywood. Several videogame executives in the Philippines and elsewhere told me how Web3 empowers cash-starved developers in the Global South with tools to fund new projects, elevating the creative power of typically marginalized groups. Culture needs a new business model. Web3 makes that possible. An eight-year-old Filipino artist named Sevi, who sells his paintings as NFTs to a global audience, raising enough money to pay for his autism treatment, put the societal impact of Web3 in stark relief. These interviews, my own wide reading, and the millions of dollars of Blockchain Research Institute research form the basis for this study of Web3.

This book is for everyone who cares about the future and wants to play a role in shaping it. Perhaps you’re a student weighing your career options, or an executive trying to understand what Web3 means for your business. Maybe you’re underemployed in Africa or India, and you see an opportunity to plug into Web3’s global labor pool and work for one of its native digital organizations, known as DAOs. Maybe you’re a social entrepreneur in the not-for-profit sector, and you’re evaluating different ways to raise funds or engage with young constituents. You could be an artist or storyteller exploring how Web3 tools can reward your creativity. Perhaps you’re a politician who wants to attract investment in your city, state, or country. Or maybe you’re a citizen who feels that the Web and the world could be better and fairer.

Web3 is the Internet’s next economic and cultural frontier. Some frontiers are for experts only and require vast amounts of capital or superhuman strength, like climbing Mount Everest or journeying to Mars. All frontiers present their share of risk and rewards. But the most bountiful of frontiers in history have often been pushed by everyday people, or at least the ones brave enough or driven by circumstances to pack up their belongings and hit the trail. Even the heartiest explorer needs a guide. With humility, I hope this one proves useful.

Part I

Disruptions

Chapter 1

The Web Is Entering a Third Era

Every so often, a new technology emerges, upending the social order and transforming the economy in profound and unexpected ways. Johannes Gutenberg’s invention of the printing press in 1440 democratized books and knowledge (for the literate) and, nearly eighty years after its invention, helped Martin Luther spread his ninety-five theses challenging church dogma, ushering in the Reformation. It also created an era of broadsheets, pulp fiction, pornography, and print advertising. James Watt’s steam engine in 1776 turbocharged the nascent industrial age, radically reshaped the natural world, and gave rise to new industries like railroads and telegraphy, giant corporations like Andrew Carnegie’s US Steel and John D. Rockefeller’s Standard Oil, and trade unions like the American Federation of Labor (later the AFL-CIO). The commercialization of Italian inventor Guglielmo Marconi’s wireless communications by the Radio Corporation of America in the 1920s with live news and corporate-sponsored programming created a new mass media and consumer culture and changed politics profoundly as both autocrats and politicians in democracies harnessed the airwaves, reaching into the homes of the poor and the emerging middle class, to spread fear and hope in equal measure.

In the second half of the twentieth century, the Cold War and the space race accelerated the convergence of computing and communications, giving us another breakthrough: the Internet, initially conceived in the 1960s to keep the US command centers operational in the event of an attack, and later commercialized with Tim Berners-Lee’s invention of the World Wide Web and Marc Andreessen’s Mosaic web browser in the 1990s. The Internet, and the Web specifically, has already altered our world in profound ways. Now it is entering a new era that promises once again to transform all industries, society, and culture.

The first era of the Web, now known as Web1 (1992–2002), the so-called Read-Only Web, was a broadcast medium that recast information such as mail, magazines, catalogs, newspapers, and classifieds, digitally. Wired, a print magazine, launched the banner ad business, and corporations everywhere replaced their interoffice mail department with email and marketing material with websites. Users could read information online but not interact with it. Web1 democratized access to information for those with connected computers but was static and unidirectional. Users were passive receivers of someone else’s content. Some of the best-known Web1 entities, such as Encyclopaedia Britannica Online, AOL, Lycos, and AltaVista, borrowed from pre-Internet counterparts.

The use of the words page and mail, as in a web page that one published and electronic mail, says it all: the mental model was rooted in paper and publishing. Web1 creations were skeuomorphic, that is, digital versions of preexisting products, services, or their business models.¹ Sometimes the first version of a new product or service resembles the old version on one or more dimensions, because either the designer or the designer’s targeted audience can’t quite imagine a totally different future. More often, designers and entrepreneurs leverage aspects of the old to help their audience transition to the new, so that the new feels more familiar. For example, manufacturers of the first electric lightbulbs shaped them like candle flames. Computer icons of trash cans, file folders, and mailbox applications are another example. For years, the first Tesla cars had prominent front grilles, even though electric cars don’t need them.²

The superpower of Web1 was it harnessed the power of third-party developers and so it was a system governed by open protocols, said Chris Dixon of venture capital firm Andreessen Horowitz. Anyone could come and build stuff—websites, app layer, and infrastructure layer across the board. It had this community-driven development, which I think is a very powerful force.³

The crash of the dot-coms in 2000–2001 created a need for a new kind of Web. Thanks to some important technology innovations, the Web became a medium for collaboration and computation, called Web2, or the Read-Write Web (2002–2020), with tools for creating, sharing, and discussing content, unwittingly programming the Web in new ways.⁴ To use computer programming jargon, we all could write to the Web, adding our own content. Internet-native communities and organizations formed. Consider Wikipedia. Its cofounders, Jimmy Wales and Larry Sanger, invited volunteers to contribute or translate entries, building an important global resource in the process. Wikipedia and other volunteer organizations stewarded but didn’t control or own their sites’ utility and development.⁵ In contrast, social media giants like Facebook and Twitter enabled individuals to create and publish their own content, form groups, and collaborate online, but users couldn’t attach clear ownership rights to their content, and they lacked any say in the governance of those platforms. As a result, the economic interests of the biggest Internet platforms [were and] are poorly aligned with their most valuable contributors: their users.⁶ Web2 and mobile combined to form natural monopolies in several areas, from search to social networking, e-commerce to mobile operating systems. Said Dixon, We used to have CBS, NBC, ABC. Now we have Facebook, Google, Amazon, Apple.⁷

The Failures of the Old Web

Tim Berners-Lee’s great invention is still a force for tremendous good in the world, but it has fallen short in key respects, as Berners-Lee himself acknowledged. Thirty years after the World Wide Web went live, he wrote in the Guardian about its legacy, including the perverse incentives that encourage ad-based revenue models that commercially reward clickbait and the viral spread of misinformation and the outraged and polarized tone and quality of online discourse.⁸

Facebook’s Mark Zuckerberg joined Jeff Bezos of Amazon and Sergey Brin and Larry Page of Google as the magnates of the new oil: user data generated from user attention, which was fracked, analyzed, and sold to advertisers. With the marriage of personal digital assistants, cellular telephony, and 3G connectivity came the smartphone, putting supercomputers online in the hands of billions. The smartphone camera made everyone a documentarian of their own lives, streaming a deluge of data. Mobile combined with the Global Positioning System unleashed so-called sharing economy platforms to package and peddle other people’s excess capacity. Sharing economy is, of course, a misnomer: With Uber Technologies Inc., for example, drivers share their time and resources but do not participate in the upside of the platform and have no say in how Uber governs it. Likewise, riders make these networks valuable, but they have no economic or governance stake in Uber unless they’re institutional investors or Uber insiders.⁹

Berners-Lee shares Web3 proponents’ concerns about Web2. However, he is unenthusiastic about blockchain, one of the core technologies of Web3, as a solution to these problems. Blockchain protocols may be good for some things, but they’re not good for Solid, he said, speaking of his own project to decentralize the Web and improve privacy while putting data in the hands of Internet users. In his view, blockchains are too slow, too expensive, and too public. Personal data stores have to be fast, cheap, and private.¹⁰

Berners-Lee has also shared his frustration with the public’s conflating or confusing Web3 with what he called Web 3.0, meaning the semantic web, where computers could read and process data from the Web to the benefit of all.¹¹ He said we should just ignore Web3 because it’s not really the Web at all. In a sense, he’s right. Web3 as a concept is emerging; it is a radical departure from the original technology and architecture of the Web. Further, Berners-Lee’s Solid could help solve the problems of data capture and ownership that he and others have identified with Web2. When the inventor of the World Wide Web speaks of its future, we should listen.

WEB2 ADVOCATES THOUGHT the new writable Web would remove gatekeepers. Instead, Web2 giants simply became new gatekeepers. When the government of Australia introduced a new law requiring Facebook, Google, and others to pay Australian news outlets to feature their links, Facebook responded by blocking all news content in a country where 39 percent of people get their news from the service. It did this in the middle of forest fires and the COVID-19 pandemic, effectively shutting off access to the national weather service and government health officials.¹² People were awaiting word on vaccination distribution. The government capitulated and offered Facebook various concessions.

With reams of data at their disposal, Web2 platforms devised ever more sophisticated tools to profile and target users in ways that Nielsen couldn’t easily deliver for CBS, NBC, and ABC, even at its zenith. Social media specifically targeted those receptive to certain messages, regardless of their truth, amplifying extremism, harming public discourse, spreading misinformation, and, according to many scientists who’ve studied it, altering the chemistry of the mind.¹³ An internal audit of Facebook concluded, Our algorithms exploit human brain’s attraction to divisiveness and were driving people toward self-reinforcing echo chambers of extremism.¹⁴ So far such warnings have not spurred much soul-searching in the C-suites of Web2.

As more commerce moved online, Web2 businesses as well as banks and payment firms like Visa and Mastercard also became all-powerful financial intermediaries of the digital economy. Meanwhile, the value of all the collaboration and communication accrued to centralized platforms such as Apple, Google, Facebook, Amazon, and others as they harnessed user data, app developer data, and brand data to create immense value for themselves within their walled gardens.

This model worked well for a time, but it overwhelmed users with ever more targeted ads and page recommendations, and it exposed their data to hackers.¹⁵ Imagine if General Motors did not pay for its steel, rubber, or glass—its inputs, economist Robert J. Shapiro told the New York Times. That’s what it’s like for the big Internet companies. It’s a sweet deal.¹⁶

As natural monopolies, Web2 giants stifled competition as they consolidated network power. Founded in the 1990s and 2000s, these companies were flexing their muscles, killing off or acquiring upstart competitors. For example, Facebook snapped up FriendFeed in 2009, Friendster’s patents in 2010, Friend.ly in 2011, Instagram and a wallet app in 2012, and WhatsApp and Oculus VR in 2014, to name a few. But it didn’t stop there: it bought technologies for location discovery, facial recognition, speech translation, fitness and activity tracking, voice recognition, emotion detection, biometric identification, and a brain-machine interface that translates neural impulses into digital signals—setting the company up to collect the most personal data yet for profiling each user.¹⁷ An attempt in 2013 to buy Snapchat for $3 billion failed. From Facebook’s perspective, these deals were sound decisions; in other eras, corporate giants used their buying power to roll up competitors. But for Internet users today, the model looks more like a Faustian bargain and an increasingly unsustainable status quo in need of a major rethink.

Birth of the New Web

Following the financial crisis of 2008, just as the mobile Web was taking off and Web2 giants were consolidating their power online, an inventor named Satoshi Nakamoto surfaced to lay the foundation for another era of the Web. Satoshi released the Bitcoin white paper and then bootstrapped the first publicly available tool to send value over the Internet peer-to-peer with nothing more than a computer and an Internet connection.¹⁸ Before Bitcoin, this was not possible without trusting a middleman. Bitcoin became public infrastructure for payments the way email and the Web became public infrastructure for information. What was remarkable about Bitcoin was that it worked, setting the stage for much bigger commercial, cultural, and political upheaval.

The Web is entering a third era, Web3, the Read-Write-Own Web (2020–), which can democratize tools for owning of the Web’s key platforms, organizations, and assets and align incentives of users with the technologies they use. Web1 and Web2, though very different, were still information media. Together they make up the first era of the Internet. With Web3, the Internet is entering a second era—the Internet of value. In our book Blockchain Revolution Don Tapscott and I explained how the Internet is entering a second era. A revolutionary technology known as blockchain is ushering in an Internet of value where assets can be represented digitally, owned, transacted, and secured peer-to-peer. Blockchain is bringing a new Web and a new Internet.

Web2’s missing piece was digital property rights. All of us who use the Web create value—virtual goods or digital assets that have value. We write to the Web and create value, but Web2 giants instantly expropriate that value. Users don’t own the virtual goods they create, they can’t monetize their data or manage their privacy, and they have no say as stakeholders in how the services they use are run. Every time you tweet, form a group on Facebook, upload a photo to Instagram, make a TikTok video, or publish to YouTube, you are creating value that you can’t fully capture. Every time you do almost anything online, you leave a trail of intimate data about you—what you buy, eat, say, where you go, who you associate with, how you look, what interests you, which causes you support, how you access information, and how long you spend reading certain material. Get the picture?

Sometimes you even pay real money to create value for the platforms you use. Consider videogames like Fortnite, where you must buy that game’s digital goods to fit in and compete effectively. But you can’t take them with you. If the game developer gets acquired and shutters your favorite title or changes its code, you may lose your assets forever. We are not owners but renters online. Arianna Simpson of Andreessen Horowitz said, Those aren’t really assets in the traditional sense. You don’t have ownership; there are no property rights. They exist inside someone else’s universe at their privilege.¹⁹ This is bad for the user and limits the economic potential of the Web. Despite these limitations, Internet users still spend $100 billion a year on digital goods that they don’t truly own. Matthew Ball wrote in his book The Metaverse, The virtual hat, plot of land, or movie that a user buys cannot truly be theirs because they cannot ever control it.²⁰ Property rights laid the groundwork for prosperity in the industrial age. Digital property rights—ownership online—will underwrite prosperity in the information age.

Ownership of digital assets, or tokens, is the foundation to Web3. It gives people an economic stake in their digital existence. Ownership enables new models of finance, as individuals leverage their digital assets to earn, save, transact, or invest peer-to-peer, foreshadowing the biggest upheaval to finance and money in centuries. Kevin Owocki, Ethereum pioneer and founder of Gitcoin, said, Property rights in the digital realm are not something that we’ve had before. If you think property rights were important for the evolution of finance in the real world, then you should think they’re important for Web3.²¹ With ownership also comes new forms of identity: Internet users can use Web3 tools to prove attributes about themselves, their Web3 identities complemented with biometrics and proof of government ID, what videogame entrepreneur Beryl Li calls proof of humanness.²² Finally, ownership gives users a say in how platforms and services operate. Governance rights promise a more representative and fairly run Internet where platforms are accountable to users. Simply put, Web3’s leaders posit that Internet users should have privacy in transactions, sovereignty over their digital self, and property rights for their assets online.

Web3’s leaders and advocates are also diverse, global, and young and empowered with technology tools that existed only in the domain of science fiction a generation ago. Dispersed technology will distribute power, influence, and value creation in Web3. Though there is no single Web3 culture any more than there is an electricity culture, some common themes run through this community of users and developers. Early adopters are, by their nature, experimenters who aren’t afraid of reimagining the economy from first principles, even if they’re playing with new and untested tools.²³ Like Web1, Web3 has a jaunty, even irreverent vibe. The stakes are high and consequences weighty, but the memes are lighthearted. When everyone calls you crazy, it helps to have a sense of humor. Web3 is also open. It’s not just that it’s open source or permissionless, said Tim Beiko, a developer of the popular Ethereum platform. When you build something on Ethereum, anyone can then interact with it. Not only can they see the code, but they can plug into your thing directly. That creates a huge culture of openness and collaboration.²⁴

Web3’s builders are a capitalistic bunch competing aggressively in an open market. But, in general, Beiko’s sentiment holds true. The one exception would be hard-core Bitcoiners who (to paraphrase a line from Tracy Kidder’s 1981 Pulitzer Prize–winning book, The Soul of a New Machine) harbor very strong feelings about bitcoin, like Cossacks toward their horses.²⁵

Life, Liberty, and the Pursuit of Digital Property

Property rights are foundational to a free society, democracy, and a functioning market economy, a concept first articulated during the Enlightenment but expanded greatly through the centuries. Today they are a cornerstone of a modern society and market economy. Property rights, documented in contracts enforced through the consistent and impartial rule of law, anchor all investment, capital formation, and innovation. Indeed, contracts are the foundation of every asset class, every corporation, and all economic activity. The countries that govern these best reap the rewards of greater investment and innovation. This makes intuitive sense: Why would anyone allocate capital to a new business or any other investment for that matter if they were not sure of their ownership?

While exiled in Paris during the English Civil War in the seventeenth century, English scholar Thomas Hobbes wrote his seminal work, Leviathan. In this work, Hobbes advocated for a strong central authority, but rooted in law and the state rather than a single person, arguing human beings’ existence was solitary, poore, nasty, brutish, and short.²⁶ A few decades later, during the Glorious Revolution, which affirmed the primacy of Parliament over the divine right of the monarchy, John Locke published his Two Treatises of Government. His view of man’s natural state wasn’t so pessimistic, and his concept of government was rooted more in the rights of the individual, not in the absolute authority of the state. Rights derived from private property, not government fiat.²⁷ Of course, that was not how things worked. What was Locke’s remedy for the inconveniences of the state of nature? Property rights.

Web1 was not some barbarous state of nature—more Adam and Eve than Cain and Abel. Still, it was anarchic and disorganized, and it lacked a way for people to verify themselves without sharing personal information, as well as express digital property rights, represent community ownership, and develop other mechanisms to coordinate, organize, and fund the creation of value online. Web2 companies created a simple model where we get access to a gated and curated experience, and in exchange we contribute data to building these valuable platforms and agree to forgo any upside from our content or labor. We also agree to the terms of service without negotiation and often without reading them. We have no input into the platform’s evolution, its other participants, and so forth. To paraphrase Locke, despite our labors, our property isn’t properly ours. Instead, the platform markets our digital personhood to the highest bidder. In this respect, Web2 is more orthodox than enlightenment, more feudal than capitalistic. Surfing the Internet is more like serfing the Internet as we willingly forfeit privacy and data rights for the security of the digital estate.²⁸ However, under authoritarian regimes, Web2 applications can be instruments of social control and political repression.²⁹

Web3 technologies, on the other hand, can be instruments of economic, social, and political freedom. Rather than relying on governments to enforce our rights, blockchains can do it for us. Privacy is one of the most important things that Web3 can do over centralized systems, said Sunny Aggarwal, a serial crypto entrepreneur.³⁰ Digital bearer assets, known in the industry as tokens, enable us to hold and port valuable digital goods from platform to platform online. These goods can be currencies, securities, and other financial assets as well as collectibles, intellectual property (IP), our identities, our data, and the as-yet unimagined. Online there are no fixed hectares of property to claim. Only an infinite frontier. Cyberspace is likely to be in due course the richest of economic realms, said James Dale Davidson and Lord William Rees-Mogg in their seminal book, The Sovereign Individual.³¹

The word token as