By Darren Parkin
The average time spent online is doubling every decade. On average, younger generations spend far more time online than older generations. Digital tokens are the currency of the metaverse. Digital goods have property rights. Web3 makes them ownable, tradeable, composable, and transportable across platforms, spurring smoothly functioning economies of scale.
So while centralised aggregators of Web2 own your data, Web3 bridges developers with users, bypassing the centralised eBays, Facebooks, and Twitters of the world. The decentralised social networks of Web3 guarantee that users own their data and have a direct relationship with their audience while developers can always build apps on the platform.
Such technology gives the many developed, centralised apps built on top of decentralised Web3 platforms better odds at achieving faster network effects, thus Web3 will not displace but co-exist with Web2. Web3 can facilitate Web2’s bootstrapping of a network to attract enough people so others will also join and stay. The constant composable building of apps on Web3 platforms will spur network effects.
Web3 platforms motivates users to use specific apps where they create profiles and connections with others in one app that they can then use in other apps built on the same platform. In Web3, you could duplicate your Twitter followers to YouTube and/or Clubhouse if these platforms were built on a Web3 protocol. You could also easily port your Spotify listening history with all its music folders to another music platform for additional recommendations based on your listening tastes.
Web3 is the revolution of decentralisation which hands power back to the individual as each person will own their own data. Centralised systems will co-exist as there are benefits to the efficiencies gained through such systems, but decentralization hands freedom of speech back to the individual who can therefore not be globally censored nor cancelled.
Web3 use case: Decentralised storytelling
The traditional “Hollywood” model is fraught with issues when it comes to the creation of shows and films where producers are under pressure to answer to their investors. I discussed it in brief HERE. In consequence, creatively unique products are far less likely to reach the public since mainstream is a safer way to go. With Web3, fans can help create a story all off of a central IP backbone while owning their favorite characters. For example, Neil Strauss wrote a book with input from token holders. His book licenses characters from Bored Ape and Mutant Ape holders who get a piece of the profits from book sales done as NFTs.
Government slows innovation
While decentralised systems can co-exist effectively with centralised platforms, one clear case of inferiority is government vs. private enterprise. Celera Genomics among many others proved how costly and slow the US government moves when it comes to cutting edge technologies. They mapped the human genome in less than one-tenth of the time and at less than one-tenth the cost of the bumbling US government.
Balaji Srinivasan said: “Centralisation, specifically the US government, is most responsible for holding back scientific progress. The same cohort of people in the centralised scientific establishment award the research funding to themselves and others on their committees.”
Crypto bear stifling innovation? The Fed’s three options
But besides governments hampering innovation with their overregulation and bureaucratic manner, the question has arisen as to whether the current crypto bear market will slow development of the metaverse, blockchain, and Web3.
The length of the bear market will largely depend on the direction of interest rates. Much debate has taken place over the level of rate hikes in the coming months.
Fed chair Powell has said it will be data dependent. He has made it clear he will continue to hike until he breaks the back of inflation even if this means lower markets. If he hikes beyond an FFR of 3.5%, markets will likely nosedive as the debt service on the record levels of debt together with the growing number of defaulters takes its toll.
One alternative is if the CPI and PPI come in under expectations due to lower commodities prices, soaring inventories, and home prices coming sharply off their peak, this will give Powell a reason to hike by “only” 50 bps when the Fed meets later this month, then maybe two more 25 bps hikes to finish off the year.
Markets may rally on such moves, but Powell will still be a far cry from printing money via QE 5 since an FFR near their target of 3.6% will be insufficient to lower inflation to their target rate of 2%, thus any new bull market is likely still a long way off.
Another possibility is that while Powell would like to pull a “Volcker”, today is far worse than the late 1970s when Volcker started hiking. Interest rates were far higher and debt was far lower, thus Volcker had room to hike into the teens. If Powell were to try such aggressive moves, the major averages would plummet well beyond 50% off their peaks.
Powell is a politician surrounded by powerful people who have ample holdings in stocks, bonds, real estate, and other assets. He will not crash the markets. Instead, he will find a reason to halt rate hikes.
Perhaps a new crisis emerges which allows him to justify the launch of QE5. Certainly a “we dont know what we dont know” black swan could surface given the higher order effects from the COVID lockdowns and quarantines which crippled supply chains, as well as from government regulatory overreach which prevents small businesses from getting off the ground. Small businesses are the lifeblood of an economy as this is often where cutting edge ideas are realised.
QE5
Indeed, QE5 would be a huge buy signal. It would launch the next crypto bull market enabling leading companies to continue their path of exponential growth while new and innovative companies would join the fray.
The current $1 trillion market value of the crypto space will inevitably grow into the tens of trillions of dollars.
While some naysayers talk about crypto being over due to the $2 trillion in market value evaporating into thin air, that is typical of the crypto space.
When valuations were just in the billions, the crypto space had corrections beyond 90% multiple times since 2010, but it is easier fodder for mainstream media to create FUD about $2 trillion up in smoke.
Still, even with the current bear likely to get worse before it gets better due to the deeply hawkish macro environment, building has not slowed but accelerated. Web3, blockchain, and AI continue to grow at a fast clip.
Top minds do not care about the price of Bitcoin or the valuation of the crypto space. They simply see solutions that carry deeply evolutionary consequences as they disrupt inferior legacy systems.
DeFi is just the ice cube on the iceberg. As I discussed in a previous article, ReFi (regenerative finance) and DeSci (decentralised science) are on the rise. ReFi rewards those with tokens who are environmentally friendly. Environmental projects such as Toucan tokenise carbon credits with over 21.9 million tonnes of CO2 bridged to date.
DeSci funds research while ownership and value are shifted away from centralized intermediaries such as governments and institutions. Smart contracts can be used to mediate in p2p fashion between authors and peer reviewers. This sidesteps the traditional academic publishing industry. Blockchain can then be used to record truths, distortions, and misses.
Reporting truths can become economic, spurring writers to strive for the truth in reporting. Given enough time, we may singularly see the fade out of mainstream media distortions and lies, or at least a public that can easily spot such inaccuracies as such misleading publications and authors get scarlet lettered.
(͡:B ͜ʖ ͡:B)
Dr Chris Kacher, PhD nuclear physics UC Berkeley/record breaking KPMG audited accts in stocks & crypto/bestselling author/top 40 charted musician/blockchain fintech specialist. Co-founder of Virtue of Selfish Investing, TriQuantum Technologies, and Hanse Digital Access*\. Dr\. Kacher bought his first Bitcoin at just over $10 in January\-2013 and contributed to early Ethereum dev meetings in London hosted by Vitalik Buterin\. His metrics have called every major top & bottom in Bitcoin since 2011 to within a few weeks\. He was up in 2018 vs the avg performing crypto hedge fund \(\-54%\) \[PwC\] and is up well ahead of Bitcoin & alt coins over the cycles as capital is force fed into the top performing alt coins while weaker ones are sold\. *
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