A rebuttal to Web3 critics: You techies don’t understand technology

There are reasons why some people aren’t using Web3 — or don’t want to use Web3, and you’d think the problem of progress isn’t really a problem.

Congressional Letters

A few weeks ago, a group of 1,500 people calling themselves (unnamed) “computer scientists, software engineers, and technologists” wrote a letter to congressional leaders. The letter, in support of responsible fintech policies, questioned DeFi principles and suggested that strict regulation was necessary to protect the public.

The letter is surprisingly brief for a group that relies on their professional credentials to make fairly inflammatory statements, making sure to hit on all the fear tropes about cryptocurrency and loudly proclaim those who have something to lose if Web3 goes forward.

In short, they claim it offers no protection to individuals, are fraudsters and schemes, and…

“[Cryptocurrencies will]…never be suitable as the basis for large-scale economic activity.”

This is a rather unscientific conclusion coming from a group that allegedly includes scientists.

Bro, where is my scientific method? (Photo by Sander Sammy on Unsplash)

Sentiment in Congress

The letter represents the sentiment of a small but vocal anti-Web3 group in the tech industry. Setting aside the fact that most of the unsubstantiated claims in the letter are false, why would technologists speak out against such a promising new technology? What’s the motivation? It’s because, with anything new, there are always those who promote fear and anxiety that it’s all going to be terrible, horrible, and wrong.

Some cultures simply choose not to move to a certain technology level.

The tools themselves are not good or bad, but are conflated with intent and behavior. It doesn't matter who is better educated or skilled, or even if they have a better understanding of the subject at hand. It's about who can see the forest for the trees, and who can't?

Furthermore, you always need to ask, what do these adversaries have to lose if Web3 succeeds?

Even technical people often don’t understand technology

Let’s address the first question: Why are techies anti-tech? Clifford Stoll, a famous author and technologist, wrote in 1995:

"Visionaries saw a future of teleworking, interactive libraries, and multimedia classrooms. They talked of electronic town meetings and virtual communities. Business and commerce would move from offices and malls to networks and modems. The freedom of the digital web would make government more democratic.

Nonsense. Do our computer experts lack common sense? Facts (sic) No online database will ever replace your daily newspaper, no CD-ROM will ever replace a good teacher, and no computer network will ever change the way government works. ” — Clifford Stoll

He was wrong. To be fair, though, Mr. Stoll in the same article points out the problem of unfiltered speech on the internet. He accurately describes the precursors to our current “noise” of easy dissemination of false information on social media, as well as the inability of large sections of the public to distinguish fact from fiction.

Perhaps some still thought that this then-advanced technology would continue?

While Stoll was able to accurately analyze at least some of the potential impacts of technology, he lacked foresight about many of the concepts he described. It’s fair to say that he thought the internet in 1995 wasn’t much fun for shopping, but he didn’t realize that technology didn’t stand still. There were others around the same time who really thought that widespread adoption of the internet would have pretty nefarious results. A group of writers published a compendium of articles about these dangers, called “Resistance to Virtual Life.” Among some of the insightful articles were more sinister claims: that the internet would become “a new domination machine” that would seek to encroach on public space. Now, history is repeating itself, with technologists joining the naysayers in promising doom and gloom to those working on Web3.

Other Web3 critics: They’re not completely unbiased

The aforementioned letter to Congress includes signatories that the average person wouldn’t recognize, but some well-known tech leaders are making similarly incendiary statements about the technology. In December, former Twitter CEO Jack Dorsey tweeted:

In other words, Dorsey is saying that the enemy that those working in Web3 think they are conquering is not actually Web3. He expressed his belief in decentralized systems in a follow-up tweet, but asserted that the current Web3, especially Ethereum, is the antithesis. Hypocritically, his comments about Web3 are consistent with his recent announcement of a plan to claim his own privately held portion of Web3 and his unabashed investment in Bitcoin. Some may argue that Bitcoin is not Web3, which is beyond the scope of this article, but I find Dorsey’s concept of “Web5” to be a rebranding of the bad parts of Web3.

Besides his obvious interest in seeing Ethereum (Bitcoin’s main Web3 competitor) fail, let’s not forget that he also has a keen interest in Web2 companies and the TradFi payment system.

There are many other prominent voices in tech and beyond who have been busy telling us why Web3 is doomed to fail. Emmanuel Awosika’s article “Who Hates Web3?” expertly categorizes many of them as “stubborn journalists,” “contrarians,” “doomsday prophets,” and “Luddites,” who always appear when new technologies seem to gain momentum. These labels incorporate their approach and perhaps their expertise, but their motivations are important, too. Are they honestly expressing their concerns? Or do they have ulterior motives?

One of the signatories of the congressional letter, Dave Troy, is the co-founder and CEO of 410 Labs, which, according to Crunchbase, “produces a suite of socially productive tools and applications that improve communication and access to information.” In short, it creates Web2 applications. Another signatory, Alan Graham, represents One Click License, or OCL, which sells proprietary technology that sounds a lot like the free functionality of smart contracts. There are also random signatories from Amazon, Google, and Microsoft — companies that have a lot to lose if the services or technology they provide is replaced by Web3 solutions.

Separating technology from behavior

Perhaps the main problem with the letter sent to Congress is that it conflates blockchain technology with its potentially malicious use cases. In it, the authors state that “underlying crypto assets have been vehicles for unsound and highly volatile speculative investment schemes that are being actively marketed to retail investors who may not understand their nature and risks.” Have bad actors been actively trying to defraud people of their savings by investing in worthless assets? Stealing their credit card numbers? Wire money to shady offshore accounts?

We did not respond by banning asset classes, credit cards, or wire transfers. Instead, we focused on preventing malicious use of these tools.

Over-regulating or outright banning blockchain technology and encryption to protect people is as absurd as outlawing computers to stop hackers from stealing personal information.

We should absolutely ensure that Web3 is built to be safe and secure. We should pass regulations to prevent abuse and exploitation of others. But we won’t throw the baby out with the bathwater.

Well, this technology is worth having. (Source: ImgFlip)

They go on to point out several broad categories of criminal activity that involve cryptocurrency, such as money laundering and ransomware, but don’t explain how Web3 technology can make these problems worse than they already are. Clearly, money laundering has been a problem since before Bitcoin launched in 2009. Will unscrupulous actors stop locking up networks for ransom if ransoms can’t be paid in cryptocurrency? I don’t think so. Criminal investigators have been able to track fraud and illegal activity on blockchains for several years, so this isn’t a problem anyway.

Finally, why are they blaming Web3 for our woefully inadequate cybersecurity infrastructure? Let’s digress for a moment and discuss real problems we have in cybersecurity, such as zero-day vulnerabilities. A zero-day vulnerability is a vulnerability or bug in software that is not yet known to the public or software developers, which hackers can exploit to break into a network or database. A famous example you may have heard of is Stuxnet. These security vulnerabilities are often found in software sold by Web2 companies. There are also reports that the U.S. government has purchased “zero-day” code vulnerabilities to use as cyber weapons on the underground market, rather than letting developers and the public know about them. However, according to the authors of the letter, Web3 is the real problem that needs to be stopped to mitigate ransomware attacks. Aren’t they zero-day vulnerabilities in Web2 software?

They also mixed up the technical part

The letter’s authors state: “Blockchain technology cannot and does not possess mechanisms for reversing transactions or data privacy as they are contrary to its fundamental design." This shows a complete misunderstanding of the technology and how it should be used. Yes, blockchain is an immutable ledger by design, but that doesn’t mean it can’t be ameliorated against known fraudulent activity. Network members have stepped in several times to replace stolen funds (such as with Jump Crypto and Solana), and then there was the famous Ethereum hard fork in 2016, where the community agreed to reimburse users for the ETH they lost in a hack.

Blockchains can fork. (Photo by Jens Lelie on Unsplash)

We should also note here that transaction reversal in traditional finance is not universal. If you have been scammed and have already wired money to a scammer in the Bahamas, there is no way to "reverse" that transaction. Bernie Madoff's investors can tell you that there was no possibility of reversing transactions in their case either. The point is, just because the blockchain itself is immutable, it does not mean that we cannot provide security and fraud mitigation measures in Web3 that are as good or better than TradFi through policy, regulation, and improved technology.

The second part of their claim is that data privacy on the blockchain is impossible, which is completely false. First, no personal data is automatically tied to a wallet address. This is the essence of a trustless system; you can transact with someone without any personal information. Your wallet address can only be associated with an identity if you choose to make that connection public. There is also no personal data inherent in smart contracts. In fact, blockchain technology can be used to enhance data privacy by creating decentralized identities (DIDs), which allow users to control who knows their personal information.

New rules: Technology is only 13 years old

It ends with this: “Despite being in development for over 13 years, it has severe limitations and design flaws that render it unusable for nearly all applications that handle public customer data and regulated financial transactions.” Here they are essentially saying that blockchain technology has had plenty of time to become perfect and has proven to be unsafe for public use. Amazingly, these technologists forget that the Internet was in development for at least 25 years before its broad public applications were just beginning to be explored.

Sometimes technology takes time to develop. (Photo by Aron Visuals on Unsplash)

As for the regulation of blockchain-based transactions, most centralized exchanges such as Coinbase, Gemini, and Binance comply with Know-Your-Customer (KYC) standards. Regulating transactions on decentralized exchanges is certainly more difficult, but it is also happening. To say that regulation of financial transactions in Web3 is impossible is to ignore a lot of what has already happened.

Technician who understands technology

Thankfully, there are many technologists who believe in Web3 and see the possibilities it brings, rather than being scapegoats for societal challenges.

Marc Andreessen, the inventor of Netscape and a well-known technologist, once said: "We can actually predict that in 30 or 50 years, the entire global economy will run on the blockchain." In the Bankless podcast, which quoted this sentence, he talked about how he was the best and brightest in the world and actually thought about all the problems of Web3, and was involved in the innovation opportunities to solve them. Andreessen saw the opposite of what was written in the letter - there are many known uses and many uses that have not yet been discovered. Given that he sees the possibility of the global economy running on Web3, he also has no doubts about our ability to overcome security and fraud challenges.

Gavin Wood, computer scientist, co-founder of Ethereum, and the man who coined the term “Web 3.0” in 2014, said this at the 2022 World Economic Forum:

“It’s no longer about Bitcoin, it’s no longer about crypto, it’s no longer [just] about smart contracts, it’s no longer about DeFi. It’s like we’re starting to understand that this is a broad platform for building new kinds of services that Web2 couldn’t build.”

This is how you see the forest from the trees — understanding the vast potential that Web3 brings to the world in new ways that are simply not possible in a centralized global economy. People who can only see the trees, like the letter writer, lack vision and only see the problems. As Web3 leaders lead our economy through this forest to new frontiers, there will be those who join them to see the new horizons, while those who stay behind are busy trying to chop down the old trees.