Why We Need Web3: Elon and Zuck Just Proved It Again

Life happens on Web 2.0 these days – so it can be hard to imagine what could be next or bigger than this! And yet Big Tech companies like Twitter (NYSE:TWTR) and Meta Platforms (NASDAQ:FB) are bogged down in drama and disappointing quarters. Their troubles only underscore the greater possibilities of Web3.

Four letter blocks, spelling out Web 3.0.
Source: Shutterstock

After Twitter founder Jack Dorsey resigned as CEO, apparently under pressure, his friend Elon Musk stepped into his shoes as Twitter’s “celebrity in chief.” Just in the past week or so, Elon has disclosed a 9.2% stake in the company…proposed a bunch of changes to Twitterturned down his invitation to the board – which would have capped his ownership at 14.9%…and is now offering to buy 100% of Twitter, instead.

A couple things to keep in mind here. Elon is not only a large holder of TWTR – as well as Dogecoin (DOGE-USD)… He’s also its most prominent user. When he decides to fire off a tweet to his 81.7 million followers, he can singlehandedly drive the discourse – and prices. So when he talks about “transforming” Twitter as “a platform for free speech” (and a platform for DOGE), Elon himself stands to benefit.

The other thing to note is the lack of public accountability that a private company has. And that’s what Twitter would become if its board accepts Elon’s buyout. (As I write, they have not responded to the offer, nor any other potential offers.)

Crypto fans on Twitter are largely excited about his proposal, as Elon’s calls for free speech align with their Web3 ideals – taking power from Big Tech and giving it back to the users (and investors). But there’s no evidence that Elon will take Twitter private and open it up on the blockchain. In fact, his only real comments on Web3 are that it’s “more marketing buzzword than reality right now”…and poking fun at it:

Similarly, Mark Zuckerberg made a pretty speech in October about the metaverse as an empowering utopia where “you own your items, not a platform” … but, surprise! In Zuckerberg’s Horizon Worlds, you only own half:

That’s pretty standard for Web 2.0 platforms, including Roblox (NYSE:RBLX), which currently comes closest to what Zuckerberg’s going for with Horizon Worlds. But Roblox is struggling. And so is Twitter, for that matter!

Anyway, 50% off the top is probably fine if you’re Nike (NYSE:NKE) or Louis Vuitton, with big marketing budgets to fund their trendy metaverse offerings. But it’s hardly “empowering” to the rest of us!

Luckily, people are taking it into their own hands – and many of the Web3 startups have to do with content and creative control.

Context

It’s not so easy to get people on board with the next Twitter or Instagram when the real thing has a 10+ year head start…

But what if crypto wallets already are the social feed of the future? That’s what I’ve argued before in The New Digital World when I featured MetaMask and the essay from Jay Drain Jr. of Maven Ventures, “The Crypto Wallet: Unlocking Digital Identity.”

Source: JayDrainJr.substack.com

Drain’s thesis is pretty brilliant – but he’s not the only one with this vision of Web3. As The Block reported just this week:

Crypto startup Context announced a $19.5 million seed round led by early-stage investors Variant Fund and OpenAI CEO Sam Altman on Wednesday.

“The startup, which allows users to monitor other people’s wallets and transactions through an Instagram-esque feed, also released a new version of its product that will now help users automatically find the wallets linked to people they follow on Twitter.

“Founded last year, Context believes that watching wallets of friends, influencers, DAOs and celebrities will be the ‘follow/subscribe of the Web3 era’ and takes inspiration from platforms such as Instagram and Pinterest.”

Context has a sleek interface that recalls the early days of social media – before each platform went public and cluttered itself up with new features (and ads). As of now, Context feels very “inside baseball,” geared towards members of decentralized autonomous organizations (DAOs) and other crypto communities. But its founders and investors include alumni of mainstream sites Quora and Vine, plus the up-and-coming payment company Stripe. With venture capital coming in, it’ll be interesting to see what role Context plays in the “wallet as digital identity” trend.

Mirror

“There are many great conversations happening on Crypto Twitter. But was a Web2 platform the best place for these ideas? It was finally time for us to put Web3 ideas where they belonged: on Web3,” says Mirror.xyz of the idea that led to its founding in 2020.

If you’ve ever read an article on Medium or Substack, you’ve got a sense for what Mirror.xyz is like. But if you blog on Mirror instead, you can mint your writing as an NFT. As a reader, you can not only follow your favorite authors…you can provide them with monetary support to keep the content coming. This makes it a much more rewarding outlet for your writing!

Mirror is, effectively, a crowdfunding site as well as a publisher, thanks to features like Auctions and Editions.

Not only have “writers earned thousands of dollars worth of ETH on single blog posts,” according to Mirror, “we’ve helped filmmakers, writers, musicians, e-sports teams, grant giving DAOs, media DAOs, and party DAOs start their communities,” and “our members have used Editions to support open source projects, donate to relief efforts in Afghanistan, [and] provide early access to an upcoming book.”

Glass & Sound

“As we move into Web3…wallets are becoming a place where people want to spend time,” writes Gaby Goldberg of The Chernin Group for The Generalist. “We’re seeing more demand for wallets as a place to hold NFTs (see Rainbow or Coinbase Wallet) and multimedia experiences (see Glass, Sound, and Altered State Machine).”

Similarly to Mirror.xyz for writers, Glass.xyz and Sound.xyz are providing ways for you to purchase music and support artists – directly.

For example, Selah Marley (daughter of Lauryn Hill and granddaughter of Bob Marley) is among the artists dropping music videos not through a label – but as NFTs on Glass, which is a decentralized video platform.

“A majority of internet bandwidth is used to watch videos,” according to a blog post by Glass. “Video should be a public good. And yet… like much of the internet, it is not.”

When content delivery networks (CDNs) are centralized, Glass explains, they’re “expensive to operate since it requires renting or purchasing data centers in major cities. Decentralized CDNs reduce the costs and improve the spatial distribution of computers around the world.” It also allows creators to own and monetize their content directly on the blockchain, through Tips, NFT Editions, and Auctions on Glass.

Likewise, on Sound.xyz, artists can hold Listening Parties to promote new music directly to fans – who can then “mint an NFT of the track to leave a comment on their favorite part of the song,” and “post-release, listeners can support by collecting the Music NFT.”

The Listening Party will probably draw a smaller crowd than those streaming on, say, Spotify (NYSE:SPOT)… But, given that Spotify earns you less than a penny per stream, the payoff on Sound.xyz can be much larger. Even when it first launched in December, “Sound generated 21 million streams’ worth of revenue for seven independent artists, in under seven minutes!”

That’s just the tip of the iceberg; nowadays there’s even a Web3 community for professional chefs, where your “membership badge” is a playful NFT cartoon of a pizza slice. It’s a whole New Digital World out there, and sooner or later, even the tech billionaires of the ‘90s and ‘00s are going to have to live in it.

On the date of publication, Ashley Cassell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. To have more news from The New Digital World sent to your inbox, click here to sign up for the newsletter.


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