DAOs? Tokens? Decentralization? Don't worry! Here's your metaverse primer. (Part 2)
Read, Write, and OWN the Internet. In theory.
NOTE: Catch up on Part 1 of our Metaverse Primer right here.
Episode 2 of Meta-Averse is live. Ala and Jacob from Bittensor join the show to talk about building a decentralized marketplace for machine intelligence. Don’t be scared off if you feel a slight head-spinning kind of feeling — “decentralized marketplace for machine intelligence” is a mouthful!
In a nutshell, these guys are building a community on the blockchain that’s kind of like a company, with the aim of building machine intelligence (AI, more or less) faster and more efficiently AND in a way that lets anyone with true skills join, participate, and own a stake of the community’s efforts, whether they’re an ex-Googler or working alone in a far-off corner of the Web.
If you’re into DAOs and machine intelligence, you’ll be right at home, just hit play!
If not, don’t worry: This episode gets fairly technical at points, but a lot of what we talk about is applicable to most any type of community-building on web3. Let the heavy tech-speak wash over you like a next-gen ASMR video, and hone in on the explanations of how blockchain tokens can facilitate ownership in an online community.
Part One of our metaverse primer focused mainly on the reasons why I started paying so much attention to web 3. Part two is focused on how the blockchain works, what NFTs and other types of tokens are, and some of what might be possible using this technology.
I’ll say for the record that mine is in no way an all-encompassing metaverse primer. For that, I direct you to Matthew Ball’s nine-part, many word opus on the subject. I want to say something about the meaning of a venture capitalist having penned the current working bible on all of this stuff. “Follow the money,” seems about as profound as anything else I could come up with. Talking about “decentralization” hand-in-hand with “billions in vc investments” creates a bit of cognitive dissonance in my brain, but that’s Late Capitalism for you, I guess.
We’re going to explore the technology itself, because without tech that actually does what people say it does, this is all complete vaporware nonsense. All of this stuff — or much of it, anyway — is predicated on something called blockchain technology. In quick, rough terms, the blockchain is a shared database — an immutable, digital ledger into which information can be recorded.
In other words, it’s a transaction log that lives online and cannot be changed or erased once information is recorded to it. Any time you record a new transaction to the blockchain — by adding a new block to the end of the chain, hence the name — the record of that transaction is set in stone, and freely available for others to review.
What that means, conceptually at least, is that the blockchain can capture a transparent record of whatever you want it to - a record that nobody can go back and rewrite after the fact, at that. So, imagine that, I don’t know, all political fundraising was done on the blockchain. We would then have an accurate, transparent record of who donated to whose campaign, including when and how much. That record would exist, forever, unchangeable, for anyone who wanted to to review, use in a stump speech, or submit as evidence in a court of law. In theory, that level of public transparency, applied to, say, every financial transaction around the world from here to the end of time, could change the way people of all walks of life are held accountable.
Blockchain technology is also, by design, decentralized. In theory, anyway. That means that instead of the immutable transaction ledger we were just talking about, existing on a single computer — that is, being owned and controlled by a single entity — it’s spread out across multiple computers across the internet. The key thing about this is that no one actor can shutdown, erase, or manipulate the system on their own. If one node of, say, a decentralized social network is taken out, the other nodes can keep the lights on. If a user of the decentralized social network tries to make a change on one of the nodes — for example, erasing a tweet or deplatforming a user — everyone will immediately see the change and how its not reflected in the other nodes. And then they can collectively set the record straight and, I don’t know, exile that one user who tried to make unilateral decisions. The point is that decentralized networks offer all sorts of built-in transparency and trust and shifting of power away from single overlords and into the collective hands of the users (builders and users, I should say).
In theory, anyway.
I keep saying. ‘In theory, anyway,’ because there are all kinds of technological and market realities at play that are already calling into question the whole decentralized nature of all of this stuff. We’ll get into this in future episodes, but here’s an easy example.
NFTs are being held up as a way to use the blockchain to help artists sell their art without the need for a middleman. But the vast majority of NFT sales are happening on a single platform, a marketplace called OpenSea. Some reports put OpenSea at a 97% market share as of November 2021, doing a staggering $2.7 billion in transaction volume during the first half of January 2022, alone. If I make an NFT — the process is called minting, so if I mint an NFT and list for sale it on OpenSea — not only does OpenSea take a commission on any sale I might make, they also retain sole control over the database that powers their website.
If OpenSea wants to delist my NFT, they can go ahead and make it disappear, without my consent or input, just like Amazon or eBay or any other website can, decentralized blockchain be damned. On the one hand, I could just go sell my NFT myself, directly to the buyer. I don’t need OpenSea to do that — that’s what cryptocurrencies and smart contracts are for. On the other hand, how am I going to find a buyer for the digital masterpiece I’ve put a six-figure price tag on, unless I use a well-known NFT marketplace, of which very few exist and OpenSea currently has the market cornered on?
It actually may be much worse than that, as OpenSea reportedly has some deeper ties to how crypto wallets work that allows them to remove NFTs not only from their online listings, but also from your wallets. A crypto wallet is exactly what it sounds like, more or less, — the place where you keep all of your crypto stuff: cryptocurrency, NFTs, and so on. So the upshot, for now, is that even in this emerging, decentralized world, the centralized power players seem to have a lot of power. For more on this, check out this essay by Moxie Marlinspike. Moxie is the guy who created Signal, one of the world’s foremost encrypted messaging apps.
Another difference between conceptual and reality-based decentralization that’s worth mentioning is this: Back in the early days of the internet, if you wanted to participate you needed to build stuff. You built a webpage in HTML, or hosted an email server of your own, that kind of thing. Then .. and I’m glossing over a whole bunch of stuff here, but that’s okay for now … then big companies came along and made things easier. Outfits like Geocities made it easy to create and host a website. Gmail let you use email without hosting a server. MySpace, Twitter, and Facebook made it easy to say stuff and connect with individuals online without even having to spin up a blog. All of these services, and countless others like them, reduced the friction involved in doing things online — email, social media, running a digital storefront — by taking care of a lot of the technical heavy lifting for us.
But in doing so, they centralized all of this stuff. When your email goes through Google and your social media lives on Twitter and your business runs on Shopify, life is easy. But you’re also at the mercy of the folks who run these centralized services. People are generally quite willing, on the whole, to trade control for convenience. At least we are online. So a big question — and this is one for our guests, so stay tuned — is whether or not this whole concept of a decentralized internet even means anything if we, the individual users, aren’t willing to host part of the network ourselves. True decentralization is theoretically possible if the network is spread out across nodes that each of us host and maintain ourselves, on our own laptops and iPads and cellphones. But short of that, what happens? Is the blockchain really decentralized if most of the internet is still hosted on Amazon Web Services? Maybe it is, but it’s a question worth thinking about.
I bring all of this up, early on, because I really like the idea of decentralization. Conceptually, the idea that everything from money to ownership of goods to the way we organize and govern ourselves could be permanently, immutably controlled by the collective community of stakeholders is fascinating to me. One of the things I keep hearing from cryptocurrency enthusiasts, for instance, is that a viable currency that’s not tied to any nation-state is potentially life-changing thing for millions of people. Americans — I live in America, so count me as one — Americans may take for granted how stable our currency, the US dollar is. But it’s not like that for a lot of the world. So a globally accepted currency that’s untethered from any nation-state and its government and things like corruption and hyper-inflation, and whatever else economists understand really affects people’s lives on a daily basis? Conceptually that could be huge. As could a truly democratic, transparent, immutable means of government — lawmaking, and distribution of resources ,and so on — that’s in the shared hands of the people being governed. Conceptually, decentralized blockchain technology could make this stuff happen. But, again, that’s conceptually.
So that’s a little bit on the blockchain, and I’m sure some of you reading are making mental lists of all the things I just got wrong. And that’s fine. That’s where the guests come in, and that’s where I’ll direct you to things you can read and watch and listen to if you want to understand this stuff a little better.
In the next part, I’ll go a little further and talk for a minute about how the blockchain ties into VR and web3 and The Metaverse. Or how it will, one day soon — ahem — in theory.