From Web2 to Web3, the Internet is once again at a historical fork in the road

Original title: The Internet Returns to the Crossroads of History

In 2007, Jobs released the first touch-screen phone, the iPhone, which subverted the rules of the Internet industry.

In 2008, inspired by the global financial crisis, Satoshi Nakamoto released the Bitcoin white paper, creating a new electronic currency - Bitcoin.

At that time, Jobs probably could not have imagined that the changes brought about by the iPhone to the Internet industry would directly trigger the golden decade of closed development of Web2 mobile Internet.

At that time, Satoshi Nakamoto probably could not have imagined that more than ten years later, when the possibilities of Web2 were exhausted, Bitcoin and blockchain, which were originally used to resist global fiat currency inflation, would become the key to opening the door to Web3.

Now, after more than a decade of development, the mobile Internet seems to be at the end of its road. Talking about the monopoly and closure of large companies has become politically correct. Under the brutal conquest of Internet giants, the walls of large companies are getting higher and higher, and the data ownership and privacy rights of ordinary users are in jeopardy. When the traffic dividend disappears and the growth slows down, it was thought that the Internet industry was only left with a stock game, but Web3 has given the industry new hope. After a sudden turn of events, people began to yearn for a new Internet future.

In this new future, users will own the platform, not the platform owning the users. Users’ time, attention, and data are no longer commodities sold by the platform. The ownership of content and data is returned to the users. Shareholder interests are not the first priority. Web3 applications are jointly created and owned by the community. Most importantly, the Internet will no longer be closed. Open source and openness will become the consensus of Web3, which will lead to more innovative possibilities.

People who are familiar with the history of the Internet might say: Wait a minute, weren’t open source and openness the characteristics of the early Internet? The river of history has twists and turns, is it going back to the past?

It is said that "you cannot step into the same river twice", but the Internet seems to be tracing its own source, returning to the fork in the road where Web2 once diverged, and starting again in the river of history.

So, let’s go through the Internet again from the dimension of openness and closedness.

Web2 was once open

In China's Internet industry where "traffic is king" and spending money is the main way to grow, Huang Yimeng, CEO of X.D. Technology, has successfully cultivated an outstanding game distribution and content platform like TapTap in the gaps between gaming giants such as Tencent, NetEase, and Bilibili. This is certainly because he understands games very well, but it is also inseparable from his deep understanding of open communities.

Before founding Xindong, Huang Yimeng founded VeryCD in 2003, which is the Chinese version of eMule, a P2P media resource sharing website based on open source. At that time, VeryCD's concept was to "share the Internet" and to build the world's largest, most convenient and most user-friendly resource sharing network through open technology. It also once became one of the most visited resource sharing websites in mainland China.

Huang Yimeng was not the only entrepreneur who believed in the concept of openness in the Chinese Internet at that time. Recently, Huang Yimeng reminisced on Twitter, recalling the discussion he had with Abei (Yang Bo, founder of Douban) and Ma Ruila, founder of Mtime, more than a decade ago on how to connect the open film data protocols of Douban, VeryCD and Mtime.

Huang Yimeng recalls this with some sadness, "That was the golden age of Web 2.0. Everyone thought that openness was a matter of course, and each website performed its own function to piece together a richer Internet."

Huang Yimeng Twitter

Indeed, Web2 was once an open paradise, the most typical example of which is the once popular RSS protocol.

RSS is a web aggregator protocol that allows users to access website updates in a standardized, computer-readable format. Subscribing to RSS allows users to keep track of updates from many different websites in a news aggregator without having to check them one by one. In other words, users who use RSS can customize their own content information flow.

At that time, the Internet industry was still in its early stages, and large applications such as Facebook, Twitter, and Weibo, which are now common, had not yet been born. People used RSS to track updates from different websites and customize their favorite information streams. As Huang Yimeng said, ten years ago, APIs, RSS, and XML exports that did not require login or registration were standard features of many websites.

However, with the development of mobile Internet, various App applications have emerged. Users only need to register an account, and the App will provide us with relevant information. We no longer need to customize our own information flow, and the APP will "continue to push" according to our browsing preferences. At present, the content applications we commonly use, such as WeChat public accounts and Toutiao, are actually closed services based on RSS. Correspondingly, excellent RSS providers such as Google Reader and feedsky have been closed one after another, and the number of websites supporting RSS is also decreasing. This protocol seems to be becoming the dust of history.

Even mobile apps have had an open era. Weibo started to build an open platform in the early days and provided API interfaces to third-party developers to build personalized client products, which gave birth to a number of third-party Weibo clients with strong personalization and fewer advertisements, which were welcomed by users. However, Weibo, which did not want to see the growth of third-party clients, closed basic permissions many times due to security issues and other reasons. It was not until 2017 that a developer revealed that Weibo had completely closed the open interface, which meant that third-party clients were almost wiped out and Weibo was closed again.

Another popular open product is the application IFTTT, which was launched in 2011. As the name suggests, you can set a condition on IFTTT to let the system perform a specific action for you.

As an open collection of a bunch of websites, IFTTT allows users to just pick one of the third-party services it provides and specify that when it enters a certain state, it will trigger an action in another service. Everything can be done in a snap. For example, you can set IFTTT to send you a push notification when the weather condition changes to rain; you can set IFTTT to send the content mentioned by the other party to Evernote when someone mentions you on Twitter; you can also set IFTTT to send the updated content to Read It Later when a certain RSS is updated.

In the early days of Web2 development, this open mindset allowed the innovation of different products to be combined and stacked like Lego, and more incredible compound interest effects emerged based on information aggregation and mutual inspiration.

However, between openness and closure, history ultimately made its own choice.

Looking back now, with the birth of Apple's application system and the development of mobile Internet, a large number of Web2 protocols that once moved towards open source and openness were eliminated in the competition, while Internet applications that focused on moats, intellectual property rights and monopoly became more and more powerful. Under this path, Web2 naturally began to turn from open to closed, and then developed into the monopoly giants we are familiar with today.

Perhaps, the famous saying of a16z founder Marc Andreessen, "Software is eating everything", is the best footnote to Web2.

The Dilemma of Openness and Commercialization

Openness and open source are obviously conducive to innovation, so why are they abandoned by history? This is inseparable from a classic problem in the development of Web2: how to make profits?

The biggest profit logic of Web2 is "traffic monetization".

Ever since Yahoo, the forerunner of Internet companies, started the “good example” of providing free services, “spending money to earn traffic” and “traffic monetization” have become difficult problems facing all Internet companies. How to obtain traffic (strategic choice) and the efficiency of traffic monetization (business model) can greatly affect the profitability and market value performance of Internet companies.

This can be vividly reflected in the development history of Tencent's early business model. Tencent's earliest product was to provide users with free instant messaging tools. Although the number of users grew rapidly, users did not have the habit of paying, so Tencent did not have a good way to monetize at the time.

In order to achieve profitability, Tencent first charged fees through three models: telecommunications value-added services, virtual goods sales (QQ skins, etc.) and "Freemium" (Free + Premium). It then continued to expand other free products and content, such as WeChat, QQ Music, QQ Portal, QQ Games, etc., and then continued to expand its attempts to "monetize traffic" through value-added services, advertising, entertainment and e-commerce.

In the face of such business logic, the number of users and the length of time they are used are the biggest reservoirs for every Internet company, and applications need to monetize around users. This also forces Internet applications to try every possible means to keep users in their own closed ecosystems, even at the cost of blocking and monopolizing each other, which is why we are familiar with the various wars between giants such as Alibaba, Tencent, and ByteDance.

Under the Web2 mechanism, openness and open source are exactly the opposite of profitability.

When RSS services became popular, it meant that the traffic of a large number of websites was actually stolen. Users could directly track website updates through RSS subscriptions, which was equivalent to cutting off the traffic of these websites and applications. The content producers of the websites could not get click-through rates and traffic, and thus could not monetize through advertising and other forms.

When Weibo opens its API to third-party developers, it means that it is also sharing the traffic of its main site. The traffic and click-through rate of Weibo's own products will naturally decrease. In the Web2 era where "traffic is king", what is shared is not just traffic, but commercial value and monetization opportunities. This model will definitely not last long for Weibo, a listed company.

For example, in the traditional Internet, open protocols such as TCP/IP, HTTP, and SMTP, which are the cornerstones of the Internet, obviously have extremely high value, but their inventors find it difficult to monetize them and are unable to match the value of their contributions, and can often only "generate electricity with love."

All historical choices are inseparable from the human nature of pursuing interests. This has no moral color, but is an unchangeable fact.

In order to make profits, Google has been constantly cutting off applications that cannot be monetized, no matter how much they are loved by users, including Google Reader which uses RSS.

In order to make profits, Tencent has the power of life and death over applications built on its own ecosystem. A few lines of code can cut off the lifeline of a mini-program application, no matter how successful it is, because it poses a threat to its own business.

In order to make profits, Internet giants regard the user traffic entrance as a golden gate and block each other, no matter how much inconvenience this causes to users.

Until the end, when there is a conflict between user interests and commercial interests, Internet applications will still choose interests. After all, they are only responsible to shareholders and themselves.

With the ultimate goal of commercial profit, traffic is becoming more and more expensive, Internet applications are becoming more and more closed and monopolistic, and any passers-by passing through its ecosystem must leave "tolls", which has evolved into the behemoth of the Web2 era that we are familiar with now.

Web3: Changing incentives

To change the Web2 model dilemma, it is necessary to change the business incentive mechanism.

Thanks to Satoshi Nakamoto, the concept of Bitcoin proposed more than ten years ago has evolved layer by layer and eventually subverted the corporate business model and social collaboration model.

As the "fat protocol" theory says, the previous generation of shared protocols (TCP/IP, HTTP, SMTP, etc.) generated immeasurable value, but most of this value was recaptured in the form of data at the application layer (think Google, Facebook, etc.).

The key elements that will subvert this ecosystem are the shared data layer and the introduction of encrypted tokens.

By storing user data through an open source and decentralized network, rather than independent application access to control different information islands, Web3 lowers the entry barrier for new participants, allowing innovative ideas to be built layer by layer like Lego, and creating an ecosystem: the products and services above will be more dynamic and competitive. On the same and open source protocol, the market can build several competitive, non-cooperative, but interoperable services. This also prevents the "winner takes all" market monopoly.

On the other hand, after the introduction of tokens, when the tokens appreciate, they will attract early speculators, developers, and entrepreneurs. They become stakeholders in the protocol and financially support its success. Then, some of the holders who have gained early benefits will create applications and services around the protocol to further increase the value of the token, and continue to expand the protocol ecosystem. Some applications will become very successful and bring in more new users, which will further increase the value of tokens, attract more entrepreneurs' attention, and bring more applications, thus forming a positive cycle of growth mechanism.

Under the dual effects of openness and tokens, the security, privacy and control of user data are ensured and owned by the users themselves. The interests of protocols, applications, developers and users are also closely related to each other. Everyone becomes an important participant in the entire interest circulation system. Everyone can be an architect, participate in the construction of the Web3 platform, and obtain incentives proportional to labor through smart contracts. Everyone owns the platform.

The dilemma of being unable to achieve both openness and monetization in the Web2 era will be completely broken. Although Web3 is still more discussed than implemented, it provides a better solution and direction in the dilemma. After the development of the Internet hit a wall, with the help of technological innovation, it has returned to the fork in the road and continued to move forward along the path of openness and innovation of its predecessors.

Web2 has evolved from openness to closure, and then to the openness of Web3, which is quite similar to the evolution of "seeing mountains as mountains and seeing water as water".

The historical course of this river seems to have taken a detour, but it is also the only way to go. At every moment, every market participant has made a choice to maximize their own interests, and the course of history is carved by interests. The birth of Bitcoin and decentralized blockchain has released power from the hands of a few people and dispersed it to a wider group of people. The final choice of history will also be in the interests of the power owner, that is, each of us.

Acknowledgements: Thanks to 0x49 for his contribution to this article