3 Paths to a Trustless Future
How blockchains are redefining trust in a world of distrust.
Our current internet has no trust layer.
In 1999 when I was 14 years old, I begged my parents to get this cool new thing called the internet.
Because I wanted to download music from Napster and burn CDs to impress girls. As a tall skinny teenager with big front teeth I needed all the help I could get 😂
Over the next 2 decades, the internet created tech innovations far beyond what any of us could have ever imagined.
Four of the ten largest companies in the world (Google, Amazon, Tesla and Meta) were built during this time.
In our quest for unlimited access to content and high profits we made one big mistake.
We completely sacrificed trust.
Today our lack of trust in each other is at an all time high.
This isn’t a world I want to raise my kids in.
A world where:
🚫 Stealing from artists has become acceptable
🚫 Intermediaries take unreasonable margins from creators
🚫 Corporations are focused on extracting value from users
🚫 Fake news and fake reviews are easy to create
I believe trust is the single most important gift humans can grant each other. Trust ignites a powerful flywheel.
Thankfully, blockchain offers us a chance to rebuild trust on the internet.
It gives us a desperately needed trust layer from which we can rebuild the foundations of a healthy society and functional economy.
Let’s dig deeper… 👇
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Why Is Trust Important For a Healthy Society?
Trust is crucial for a healthy society because it provides a foundation for social interaction and cooperation.
When people trust one another, they are more likely to work together towards common goals, share resources and ideas, and support one another during difficult times.
Here are some reasons why trust is important for a healthy society:
🤝 Facilitates cooperation: Trust is essential for cooperation among individuals and groups. When people trust each other, they are more likely to work together, share information, and support each other to achieve common goals.
Enhances social interactions: Trust is a key factor in building relationships and promoting positive social interactions.
When people trust each other, they are more likely to engage in open and honest communication, show empathy and understanding, and avoid conflicts.
🤑 Promotes economic growth: Trust is vital for economic growth and development. In a society where there is high trust, businesses are more likely to thrive, and people are more likely to invest in each other and in their communities.
🧐 Encourages civic engagement: Trust promotes civic engagement and participation. In a society where people trust their institutions and each other, they are more likely to participate in civic activities and volunteer their time and resources for the benefit of their community.
🧘♀️ Improves mental health: Trust contributes to a healthy society by promoting mental health and well-being. When people trust others, they feel safe and secure, which reduces stress and anxiety.
Without trust, our society becomes driven by fear, suspicion, and conflict, which can lead to a breakdown in social cohesion, and hinder progress and development.
Trust Online vs Trust On-chain
In the context of blockchain, the term "trustless" refers to a system that doesn't require trust between parties in order to function.
A trustless system is one in which all transactions are transparent, secure, and verifiable, without the need for a central authority to verify or approve them.
In traditional financial systems, trust is placed in intermediaries such as banks, credit card companies, and other financial institutions to process transactions and ensure their validity.
These intermediaries act as trusted third parties, and their involvement is necessary to prevent fraud and ensure the integrity of the transaction.
However, in a trustless system like blockchain, intermediaries are not necessary. Transactions are validated and recorded by a network of computers, using complex algorithms and cryptographic techniques.
This means that the system is self-regulating and self-verifying, and there is no need to rely on a central authority to ensure the validity of transactions.
The term "trustless" can be somewhat misleading since it doesn't mean that there is no trust involved in a blockchain system.
Rather, it means that trust is decentralized and distributed across the network of participants, and that transactions can be verified without the need for a central authority.
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3 Paths to a Trustless Future
Path #1 is the path users will take over the next decade as we migrate from online to on-chain.
Right now users feel manipulated and deceived by platforms. While users have completely lost trust in most platforms, they continue to use them anyways.
This creates the worst kind of relationship between 2 parties. A relationship where both parties are trying to extract the most amount of value from the other.
Don’t worry. Big change is on the horizon.
Decentralized Apps (dApps) and protocols built on blockchain provide users with complete ownership of their data.
For example, let's look at Lens vs Facebook.
On Lens, you login with your wallet. Lens does not know anything about you, other than what is publicly available on your wallet.
Lens also does not store your data. In the future you could disconnect your wallet from Lens and remove their access to your data.
On Facebook, you login with your account, which you set up on Facebook. In order to set up your account you have to give Facebook a lot of personal information about yourself, which they own and store in their database.
On Lens, each time you create content or engage (post, follow a friend, like, share, etc), an NFT is created in your wallet. You own this data. 💪
On Facebook, each time you create or engage, the subsequent data is stored in Facebook servers. They own it and can do whatever they want with it, which they frequently do.
With comparisons like this, it’s no surprise that users have completely lost trust in platforms.
But don’t lose hope. 🙏
So long as new platforms embrace blockchain and act transparently with their users, then users will once again feel safe and in control, as they should be.
Path #2 is the path creators desperately need!
Unfortunately, creators are the ones who lose the most on the internet. Remember why I got online in 1999?
To steal music. 🏴☠️
I’m not proud of this, but stealing music, tv and movies has become widely accepted. We’re desensitized to it.
We desperately need a new system by which creators get acknowledged and recognized for their work.
For an example of this, let's look at Audius vs Spotify.
Audius is a decentralized music platform that allows artists to retain ownership and control over their music.
Unlike Spotify, which requires artists to go through intermediaries such as record labels, Audius enables direct connections between artists and their fans, giving artists greater control over how their music is distributed and monetized.
Audius offers a more favorable royalty payout model than Spotify, with artists receiving 90% of revenue generated by their streams, compared to Spotify's average payout of around 0.0038 cents per stream.
Audius also uses cryptocurrency to pay artists, which eliminates transaction fees and provides more transparent and secure payment processing.
Clearly a musician is just one type of creator that exists online.
Over the next decade many more decentralized platforms which honor creators' work will be built.
However, it won’t matter unless users and platforms do their part to rebuild trust. We must act transparently and honestly, as we no longer accept that stealing is ok.
Don’t trust, verify…
This is the mantra we at Web3 Academy live by.
We do our best to look past all the fluff, hype, FUD and FOMO, and extract only the truth. We investigate the fundamentals, follow the incentives, and 👀🔛⛓️ to see if nothing fishy is going on.
Luckily for you, we also happen to publish our in-depth findings, analysis and think-pieces in an easy-to-digest report every Thursday 9AM EST.
Path #3 is the hurdle platforms must get over in order to survive in the future.
Centralized platforms, by their nature, are controlled by a single entity, which makes them vulnerable to abuse of power, which can lead to censorship, bias, and discrimination.
This can limit free speech, stifle innovation, and exclude certain groups from participating in the platform.
Centralized platforms may be limited in their ability to innovate and evolve, as they are often bound by existing structures, processes, and interests.
This can stifle creativity, slow down progress, and prevent new ideas and approaches from emerging.
The decentralization of platforms can provide several benefits for building a better future, by promoting transparency, security, innovation, and user control.
By shifting power away from centralized entities and towards distributed networks, decentralized platforms can create a more equitable, sustainable, and participatory future for all.
For an example of this, let's look at Gitcoin.
Gitcoin is a public goods fundraising platform. It enables organizations to complete grant fundraising in a transparent way on-chain. It also enables a new model for distribution of funds based on quadratic funding.
In order to understand Gitcoin, let me present a hypothetical use case.
Let's say that Walmart partners with the NBA to support youth basketball around the world. As part of this initiative Walmart puts up $1,000,000 to build 20 community basketball courts.🏀
Walmart accepts applications from hundreds of communities, but how do they decide which communities are most deserving of a court?
Using Gitcoin, people around the world are able to donate to the specific basketball court they want to be built.
The 20 communities with the most amount of people donating are the ones that get the basketball courts. Not the community with the single largest donor.
This is because public goods have the greatest impact when they are used by the greatest number of people. 👨👩👧👦👨👩👧👦👨👩👧👦 > 🧍♂️
And because these donations are made on-chain, all donors can transparently see where the funds go. They can see exactly how much of their donation was used to build the court vs how much was used to pay someone’s salary.
In the future, Walmart could even pass ownership or management of the basketball court over to these donors. Anyone who made a donation could easily be given governance or voting rights through on-chain mechanisms.
This would enable the community to not only use the court but take full responsibility for it therefore leading to the best outcomes for the community itself.
Giving up control to community members is scary for any platform. However, it is these platforms that will thrive in the long run.
Because they will be building a relationship with their members that goes far beyond a transfer of money.
Web3 is redefining trust between platforms and their communities.
Becoming Trustless Isn’t Enough
Blockchain technology won’t solve all of our trust issues.
Far from it.
It’s a start, but we also need to push the values of web3 beyond what exists on-chain. We must live these values in our day to day lives.
✅ Transparency: Web3 values transparency, as it helps to establish trust between parties.
✅ Decentralization: Web3 aims to create a more decentralized internet that removes the middleman and enables users and creators to work directly together.
✅ Privacy: Web3 values user privacy and data sovereignty, as it enables users to control their own data and limit the access of third parties.
✅ Interoperability: Web3 values interoperability, as it enables different technologies and networks to work together seamlessly.
✅ Openness: Web3 values openness, as it enables the sharing of knowledge, resources, and ideas.
This is how we truly change the world.
This is how we leave our mark.
This is how we make the world a better place for our kids and our grandkids.
And as always, thanks for reading and see you in the next one 😎
🟣 For the DOers
3 NFT marketplaces are engaged in a bloody battle for market dominance. But are they sustainable? Let’s analyze their tokenomics to find out the truth.
W3A PRO | $LOOKS vs. $BLUR vs. $X2Y2 Tokenomics
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