Yo Harry! Really interesting read, thanks for writing. Obv it's a long piece so apols if I make multiple comments. Hope you don't mind me writing here and feel free to ignore but really keen for a discussion because there's some concepts/ideas that would be great if you could expand on either because a) it helps clarify or b) they are worth healthily challenging.
"But power is starting to shift away from these companies."
- Agree, web3 represents a potential shift from existing tech companies but I don't see the power being then democratised. Power is still centralised, either, in the broadest societal sense, to those technically astute, or to those maintaining the network e.g. mining pools, or to GPU manufacturers, or those with access to cheap energy.
"Entry costs that previously, say 10 years ago, were high are now coming down. Blockchain tech allows you to accepts payments without an intermediary."
- Payments are made without an intermediary but pragmatically speaking, unless fiat currencies are no longer used for real life transactions, exchanges (ie intermediaries) are still necessary. Because of the fx transactions costs and until (if ever possible - which I think we should be really skeptical about) blockchain can scale to meet tx demand, it's not cheaper than 10 years ago.
"But if a small group of individuals can choose to remove your content, their power greatly outweighs the market at large and the free market is not all that free."
- As above, re: centralisation, we've seen market manipulation in web3 by malicious individuals in power.
"There’s still a risk that the network could change in ways that you don’t agree with, but all is not lost because other participants may feel the same way as you, agree to fork the network, and proceed in a different direction to the majority."
- Agree in principle, but there's so many counter examples (Bcash, eth classic etc.) that I don't know if in practice this is true.
"Let’s look at 2 of the largest NFT marketplaces, OpenSea and LooksRare."
- Something to ponder I suppose, but is this not an example of centralisation similar to existing platforms on web2. Discoverability seems to still only be solved via centralised platforms.
"a platform provides services that can’t be found anywhere else"
- I'm not sure I understand this, are you saying that the concept of a platform is unique or all individual platforms are unique?
"They provide a service that can’t be found anywhere else because the NFTs are unique pieces of art that can’t be found anywhere else."
- I dunno man, the tokens are unique, but is the art? Or is the argument that the token itself is art? (meta af haha)
A general point/question about NFTs
- I might be a luddite but I'm really unclear about the utility gained from purchasing an NFT. Granted there are some offline IRL benefits as you mentioned but the vast majority of purchases seemed fueled by speculation.
Hey Ross! Really appreciate your comments and the time you took to write all this up ❤️. I’m all for open dialogue.
Allow me to respond in full below :)
> But power is starting to shift away from these companies.
You raise a good point. I think our definition of “centralised” differs. I’d say that the technically astute, those maintaining the network e.g. mining pools, GPU manufacturers, and those with access to cheap energy are all examples of decentralised groups.
The way I see it, unless there’s mass collusion between mining pools or some kind of developer cartel controlling how Web3 develops (which I see as unlikely), then these groups are not centralised.
To me “centralised” refers to a single corporate entity with a singular vision controlled by a select group of individuals where network participants have no say over governance, using closed-source backend services. Basically an opaque entity that cannot be inspected or verified by the public.
I don’t see the aforementioned groups as having these characteristics, so I believe they are decentralised.
I also don’t think that “decentralised” is equivalent to “democratic” because the most active and engaged members of a decentralised network are likely to be the people who decide which direction the network goes in. People get rewarded for their contribution, not just for being there.
So just because you or I participate in a decentralised network does not mean we get voting power equal to the most active participants.
That is to say, voting power is not equally distributed.
Compare this to a centralised company like Meta. Mark Zucerkberg likely has the last say in any and all meaningful decisions about the company, regardless of what the rest of the company thinks.
> Entry costs that previously, say 10 years ago, were high are now coming down. Blockchain tech allows you to accepts payments without an intermediary.
Yeah I get that tx fees have not gone down that much in the last 10 years, good point.
In my head I was comparing Blockchain now to traditional ecomm 10 years ago.
Even if we look at Shopify and PayPal now, they charge you a % fee for being on the receiving end of commercial transactions, so the more you earn the more you pay.
But on Ethereum for example, it costs 21,000 units of gas to send ETH and it doesn’t matter how much ETH you send, it’s a fixed cost.
And the majority of the time, as the receiver of ETH, you don’t pay the gas fees anyway.
So the barrier to entry for you as a business is lower than it was 10 years ago.
Totally glossing over the fact that consumers now have more fees to pay and I don’t deny that’s a problem with Blockchain rn.
> But if a small group of individuals can choose to remove your content, their power greatly outweighs the market at large and the free market is not all that free.
I have stuff to say here but I’m not sure if you have a specific example of market manipulation in mind? Would you mind expanding a bit?
> There’s still a risk that the network could change in ways that you don’t agree with, but all is not lost because other participants may feel the same way as you, agree to fork the network, and proceed in a different direction to the majority.
I’m not well-versed in the area of forks and how successful they’ve been (probably should’ve stayed away from the topic as this is a weak point).
Is there a reason why you think Bcash and ETH classic are counter examples?
> Let’s look at 2 of the largest NFT marketplaces, OpenSea and LooksRare.
Yeah, re: discoverability, I agree. Not sure how to approach truly decentralised discoverability yet, it’s a difficult one to wrap my head around. Possibly a future topic!
What I want to point out is that there’s a big difference between OpenSea and LooksRare, with the former being much more centralised than the latter.
LooksRare has a token that gives holders a share of the platforms trading fees and will be used as a governance token in future, giving token-holders a say in how the platform develops.
OpenSea has none of this.
> A platform provides services that can’t be found anywhere else
I’m saying that all platforms are unique in that they provide services that cannot be reproduced without building the tech stack yourself, e.g.
* Shopify - provides ecommerce tech stack
* Uber - matches drivers and riders, provides payment system
* Twitter - allows you to share your thoughts and follow others to read their thoughts
> They provide a service that can’t be found anywhere else because the NFTs are unique pieces of art that can’t be found anywhere else.
To me it’s a combination of the art, the other metadata (attributes, tokenId etc.), the provenance (who created it and who bought it and when), and the NFT itself.
All of these combined give you a unique asset.
> A general point/question about NFTs
Totally get that! You’re going to like my next article because I’m writing about this :D
Speculation is definitely a big part but beyond that the tl;dr is NFTs convey social currency.
The “blue chip” collections are your digital Rolex, Bugatti, and Louis Vuitton purse. People want to buy them and display them on social media as a flex to say, “hey, I’m so rich I can spend millions on a jpeg.”
People already do this with physical items, experiences, and achievements, just look at Instagram and you’ll see people doing this, flashing their new car, showing just how much fun that wedding was, stood at the top of Ben Nevis, or sipping cocktails on a beach in Mexico.
I think part of this is self-expression, a need to curate and share your digital identity.
NFTs are the latest medium for self-expression and social currency.
Thank you so much for engaging, Ross, I’d love to keep the convo going ✌️
Yo Harry! Really interesting read, thanks for writing. Obv it's a long piece so apols if I make multiple comments. Hope you don't mind me writing here and feel free to ignore but really keen for a discussion because there's some concepts/ideas that would be great if you could expand on either because a) it helps clarify or b) they are worth healthily challenging.
"But power is starting to shift away from these companies."
- Agree, web3 represents a potential shift from existing tech companies but I don't see the power being then democratised. Power is still centralised, either, in the broadest societal sense, to those technically astute, or to those maintaining the network e.g. mining pools, or to GPU manufacturers, or those with access to cheap energy.
"Entry costs that previously, say 10 years ago, were high are now coming down. Blockchain tech allows you to accepts payments without an intermediary."
- Payments are made without an intermediary but pragmatically speaking, unless fiat currencies are no longer used for real life transactions, exchanges (ie intermediaries) are still necessary. Because of the fx transactions costs and until (if ever possible - which I think we should be really skeptical about) blockchain can scale to meet tx demand, it's not cheaper than 10 years ago.
"But if a small group of individuals can choose to remove your content, their power greatly outweighs the market at large and the free market is not all that free."
- As above, re: centralisation, we've seen market manipulation in web3 by malicious individuals in power.
"There’s still a risk that the network could change in ways that you don’t agree with, but all is not lost because other participants may feel the same way as you, agree to fork the network, and proceed in a different direction to the majority."
- Agree in principle, but there's so many counter examples (Bcash, eth classic etc.) that I don't know if in practice this is true.
"Let’s look at 2 of the largest NFT marketplaces, OpenSea and LooksRare."
- Something to ponder I suppose, but is this not an example of centralisation similar to existing platforms on web2. Discoverability seems to still only be solved via centralised platforms.
"a platform provides services that can’t be found anywhere else"
- I'm not sure I understand this, are you saying that the concept of a platform is unique or all individual platforms are unique?
"They provide a service that can’t be found anywhere else because the NFTs are unique pieces of art that can’t be found anywhere else."
- I dunno man, the tokens are unique, but is the art? Or is the argument that the token itself is art? (meta af haha)
A general point/question about NFTs
- I might be a luddite but I'm really unclear about the utility gained from purchasing an NFT. Granted there are some offline IRL benefits as you mentioned but the vast majority of purchases seemed fueled by speculation.
Hey Ross! Really appreciate your comments and the time you took to write all this up ❤️. I’m all for open dialogue.
Allow me to respond in full below :)
> But power is starting to shift away from these companies.
You raise a good point. I think our definition of “centralised” differs. I’d say that the technically astute, those maintaining the network e.g. mining pools, GPU manufacturers, and those with access to cheap energy are all examples of decentralised groups.
The way I see it, unless there’s mass collusion between mining pools or some kind of developer cartel controlling how Web3 develops (which I see as unlikely), then these groups are not centralised.
To me “centralised” refers to a single corporate entity with a singular vision controlled by a select group of individuals where network participants have no say over governance, using closed-source backend services. Basically an opaque entity that cannot be inspected or verified by the public.
I don’t see the aforementioned groups as having these characteristics, so I believe they are decentralised.
I also don’t think that “decentralised” is equivalent to “democratic” because the most active and engaged members of a decentralised network are likely to be the people who decide which direction the network goes in. People get rewarded for their contribution, not just for being there.
So just because you or I participate in a decentralised network does not mean we get voting power equal to the most active participants.
That is to say, voting power is not equally distributed.
Compare this to a centralised company like Meta. Mark Zucerkberg likely has the last say in any and all meaningful decisions about the company, regardless of what the rest of the company thinks.
> Entry costs that previously, say 10 years ago, were high are now coming down. Blockchain tech allows you to accepts payments without an intermediary.
Yeah I get that tx fees have not gone down that much in the last 10 years, good point.
In my head I was comparing Blockchain now to traditional ecomm 10 years ago.
Even if we look at Shopify and PayPal now, they charge you a % fee for being on the receiving end of commercial transactions, so the more you earn the more you pay.
But on Ethereum for example, it costs 21,000 units of gas to send ETH and it doesn’t matter how much ETH you send, it’s a fixed cost.
And the majority of the time, as the receiver of ETH, you don’t pay the gas fees anyway.
So the barrier to entry for you as a business is lower than it was 10 years ago.
Totally glossing over the fact that consumers now have more fees to pay and I don’t deny that’s a problem with Blockchain rn.
> But if a small group of individuals can choose to remove your content, their power greatly outweighs the market at large and the free market is not all that free.
I have stuff to say here but I’m not sure if you have a specific example of market manipulation in mind? Would you mind expanding a bit?
> There’s still a risk that the network could change in ways that you don’t agree with, but all is not lost because other participants may feel the same way as you, agree to fork the network, and proceed in a different direction to the majority.
I’m not well-versed in the area of forks and how successful they’ve been (probably should’ve stayed away from the topic as this is a weak point).
Is there a reason why you think Bcash and ETH classic are counter examples?
> Let’s look at 2 of the largest NFT marketplaces, OpenSea and LooksRare.
Yeah, re: discoverability, I agree. Not sure how to approach truly decentralised discoverability yet, it’s a difficult one to wrap my head around. Possibly a future topic!
What I want to point out is that there’s a big difference between OpenSea and LooksRare, with the former being much more centralised than the latter.
LooksRare has a token that gives holders a share of the platforms trading fees and will be used as a governance token in future, giving token-holders a say in how the platform develops.
OpenSea has none of this.
> A platform provides services that can’t be found anywhere else
I’m saying that all platforms are unique in that they provide services that cannot be reproduced without building the tech stack yourself, e.g.
* Shopify - provides ecommerce tech stack
* Uber - matches drivers and riders, provides payment system
* Twitter - allows you to share your thoughts and follow others to read their thoughts
> They provide a service that can’t be found anywhere else because the NFTs are unique pieces of art that can’t be found anywhere else.
To me it’s a combination of the art, the other metadata (attributes, tokenId etc.), the provenance (who created it and who bought it and when), and the NFT itself.
All of these combined give you a unique asset.
> A general point/question about NFTs
Totally get that! You’re going to like my next article because I’m writing about this :D
Speculation is definitely a big part but beyond that the tl;dr is NFTs convey social currency.
The “blue chip” collections are your digital Rolex, Bugatti, and Louis Vuitton purse. People want to buy them and display them on social media as a flex to say, “hey, I’m so rich I can spend millions on a jpeg.”
People already do this with physical items, experiences, and achievements, just look at Instagram and you’ll see people doing this, flashing their new car, showing just how much fun that wedding was, stood at the top of Ben Nevis, or sipping cocktails on a beach in Mexico.
I think part of this is self-expression, a need to curate and share your digital identity.
NFTs are the latest medium for self-expression and social currency.
Thank you so much for engaging, Ross, I’d love to keep the convo going ✌️