Centralizing the decentralized

Right now, Web3 is mostly just a loose bundle of complicated technologies and complicated questions. Who's in charge of Web3? What does Web3 even mean, really? Is Web3 crypto, is it the blockchain, is it a scam, is it the future of the global economy?

It seems everyone in tech has been reading a blog post from Moxie Marlinspike, the Signal founder (and as of yesterday, former CEO), cybersecurity pioneer and all-around Smart Guy About Tech. The post, titled "My first impressions of web3," gets at one of the most important tensions in the space: Is Web3 actually decentralized?

• It's all really just about servers, apparently. Part of the reason the web is centralized, Marlinspike argued, is that people don't want to build their own servers. And the blockchain is all about servers: "Blockchains are designed to be a network of peers, but not designed such that it’s really possible for your mobile device or your browser to be one of those peers." Already, companies like Infura and Alchemy are building AWS-like businesses for blockchains, and there are only a few players doing the actual interacting with the blockchain.
• "To make these technologies usable," Marlinspike wrote, "the space is consolidating around … platforms. Again. People who will run servers for you, and iterate on the new functionality that emerges. Infura, OpenSea, Coinbase, Etherscan."
• And you could argue centralization is … better! Marlinspike made the case that OpenSea might be a better platform without the blockchain-iness, and all the gas fees and complicated user interfaces that come with it. And it wouldn't be that hard for OpenSea to just publish a log of all transactions.
• Ultimately, "this is a gold rush," Marlinspike said. Most people aren't in it for the beautiful-future-of-the-internet stuff, they're in it to make money flipping crypto. And that could end in even more centralization.

The post is already something of a seminal Web3 text. Crypto Twitter has been arguing for weeks about these same big questions, and nearly everyone seemed to have thoughts about the post.

• Brian Armstrong agreed with a lot of the post, but argued that "there is a big difference between using a platform that also owns all the data also (web2) and a platform that is merely a proxy to decentralized data (web3)."
• Vitalik Buterin said users won't have to run their own servers, and developers can do the important work for them. "Users generally accept defaults given by developers," he wrote on Reddit, "and many developers really do genuinely care about decentralization and trustlessness (and growing legal issues with running centralized points of trust will push them to care more)."
• Balaji Srinivasan compared the state of things to Netflix selling DVDs: "They knew streaming was the future. But they also knew bandwidth was limited. In 2022, many web3 entities are partially centralized. They know decentralization is the future. But blockspace is limited."
• "It is like a horoscope," Harper Reed tweeted, "people who are pro crypto are like 'exactly. we got work to do,' people who are against are like ‘see that is why it is bad.'"

Marlinspike's post is a serious indictment of the way things work now, no matter how you feel about the ideology of it all. And he’s not wrong: Just look at OpenSea's ability to stop the sale of stolen Bored Ape NFTs, or Coinbase's stranglehold on the bitcoin-trading market, or the fact that Andreessen Horowitz seems to basically be funding the entire industry.

The biggest challenge with all this? Centralization has lots of upsides. Like Marlinspike points out, platforms can move faster, be cheaper, do cooler things, even offer more security and privacy. Yes, users will always be at the whim of the platforms, but it's not historically clear that most people care. In some ways, the purest version of the Web3 movement is a bet that the world is different now, that people care more about tracking and privacy and censorship and will change their digital habits to support their values. Otherwise, we may be in for what Marlinspike calls Web 2x2: Web 2.0 but with even less privacy. And maybe even bigger platforms.

— David Pierce (email | twitter)

On the calendar

Low-code/no-code and the changing developer

As organizations endeavor to become more tech literate from top to bottom, the race to get low-code and no-code tools in the hands of more and more employees has forced tech executives to set up new strategies and infrastructures to ensure that the company can make full use of the software.

Join Protocol's Kevin McAllister, Nutanix's Wendy M. Pfeiffer and Pegasystems' Kerim Akgonul for a discussion on the underlying tech in low-code and no-code tools at 10 a.m. PT on Jan. 19. RSVP here.

A MESSAGE FROM SAP

As businesses grow during the pandemic, they also encounter pressing challenges to maintain that success. Among them is the pressure to strengthen their digital backbone, which leads to the question: How can companies find the ideal technology provider suited to their evolving needs?

Learn more

People are talking

Futurist Amy Webb thinks the metaverse talk is “overhyped”:

• “The future of the metaverse, for example, is not avatars.”

Don’t take your company’s TikTok too seriously, Duolingo’s Zaria Parvez said:

• “The platform doesn't want you to take yourself too seriously. It doesn’t want you to be edited and super filmed and pristine.”

Making moves

Take-Two Interactive is buying Zynga for $12.7 billion, the largest-ever acquisition deal between gaming companies.

Meta has a(nother) new return-to-office date. It plans to start bringing employees back on March 28, and will require vaccinations and boosters for those who are eligible.

SoftBank is betting on Qraft. The company invested $146 million into the AI-based fintech firm to test how AI can manage its funds.

Douwe Kiela joined Hugging Face as head of Research. Kiela was last a research scientist at Facebook.

Intel has a couple new leaders: Micron Technology’s David Zinsner is Intel’s new EVP and CFO, and Intel veteran Michelle Johnston Holthaus will lead the client computing group.

Sarah Wang is now a general partner on a16z’s Growth investing team. Wang has been with the company for three years.

In other news

Microsoft is losing lots of AR employees, according to a report by The Wall Street Journal. About 100 people who worked on the team got jobs at competitors like Meta.

Misinformation about COVID-19 tests has grown recently, The New York Times reported. Social media posts have included false claims that PCR tests don’t work and that at-home rapid tests are unreliable, among other things.

Tim Cook’s salary is getting attention on Reddit. He made nearly 1,500 times more than the typical Apple employee made last year, prompting some conversation.

Meanwhile, App Store developers made bank last year. They made $60 billion on the platform in 2021, setting a new yearly record.

Google speaker customers are mad. The company has changed some settings for its Nest speakers to try to avoid an import ban, and customers are quite vocal about their displeasure.

The SEC wants more transparency from big private companies, sources told The Wall Street Journal. It’s working on plans to require nonpublic firms to regularly disclose information about their finances and operations, among other changes.

NFT theft is soaring, according to a report by NBC. NFT marketplaces like OpenSea are struggling to keep up with anonymous thieves taking digital art and selling it as their own.

Eric Schmidt’s real estate grab

Eric Schmidt has lots of property. He bought a Bel-Air estate last year and a big piece of property in Montecito, just to name a few. And now he has his latest purchase of Enchanted Hill, a piece of underdeveloped land in Beverly Hills, to add to the list.

The $65 million property has been on the market for a few years. A huge mansion owned by a screenwriter and her movie-star husband once sat there, and the late Paul Allen most recently owned it. Schmidt just has a thing for real estate and architectural history, a spokesperson told The Wall Street Journal.