Introducing Web3— An Arrogant & Treacherous Successor Doomed to Fail
ft. ARPSyndicate, ScanFactory, Arkham Intelligence & Zellic
In this blog, I’m going to lay emphasis on how Web3 is too delusional, untrustworthy and dangerous to survive in the present ecosystem. Allowing it to grow at current pace (in terms of both money & influence) will only increase the number of catastrophic & unavoidable failures — ones that can’t be reversed. We will start from how all of it began and finish it by predicting what it might lead to. Unlike my previous blogs, I’ll narrate this one like summary of a one big story.
It has been more that two decades since this century began. Emergence of Innovative Technologies is what these last two decades have been all about. Transforming the world into a better place is what Entrepreneurs have built their ventures around. Capitalists, Artists, Consumers, Lawmakers, etc. from Developed Nations rely on Technologies to turn their daily life more efficient, easy & ecstatic.
The one technology, that was born out of war, but has evolved into an entirely new battlefield for wars to be fought in future, and is keeping everything & everyone connected in present — is the Internet. The network of networks which utilizes various protocols to ensure ease of access to everyone & everything. Among these protocols, the most widely adopted one, is the Web.
Web has revolutionized everything. From daily communication to scientific research, it is being utilized for everything one can imagine. It has become a technology, crucial to so many industries, that ensuring its security has become an essential requirement for its continued utilization & growth. It began as a decentralized entity — Web 1.0, a collection of static webpages, hosted on servers provided by ISPs.
Eventually, as its adoption increased, hackers & innovators started getting creative with it by building products & offering services that were needed in daily life. Search Engines, Online Communities, Streaming Services were the first few among many. And as these services required more interactions, more and more technology stacks started getting developed. This gave rise to Web 2.0, a massive group of entities providing products and services through the Internet.
With adoption comes worth. Things with worth often are meant to be traded. Traded entities eventually get treated as an asset & are expected to appreciate in value with time. And if they don’t, they become a liability & lose their entire worth with time.
These companies are now among the biggest ones by market cap. They are centralized & have got great amount of wealth and power. They have penetrated almost every aspect of a consumer’s life and have accumulated unimaginable amount of data that have given rise to some serious privacy concerns.
Every sector has its concerns & issues — Financial sector has got insider trading issues, Government sector has got corruption issues, Energy sector has got sustainability issues and so on. But, most importantly, at the end of the day — Even though all these sectors are less transparent and extremely centralized, they have been evolving and creating real value in long term & stable value in short term — an economic value, since quite a long time.
A value that is not just based on some hype among the investors but its real world significance. And there are many instances where things aren’t being done in the right or good way but there also good amount of efforts being put by regulators and lawmakers to address these issues.
But there is still a pretty large number of developing & under-developed nations who aren’t equipped with necessary knowledge & resources to address these issues. Countries which are struggling with their own economic & political problems. These countries need everything from money to knowledge for getting at par with other nations. After all they are the part of this World & every next entrepreneurs talks about making this World a better place.
All these countries, even the developed ones, are experiencing a sharp surge in rise of cyber attacks and frauds post pandemic. Just Recently, India’s Prime Minister — Narendra Modi inaugurated Interpol’s 90th General Assembly in New Delhi, India and proposed to more actively address these global threats.
We are forgetting that, Internet, is just another ground for bad things happening and it’s our responsibility to make people aware of that. Even the biggest tech companies haven’t yet figured out the awareness aspect of cybersecurity. Globally adopted cybersecurity standards and awareness, even in today’s time, aren’t up to the mark.
In midst of all this crisis, another industry has emerged — The Blockchain Industry. An industry which has fulfilled the greed of the common. An industry which treats centralization as a problem that needs to be eliminated across all other industries but has turned out to be the great solution for moving & storing funds involved with these globalization & transnational crimes.
After the Crash of 2008, when the Federal Reserve of United States started bailing out the Banks, Nerds of the Tech Industry saw centralization of money as the core problem & Bitcoin came out as the Decentralized/P2P alternative to centralized banking. Built upon the truly game-changing idea of smart contracts, the Blockchain industry was seen as a delusional solution to all kinds of problems that I stated previously.
We do not live in an ideal world. People, from lower class to upper class, all are slave to their desires. Some need money, others just want to be richer. The booming housing market, before it all came tumbling down, quenched the thirst of money for many. But during & after the crash, the returns on traditional instruments got too low. From retail to institutional investors, everyone was in need of an instrument that can outperform the market.
Bitcoin became that instrument. A Peer-to-Peer Electronic Cash System having a immutable & transparent ledger that was supposed to revolutionize the Financial Industry. Nerds were excited. They thought technology will solve the problems that even religion couldn’t in long term.
Anyway, soon more and more cryptocurrencies emerged with extremely sophisticated ecosystem built around them. These cryptocurrencies, however, solved some very concerning problems of Drug Kingpins, Money Launderers, Pyramid Strategists, etc. Moving money became so easy and cost of capital started getting higher and higher. The real-estate investors who were seen as flipping houses were now replaced by crypto investors flipping NFTs, playing with values of so called transparent ledgers & what not.
As the industry was & is booming, more and more idealists are coming forward with their revolutionary crypto ideas. These ideas need liquidity providers, who usually just want to make great returns on their money. The nerds who were supposed to save the world from greedy capitalists, are nowadays seen either becoming the same or joining hands with them, and are together ending up wiping off millions of dollars from retail and smaller investors of the blockchain industry via all kinds of bubbles & scams.
Web3 is just another brainchild of these crypto idealists. Decentralized Apps, popularly known as DAPPs, are extremely sophisticated applications, hosted on blockchain & governed by consensus. These apps together make up the Web3. Although they are getting marketed as decentralized alternatives to the apps of Web 2.0, that is governed by Big Tech Corporations, they themselves aren’t much decentralized in terms of power.
Every kind of entity requires wealth to build influence in order to expand. So do these Web3 entities. The most popular way of securing this wealth is by acquiring some seed investment from VCs & then using that fund to give initial liquidity to crypto tokens that will then be distributed among the end-users via Airdrops/Exchanges/etc. Another popular way is to just raise money from public sale of these tokens in the first place. Tokens are what represent the ownership stake for these entities. And majority of these tokens are often owned by insiders.
There are many reasons contributing to the failure of Web3 but the most fundamental ones –
- Sophisticated & Tedious Development
- Self Governance & Lack of Compliance
- Built upon Delusions & Lies
- Not better than its predecessors in anyway
- Prone to all kinds of Cybersecurity issues that can’t be eliminated
Combination of these 5 reasons have been leading to all kinds of chaos in the Blockchain Industry, from DeFi to DApps, all of them are experiencing these issues. When these ecosystems start tumbling down, all kinds of conspiracy theories involving these fundamental reasons start coming at play. Over a dozen blockchain projects have failed and led to wipeout of billions in just last 5 years. As an idea, blockchain is truly revolutionary. But in reality, it has done more harm than good.
But there’s still some hope left. Although cryptocurrency have brought nothing but more severe & diverse problems to deal with, Governments, Think Tanks, Companies, Investors, from all around the World all are trying pretty hard to make things work.
Intelligence Companies like Arkham Intelligence, have come forward with tools to visualize and link blockchain activities to real individuals and organizations and are working tirelessly towards demystifying the failures & activities of the Blockchain organizations. Apps like Delenium are being built to protect end users from Web3 scams.
Security Researchers from companies like Zellic are not only committing their time & brainpower in private smart-contract security audits but also actively participating in Vulnerability Reward Programs of popular Blockchain companies for keeping their ecosystem truly secure for all.
People building the future don’t exactly know how to secure the present.
We too, at ScanFactory, were curious about how secure all Web3 companies are, after all flaws, are everywhere. So we did an automated vulnerability survey for all the popular Web3 companies but against their Web2 infrastructure. At the end of this survey, we came to a conclusion that an average Web3 company doesn’t care much about the vulnerabilities in their Web2 stacks & they take an average of 3 months to detect & remediate these vulnerabilities. We took no more time in reporting these vulnerabilities but many of them still remain intact.
The real single reason for which I believe that all this will come tumbling down is cause of the fact that all this is falsely hyped as being something better than its predecessors but in reality it is not. In fact the entire Blockchain arena is filled with either delusional or degenerate people who are inexperienced &, in no way, better than their predecessors.
People who don’t care about technology or its purpose but just want great yields/returns. People who think a single-sign on is somehow a good thing. People who think that decentralizing the system will change how, why & what kind of people interact with the system. People who think that having a public ledger but letting people transact while staying anonymous will somehow ensure transparency. People who don’t even understand what is it that they exactly mean while asking for Equality, Privacy, Security, Decentralization, Transparency & Freedom all at the same time.
Hopefully, everything should just end up alright somehow. Because humanity has been experimenting, learning & surviving for centuries now.
UPDATE: If you feel like expressing your opinions regarding this article or want to read opinions of others then feel free to go through the discussion happening at — https://news.ycombinator.com/item?id=33708320
UPDATE: Around a week later of publishing this blog, a Web3 company, among the Web3 Automated Vulnerability Survey Program conducted at ScanFactory, to which we reported several critical vulnerabilities in their Web2 infrastructure, got compromised.
Where there’s a will there’s a way.