Returning ownership to the internet

A sort of review of Chris Dixon's "Read Write Own"

Some of you know I’ve been interested in what are sometimes called “cryptocurrencies” (like bitcoin) for some time. I was probably in part attracted by libertarian leanings (if we could detach money from the inflating hands of the government, that would be nice), and in part by being an early adopter of tech (we had the original model Roomba, I’m just saying). I just finished Chris Dixon’s book Read Write Own and quite enjoyed it… it begins with a history of the internet (probably the best short history I’ve ever read), and ends with the promises of what he would call blockchain networks. Bitcoin was the first of these, and unlike many of its successors bitcoin mainly wanted to be money, but now there are hundreds or thousands of networks with diverse goals in operation.

In a nutshell:

Web 1.0: Protocol Networks

The early internet was based on protocol networks - HTTP for websites, SMTP for email, and the like. There wasn’t any central authority in charge of them or, to what extent there was, it was only concerned with maintaining basic and open standards. So anyone could build applications or content on these networks (and they could invest lots of money to do so) with confidence the rules would still be the same five, ten years down the line. (In fact, these networks are still in use, literally right now as you visit this website or read this post as an email, basically unchanged.) And if you decided you didn’t like your website hosting company or whatever, it was very easy to take all your stuff and walk over to a new host (or host yourself) - you were the owner of the stuff you made, and you could take your audience with you (they probably wouldn’t even realize you had changed web hosting companies).

It is also worth saying that, perhaps, one of the reasons protocol networks were able to “win the day” is because the early web was largely ignored. Governments helped set it up but after that, it was apolitical nerd stuff, not worth our regulation. Big corporations similarly underestimated how important it would become. Imagine if an early Google had controlled 95% of the email market - well, then Google basically could have changed the standards for email however it wished, a somewhat scary thought. But that didn’t happen, the protocol standards were objective and unchanging, and applications built on top of them were pretty decentralized.

(Lot of stuff like that in the world today, by the way. Science works best when most people are ignoring it. When media and governments start to care, watch out.)

Web 2.0: Corporate Networks

Web 2.0 brought us Facebook, Twitter, YouTube, and so on. On the plus side, they work very well (until they ban you), they made it easy for anyone to become a writer or podcaster or whatever, made it easy for anyone to build an audience. I’m going to complain now but, let’s admit, those were good things. But, one, they’re stingy - 99% of the income your activities produce for Facebook goes to Facebook (well, for most of us, that’s 100%, but in any case on average they’re terrible). And two, worse, they can and do change their rules whenever they want, which makes it dangerous to invest money to build any additional applications (or even your own following) on top of them. Woe to the company whose entire being depends upon some feature of the Facebook API that could be deleted tomorrow, some have been destroyed that way. And if you choose to leave or get kicked off these platforms, you can’t take your audience with you to another platform, you have to start all over again.

Now interestingly, if you’re reading this on Substack.com, you’re reading this on a corporate network… but a particularly generous one, actually, with pro-free-speech credentials and a take-rate of only 15% for people who offer paid subscriptions (the writer gets 85%). And, because a lot of Substack is distributed via email (the Web 1.0 protocol network), and they let you export the email list, if you choose to leave Substack you actually can take your audience with you, and some have. But that’s rare in the corporate networks.

Web 3.0: Blockchain Networks

Now arriving - Bitcoin, Ethereum, Solana, Aptos, Sui, and many more not yet invented. Blockchain networks are sometimes seen as giant ledgers or spreadsheets in the sky that anyone can read and to which, under certain circumstances, changes can be made, and that captures some of the truth about them. (The bitcoin blockchain is, at least, a record of every wallet address and how much bitcoin is allocated to each address.) More accurately but harder to visualize, they can also be seen as giant distributed computers that exist nowhere in particular and also everywhere, with public code and programming languages and the ability to respond to commands.

If we do this right, blockchain networks will give us the best of Web 1.0 and Web 2.0 combined, and then some. To begin, of necessity, these networks have some initial founder (the anonymous Satoshi Nakamoto for bitcoin, Vitalik Buterin for Ethereum), but the pattern has been that quite soon, actually, they are set free from their founders. No one person owns them anymore, the community does (through a network governance token that carries voting rights, say) or, in a sense, nobody does. And so we get the stability of the protocol networks of Web 1.0. Invest money to build your project on Ethereum, the base code is public and changes only very slowly, and actually no one can kick you off of it.

We also get the real ownership of Web 1.0. If you’ve played with cryptocurrencies at all, one of the things that feels magical about them is your ability to move them around without invoking an intermediary - you own them, they are yours, do whatever you’d like with them. Of course we are used to this with physical objects, but a lot of stuff in the digital world “lives” in the “theme park”, a metaphor Dixon likes, of whatever company you bought them from, and if that theme park dies or changes the rules, you lose the stuff you sort of imagined you owned but never really did. We’ve purchased a lot of movies on Vudu, and I’m not actually sure what would happen to them all if Vudu were to go bankrupt. But I know our old DVDs are mine.

You can imagine taking this into, for example, the gaming world, where an object you buy in a game lives on a blockchain so that even when that game goes defunct, you still have it, and perhaps some new game will choose to integrate items from that blockchain. Or, even if the game bans you for saying “girls can’t be boys” or something, the stuff you bought is still yours. Dixon has a nice quip that Google’s slogan was “don’t be evil”, which sounds nice but you’re still trusting Google to abide by it. The slogan of blockchains could be “can’t be evil”, their behavior is forever constrained by their public code.

The harder part, perhaps, and where some projects have struggled, is getting the features and ease of Web 2.0 without the drawbacks of Web 2.0. He has a nice quotation from Vitalik Buterin.

Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.

So something like that is one of the hopes of Web 3.0, and you can see that one of the opportunities of Web 3.0 is fixing the take-rate problem. Facebook returns 1% of the income you have generated for Facebook back to you. Maybe a social network that lives on the blockchain returns 90%, and uses (from its public coding) the other 10% to serve other network functions. (The social network Minds tried something like that - I have an account there - and actually, when Twitter was really going downhill, Minds seemed to be growing in popularity. But then Musk bought Twitter, and it much improved, and we all feel safe again, and so there was no need to run away anymore.)

So, and I won’t belabor this point, but much of the second half of Dixon’s book is about how to design a blockchain network so it actually works, so it attracts participants and grows, so people invest money and time to make it better. Because these projects live on network effects. Hundreds of blockchains probably have better technology than bitcoin, but bitcoin is valuable because lots of people use bitcoin. Twitter, with all the same technology but only ten users, would be pointless. Growing a blockchain network probably is harder right now than growing corporate networks, and we’re still experimenting to figure out what works best.

One obvious problem is money - Facebook invests money to make Facebook better because then Facebook gets the increased profits. How does a blockchain network attract coders and users? One interesting feature of blockchain networks has been that the network token (BTC or ETH or SOL), which might serve many purposes for the network, is also the money of the network (with real USD value, which is all the normal media cares about). One very common tactic, for example, is to liberally dump network tokens onto early participants, to get their participation, and then reduce the dump once the network is established. Again, if you follow bitcoin at all you have heard about the “halvings” - the amount of bitcoin given to a “miner” for doing work on the network started at 50 bitcoin per block, but it has been “halved” many times (per the original bitcoin code), and next month the block reward will fall to 3.125 bitcoin. Early participants were rewarded more generously than later participants, and this has been a very effective way to get early investment in these networks. Many other possibilities exist, you can read the book for that.

The End

Anyway, I found all of that fascinating, and it gave me some hope for Web 3.0. (It gives very little particular guidance on how to invest, if you wanted that! Web 3.0 will, hopefully, succeed. Whether or not your favorite presently-existing blockchain network will succeed is a much harder question.)