Pavements so hot you could fry an egg on them. Colourful posters, QR codes and the constant hum of music adorning those streets. On it, the mix of local cowboys and girls, peppered with cyber punks and their 3D glasses. Austin, June and time for Consensus 2022.
Probably the main event on the Web 3 circuit (at least for now) is the annual gathering of the community – the builders, the creators, the curious, the investors and me. A moment to reflect on the progress, contextualise the current reality and – as the name suggests – seek some consensus on the thorny issues that surround the space. Of which, let’s be fair, there are many.
There was an awful lot of content, and some fascinating conversations, below are my 10 key takeouts:
1) Built without discrimination.
I couldn’t help notice, as it was obvious, just how more women are engaged with this space. Far more than the advent of Web1, where the 1 could very well have meant the one women at the event, to Web2, which until recent years was also shockingly male dominated, to Web3 where, whilst not 50:50 it definitely seemed much more balanced and was great to see. A future built with females, not for females, can’t not be a better future surely.
2) Mistakes expected.
We are in the foothills of something new, the next. As I keep saying we’re 40 seconds in to the next 40 years. With any new/exciting thing there will be hype, there will be attention from scammers and criminals, and there will be things that go wrong. We are in the experimental phase. Luna for example (the supposed stablecoin) was flawed.
3) Winter is here, but that’s OK.
A winter is a term often used in advanced technology development cycles to refer to a period of declining interest and investment. This sector is now definitely in one. The community is ready, they’ve seen it before (this is the third winter) and believe that this is when the good stuff happens. As they see it, it’s where people avoid the distraction of the get-rich-quick schemes, scams and focus on building and creating.
4) Parts of the world really need Web3.
Many of the world still don’t have a bank account. A staggering 40% of the world are the unbanked. The use case is strong for developing markets, where these technologies provide access to economic activity for many, and resiliency/trust in countries where there are autocratic regimes. Those economies that were born mobile (leap frogged the internet phase) will also be born Web3 – harnessing much easier the idea of cryptocurrencies and seeing the material impact as a consumer.
5) Rise of the “system”.
First they ignore you. Then they laugh at you. Then they fight you. The next five years will be the fight. One speaker at the event discussed the $7 trillion of wasted money in the current financial system – take fees/charges/costs – that a decentralised approach could eradicate. But banks obviously don't want to give up on $7 trillion. Expect the elbows to come out harder.
6) Nom de Plume.
Web3 will foster a new age of pseudonyms, our future very well may be about multiple character identities. Check out Crypto Twitter and it’s full of characters, most of the major players in the community operate under pseudonyms and with their PHP NFTs of an Ape. In fact, pseudonyms are becoming accepted broadly, increasingly being quoted in media and we even had some of them attend sessions, but using a filter to have their PHP as a mask – keeping the veil of character.
7) It’s not all one big happy family.
I was in the session where Block Inc., Jack Dorsey’s company – formally Square – announced it was building Web5. Whatever happened to Web4 cried the media! Well, it was clearly a two-fingered salute to the current scene which Jack sees as being corrupted from it’s true calling in that it’s being centralised by investors and the financial institutions. He now has a smart team looking at what they see as some of the issues impeding true decentralisation – identity and data storage – proving/trusting you are who you say you are without the need of a platform/centralised entity.
8) Do we need a magic sword?
Perhaps it’s the audience/community, but I heard the term magic Sword too often on stage across different sessions when presenters were trying to explain why NFT technology could be powerful in the metaverse. The idea that you can own a digital item, that you’ve perhaps paid for or acquired in one game, say a magic sword, and then take that with you to another game/digital environment. This, technically, makes sense, but contextually makes no sense. Do I even need a magic sword in the other game I’m playing? Do I really want to have it with me outside of the game environment it’s being used? I think this is a technology that requires better ideas, and narratives, as the magic sword one doesn’t sound like a billion dollar market.
9) NFTs not yet peaked, in fact barely started.
The technology wrapper behind NFTs is quite simply beautiful; we’ve been able to put a white picket fence around physical land for centuries and created significant value because of that (property/lending/ecommerce etc). With NFT technology, we’ve been able to put that white picket fence around digital land/things. The economic benefit of that could very well be significant. Christies and Sotheby’s had representatives on stage that seemed to think we’ve got a long way to go still in art alone. Today, NFTs are 1/1000 of the total value of the art world (in two years). Bitcoin, as a comparison, is 1/10 of gold in 14 years.
10) The Merge is meaningful.
So there is a big thing happening – definitely maybe happening – called the merge. This is a big deal. It’s moving the Etherium blockchain from a Proof of Work (mining, energy intensive) to Proof-of-Stake (no mining, energy negligible). This is no mean feat, it really is like changing the engine of a plane whilst in mid-air – and this plane has a market capitalisation bigger than many countries’ GDP. Technically challenging, but the first of three tests were passed just at the start of Consensus. With this change, much of the energy issues/concerns go away – it’s a significant event. There will be a lot of people with their fingers crossed.
So, despite the bearish market, I for one am bullish on the technologies, and certainly bullish on the strength of the community and their desire and passion to make a better world. Which is a nice segue into the quote that resonated with me from the pioneer of VR, Jay Lernier:
“It’s horrible that we are a technology civilisation that is going through a big transition/change but lack any positive narratives for the youth today. No big political or social ideas.”
Web3 and the spirit of it could be the infrastructure behind a new big idea. Time will tell…
Read part one of this insights piece here: Seeking consensus at Consensus.
Justin Westcott is Edelman’s European Head of Technology and COO for the UK & Ireland.