Our Vision of the NFT Ecosystem

Web3, Decentralization and Governance

If one of the promises of Web3 is to have control and ownership of their data, how much investment does a user need to be in a governance process for their data to really belong to them?

 3 min

Jump to

There are several ways to qualify the versions that the internet has experienced. The simplest way to do so comes down to two major qualifications:

  • The ‘Web1’ corresponds to the period when it was only possible for the user to consult a website without actually being able to interact with it.
  • The ‘Web2’ allows the user to create content and publish it online. Social networks are the best examples of Web2.
  • The term ‘Web3’ was first used in 1999 by Tim Berners-Lee who imagined a Semantic Web. This semantic web would be a web of data (or data web) that can be processed by machines.

Is it a coincidence if 10 years later, Bitcoin transactions have started exchanging data while being validated by machines? The semantic web having been very little adopted, the Web3 today concerns everything related to the cryptocurrency industry, including NFTs.

The Web3 Allows a Digital ‘Real Ownership’

One of the primary goals of Bitcoin is to be able to carry out a monetary transaction without a trusted third party. Instead of entrusting their money to a central agency like a bank to manage the bank account, everyone can “become their own bank”. Rather than printing notes endlessly, there would only be 21 million Bitcoin in circulation.

Bitcoin has made it possible to actually own a digital asset that cannot be controlled or censored by a trusted third party. In addition, the transactions are public. Anyone can verify and validate network transactions mathematically without trusting a third party.

With its limited supply and its uncensorable and public transactions, Bitcoin has made it possible to quantify the unquantifiable in a digital space. Since blockchain doesn’t lie, this notion of digital scarcity has induced a Real Ownership sentiment for digital assets

Since it was now possible to have real ownership of its financial assets, the next step was to extend this possibility to all other types of digital assets. But a question arises: With actions that will exist as long as blockchain exists, do all our interactions with the internet deserve to exist forever?

Decentralization is a Spectrum

Thanks to the large number of miners on Bitcoin, it is the most decentralized and secure cryptocurrency. By design, Bitcoin is not made to process a high number of transactions. When the idea of increasing the size of blocks to support more transactions was proposed, the majority of Bitcoin miners refused.

One of the reasons given for this refusal was simple: by increasing the size of the blocks, the number of gigabytes needed to install a full Bitcoin node would also increase. If accessing transaction validation required too expensive hardware, this would have the direct consequence of centralizing this role to a small number of actors.

By making this choice, the Bitcoin community assumed its identity:

  • Accessible
  • Transparent
  • Decentralized
  • Secure
  • Slow

And confirm that Bitcoin alone would not be suitable for all uses. It is for this reason that other crypto-currencies exist, faster, less secure, and more centralized… Each has its specificity adapted to a particular use. 

According to the blockchain, the ease of access to its governance process will determine its level of decentralization. When a critical update of a blockchain needs to be made, would you prefer a quick decision made by a small group of decision-makers or a slower decision decided by consensus by many actors?

Owning and Governing the Web3

If one of the promises of Web3 is to have control and ownership of their data, how much investment does a user need to be in a governance process for their data to really belong to them? 

Understanding the governance of crypto-currencies makes it possible to determine its mechanics and define its identity. This identity is very important because depending on the governance choices adopted, validating and verifying transactions as well as updating the blockchain will be up to a more or less important group of people. 

The more governance decisions are centralized within a small group of decision-makers, the more information that flows through the blockchain can be censored easily and quickly.

On one hand, an open and uncensorable internet where everyone can take part in governance. On the other hand, one minority decides for the others. In between, billions of possibilities are being experienced every day in the current Web3. Depending on the values advocated by one community or another, ethical questions will arise…

This work is licensed under a Creative Commons Attribution 4.0 International License.

Keep in touch

© 2018 - 2024 NonFungible Corporation

All rights reserved.