So What About the Hype (and Hucksterism) With Web3?

READ MORE: How a Wikipedia editor became one of the loudest Web3 skeptics (Fast Company)

For every positive story about Web3, there are also many negative one that don’t get the same publicity. The plus side of the ledger includes the success of the Bored Ape Yacht Club NFT collection, which counts Madonna as its latest celeb member; the pending launch of content creation and subscription platform Bolstyr, and a new Roku channel dedicated to showcasing NFT art beyond a niche audience. But there are plenty of failures or plain scams which fly under the radar.

Molly White, a software engineer and volunteer Wikipedia editor, has made it her mission to set the record straight. At Web3 is going just great, she calls out the hucksters and scammers mainly by listing all the news stories of mishaps and rip-offs.

There are a lot of them.

“Everyday people were being told that they should put their money into crypto in one form or another, and I was beginning to see a lot of projects that to me seemed to be targeting the particularly vulnerable,” she told Mark Sullivan at Fast Company about why she felt compelled to start the site. “Totally unregulated apps [were] encouraging people to take out sketchy loans to get out of a financial pinch, or projects promising to help people ‘invest’ their retirement money into crypto.”

Her main beef with Web3 is the blindly uncritical nature of most of the press and information about it. The hype has tended to swamp the technology’s failures promoting an overwhelming narrative of success and benefit when the reality may be different.

“There’s a reason that get-rich-quick schemes are so enticing, and because it tends to be the success stories that get the attention, I think people start to believe that it’s actually common for people to make money from these things,” White says.

“I realized it could be really informative and meaningful to gather all of these disasters in one place, to both show how unfit this technology is for practically all use cases, and to show just how much people are getting scammed when they try to dip their toes in.”

The chief culprit, she argues, is the sector’s lack of regulation.

“People seem to have this opinion that, because a cryptocurrency is involved, they can do anything they want: operate a Ponzi scheme, or sell unregistered securities. To some extent, they have been able to do anything they want, even the blatantly illegal stuff, because the regulatory enforcement has been so slow.”

She is also one of a growing number of voices looking to reveal Web3 as the emperor’s new clothes. Are DAOs, NFTs, blockchains and cryptocurrencies a way of remaking the web in all of our names as some believe or just in the names of the same old few?

“It’s a moneymaking opportunity,” says White. “People are putting a lot of money into crypto, and despite all the ideological talk about how crypto might democratize wealth or remove such outsized amounts of it from the hands of a few big players (including some of the same enormous venture capital firms investing in crypto), that’s not actually what’s happening. The wealth is even more centralized in crypto, in many ways, and the space is beautifully designed for that to continue.”

Crypto also promises the opportunity of quicker returns than a lot of more traditional Venture Capital investments — If a VC firm’s share in a project is represented in crypto, they can cash out anytime, rather than having to wait for a company to IPO.

She finds that most DAOs are neither distributed nor autonomous, and the ones that are trying to be democratically different “have been organized by people who have done a lot of thinking about how such an organization might work in theory, but with little practical experience” of doing so.

White dismisses DAOs as pointless in the sense that there is nothing new in what they offer that can’t done better with existing structures like co-ops, the Wikimedia movement, or groups like Occupy Wall Street and Alcoholics Anonymous.

“I personally find it unlikely that anyone with significant experience in any group like this would ever argue that the goals or mechanisms of these groups could be fully, reasonably represented in code,” she says.

“DAOs are one of the best illustrations of the problem with a lot of Web3 projects: They are trying to find technological solutions that will somehow codify very complex social structures. A lot of them also seem to operate under the assumption that everyone is acting in good faith, and that project members’ interests will generally align — a baffling assumption given the amount of bad actors in the crypto space.”

Regulators are taking note and tightening the loopholes while the hyperinflation of NFTs is expected to level out “making it a lot harder for influencers to pump and dump tokens without disclosing their financial interests, or for people to promise impossible returns on what are clearly Ponzi schemes, or for people to sell what are pretty obviously unregistered securities.”

But take that away, and White says, “You’re just left with a slow, expensive datastore that doesn’t scale well, and some really complex hurdles to overcome around privacy and data ownership.”

NAB Show has just launched a Web3 Advisory Council to provide guidance on developing relevant education content around Web3 infrastructure.

READ MORE: Introducing the NAB Show Web3 Advisory Council (NAB Amplify)

It will have its work cut out navigating the truth from the fiction. On the one hand, the Web3 narrative urges companies to get into DAO and tokens and decentralized finance and business structures today or risk missing out on huge revenue; on the other hand, surely some caution is advised in the Wild Wild West of the next World Wide Web.

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