Everyone I know sent me the same link over the weekend. A lengthy video essay by Canadian media critic Dan Olson, titled “The Problem With NFTs,” has been making the rounds on the internet since it was posted on Friday. 2.6 million people have already seen it, with more expected.) During 138 minutes of painstaking research into the 2008 financial crisis, the rise of Bitcoin and Ethereum as well as the rise of NFTs and DAOs, Olson concludes that what we’ve come to refer to as “Web3” is effectively beyond saving: the technology is too broken, and its creators are too indifferent to its failures, for it to ever meet the promise of its most star-struck backers.
Three things Web3 With NFT
On my Twitter feed this week, I witnessed a number of crypto fans dismiss Olson’s criticisms out of hand. It’s not a surprise that crypto3 is rife with scams, that current blockchains are inefficient and expensive, or that digital wallets are difficult to use and plagued with risk. In addition, many Web3 developers will find Olson’s tone condescending and hectoring in the YouTube video essayist’s house style; his target is not those working in crypto, but rather everyone he thinks ought to be terrified of those people.
And yet the combined impact of Olson’s arguments is enormous. Using the lens of rising inequality, pandemic isolation and loneliness, self-dealing venture capitalists, and a frantic feeling among young strivers that the future is only ever getting smaller, his essay analyses the growth of cryptocurrencies. All of this comes at a particularly good moment, given the recent drop in cryptocurrency prices.
Olson’s explanation of cryptography as a whole is lacking. Much has been left out, such as the many people who have seen a significant improvement in their financial status as a result of investing in cryptocurrency. As a required corrective to the crypto hype cycle that has been accelerating daily with each new NFT release by a corporation, celebrity Bored Ape buy reveal and unexpected token airdrop, many viewers will still find it necessary.
You should watch it for all of the above reasons. You can skip to Olson’s three-minute conclusion if you’re already familiar with the storey of Bitcoin; if nothing else, the movie is conveniently separated into chapters.). Cryptocurrency is here to stay, and those who feel strongly in its future need to be aware of this.
It doesn’t matter what you think of Olson or his broader thesis, the current state of Web3 is a mess—and not only in the sense that we haven’t yet finished developing it. Assuming the work gets started soon, Web3 is a mess that could take five or more years to solve.
Then there’s this: I’m not sure if someone is actually working on these. Reading the fundraising announcements, talking to product folks, and following the Twitter feed are some of my favourite ways to stay up to date.
This reminds me of what we were meant to be watching for in 2021:
music NFTs! I saw a long essay the other day where investors discussed “what to watch in crypto in 2022.” DAOs are experimenting with new ideas! “Phase I: building the infrastructure.”
Between Moxie Marlinspike’s critique of the space and Olson, it is evident that progress has been poor to nonexistent in many areas. So, with that in mind, here are three crypto-related projects that you should be working on in 2022.
Improve the security, reliability, and usability of cryptographic transactions for the general public.
The blockchain is the subject of this narrative. This week some users discovered that some high-priced NFTs on the OpenSea trading platform had previously been offered for a fraction of their current market value. As a result, they were able to buy NFTs for pennies on the dollar, then re-sell them for a tidy profit of several hundred thousand bucks.
Only once and at the intended price may you offer an item for sale on a good marketplace. However, numerous listings were allowed at OpenSea. Transactions on the blockchain, on the other hand, cannot be undone. Hence, the losers here had no choice but to rely on the platform, which eventually reimbursed them. However, OpenSea’s statement to CoinDesk about the issue caught my attention:
“This is neither an exploit or a flaw, but rather an issue that emerges because of the nature of the blockchain,” an OpenSea official told CoinDesk via email.
We can all picture what it would be like to lose thousands of dollars because we mistakenly posted the identical goods twice at dramatically different pricing. Then imagine calling the marketplace to complain and getting the response, “Good news, this isn’t an exploit or a problem. Is this an issue due of the blockchain’s structure?
I doubt you’ll ever do business with that organisation again. But more importantly, I can’t image the average person doing business with a corporation like this. People who refused to submit their credit card information to e-commerce sites in the early days of the dot-com boom seemed paranoid to me. To conduct business on Web3, you must have a healthy dose of paranoia.
Olson makes a memorable point in his video that “smart contracts” are bug bounties. An excellent illustration of this can be found in the OpenSea saga. In spite of this, the public conversation about “crypto” and “scams” has been intimately intertwined for the better part of a decade. Scammers are continually inventing wild new schemes; here’s a tip about hackers delivering free tokens to people who are then tricked into spending their whole wallets completely.
Decentralized Blockchain Networks
They have a lot riding on this because their businesses depend on providing services that are both safe and easy for the general public to use. However, simply saying “we know, we know” will not suffice. It’s time to see if Web3 can deliver comprehensive answers in this area, and quickly. However, OpenSea did, for the record, change their listings manager this week in an effort to avoid future incidents like this from occuring.
Decentralized blockchain networks, which can be designed to perform anything you want, are a major selling point for Web3 supporters. As soon as Ethereum gained traction, it was instantly swamped by traffic and had to be shut down. There are fees for using a computer on the Ethereum network, and a single transaction can cost more than $100. A social network on the blockchain today would cost you $75 to create a “free” Facebook account and another $75 every time you wanted to post something, so imagine that for a moment.
Ethereum is now undergoing a makeover in order to become more efficient, which means faster, cheaper, and using less power. Technologists, on the other hand, are constantly announcing improvements to the blockchain. Solana, for example, received $314 million last year to construct “the quickest blockchain in the world,” which it claims is the most secure.
In light of this, let’s take a look at how the world’s fastest blockchain performed on Sunday, when many people used it to buy and sell assets as a result of the aforementioned crypto crash.
Frank Chaparro, as seen on The Block, says the following:
Trading on Solana’s blockchain, a technology that proponents trumpet for its scalability and rapid transaction times, became impossible for all traders on Friday as the price of all cryptocurrencies fell. The number of transactions per second (tps) was drastically reduced.
Saturday was a washout because of such concerns. It has been reported that the blockchain is experiencing “high levels of network congestion” as a result of too many “excessive duplicate transactions” on the system.
Since Solana is the quickest blockchain until too many people are using it at the same time, it performs just like any other blockchain—which is to say it’s not very good.
My quantum computers may validate new additions to blockchain ledgers for a fraction of a cent within seconds in the future because to Moore’s Law, I don’t know. However, if Web3 is to be widely available, it must be far faster, more expensive, and less inefficient than it currently is. So far, nobody appears to be any closer to deciphering the code in this area than usual.