Web5 Impact
Block [1] recently announced that it was going to "put you in control of your data and identity" with something it calls web5. Your mind may spin from the alphabet soup of technology involved, but some version of web5 will be built, and it will fix at least part of the Internet. Let's dig in.
On June 10, 2022, on stage at Consensus 2022, Mike Brock of the TBD [2] business unit within Block presented Web5: The Decentralized Web Platform [3]. He wants to lead a charge. Over the past thirty years, web idealism has devolved into the negative externalities of big tech data ownership. This Web5 movement intends to return power to the individual.
Retweeting the original announcement [4], Jack Dorsey (Block Head) said "this will likely be our most important contribution to the Internet." Why does Jack think this is so important? Because putting you in control of your data and identity addresses two huge issues on the Internet today.
First, today we set up unique accounts on almost every site that we engage. We share too much personal information with too many companies who exercise far too little oversight over the accumulated data. The rampant surveillance by black hat, big tech and government actors puts not only our personal lives, but our very democracy at risk.
Second, independent thinkers and creators have seen reduced capacity for livelihood as they engage in social networks. Large organizations can censor their content at any time and take away the communities that they have built themselves. Frustration is building, while our civilization devolves into a soul deadening stream of cat videos and Dua Lipa loops.
Will Block lead us out of this mess? Perhaps, but let's put this in perspective. The company wants to onboard over one billion unbanked people around the world onto Cash App. Those people don't have identity. They aren't served by the financial system today, mostly due to economics. They are the underlying reason for web5.
The company needs decentralized identity to exist, but any effort there collides with those fixing the developed world problems around data and identity. Thus, they introduced a project [5], not a finished product.
The want to align with others in the industry through "public, transparent and open source roadmaps" [6]. Part of the plan is to build on a base of emerging technology standards for Decentralized Identifiers, Verifiable Credentials, Decentralized Web nodes and much more.
What they will not do though, is follow the web3 vision as proposed by Gavin Wood [7], popularized by Chris Dixon [8], and outlined by Andreessen Horowitz [9]. Jack doesn't see Web3 VCs building a decentralized web. Their incentives will lead us right back to where we are today.
Instead, we should expect the following to happen. Block will introduce a decentralized exchange that helps the unbanked around the world get on Cash App. Over time, the sheer number of people using it and the diversity of adoption for other purposes will establish an open standard around the web5 technologies. [10]
Web5 does not displace web3. Crypto adds value now and in the future. Just look at Bitcoin, which is a compelling feature of Cash App. Rather, web3 companies must focus on business models that favor the individual or risk irrelevance.
Looking at the long term impact, one can see something more. Web5 standards will eventually eviscerate the extractive business models of surveillance economy titans such as Meta, Google and Apple. As of today, investors may want to view them as value stocks.
And as for the hundreds of millions of people around the world who will now onboard through decentralized identities and control their own livelihood? We can expect them to save their money, build small businesses, and move out of poverty. A very good thing indeed.