In the fresh breeze of technological progress, where Bitcoin’s sails flutter with the promise of new highs and institutional adoption, lies a sea fraught with hidden icebergs – the complexity and vulnerabilities of web3, along with the underlying arrogance that we are always better then web2.
As I’m about to close out the holidays, I want to leave with a call to action for 2024.
“Stop comparing ourselves and competing with web2.
Stop thinking that web3 exists in a vacuum, and accept the areas where we fail so we can build real solutions that won’t falter in mainstream adoption.
We can do better. We have to do better.”
I love this space. The community spirit in the effort to build a better system is second to none. The technology is devastatingly powerful and user-centric, rather than focused on corporate greed. All too often I worry about the echo chamber in which we discuss blockchain, web3 and Bitcoin.
Crypto does not exist in a vacuum. It is not the answer to everything web2 and cannot exist without the traditional rails on which the world is currently built. If Cloudflare, Amazon or Microsoft go bankrupt, so will many Web3 frontends. I pray we move on to a world where this is no longer the case, but for now, everyday web3 needs web2 more than web2 needs web3.
Furthermore, blockchain promises a world of self-sovereignty, improved security and streamlined interactions with a new ‘internet of value’. I would like to point out that we are still a long way from getting there at this point.
Realizing the excitement for 2024 requires critical self-reflection.
As the year draws to a close and we enter 2024, a likely pivotal year for the crypto industry, it is time to shift our focus from the shortcomings of web2 and traditional finance to the challenges inherent in web3. The blockchain world is buzzing with anticipation, especially with changes in crypto accounting requirements, major institutions predicting record highs of new Bitcoin, and the likelihood that US regulations will accept a Bitcoin spot ETF. These developments, while optimistic, overshadow a critical conversation: the inherent risks of web3, especially when compared to our daily financial interactions.
Consider a simple action, such as buying a can of Coke at a local store. It is a transaction that is free from the fear of losing your entire bank balance. Despite past threats such as credit card cloning, security measures such as instant banking alerts and solutions like Apple Pay have significantly reduced such risks. The simplicity and security of these transactions are in stark contrast to the complexity and vulnerabilities in the web3 space, exemplified by incidents such as the Ledger Connect Library vulnerability.
Everyone on X was told that day not to interact with a dApp. Imagine if Visa announced that any credit or debit card transaction could result in you losing your money! Granted, users had to confirm a notification from the drainer wallet to lose their money. However, the analogous situation would be a cashier asking if the Visa confirmation code is correct before stealing your entire bank balance. I don’t know what a valid credit card confirmation should look like in a checkout system, just like it’s usually almost impossible to understand a signing message from an Ethereum transaction.
The risks in web3 are greater than in TradFi. For example, when I recently entered a gaming website competition, I found myself second-guessing every step of the way, worried about the legitimacy of transactions on platforms like Magic Eden. Yes, it’s a well-known site, but was I sure the front end wasn’t cloned? Was I sure the Ledger issue was resolved and not vulnerable? Ultimately, I checked their social media platforms and used AI to analyze the signing message to understand exactly what I was signing. This fear is compounded by the thought that a single misstep could put significant digital assets at risk, including NFTs and crypto holdings.
Web3 promises that it will not yet deliver.
This brings us to the heart of the web3 dilemma. Constantly innovating, the ecosystem is deploying new NFT and token applications in areas such as SocialFi and soul-bound tokens related to digital identities. Still, we may need rethinking to achieve mainstream adoption. While it’s great that I can find other NFT communities and users with a similar social graph on platforms like Mastodon and Lens, the fact that I have to keep those specific, potentially valuable assets in the same wallet I log in with could be a factor. terrifying. To create a social graph of my web3 activity, I have to log into dApps with the same wallet every time, which puts those assets at risk. Again, we don’t have to risk almost anything to pay via ApplePay.
The idea of tiered wallets and sub-accounts is emerging as a potential solution, offering a way to participate in the digital space without risking significant assets. But as we explore these solutions, complexity escalates, potentially alienating users and undermining the user experience we want to improve.
The challenge then is to balance the libertarian ideal of self-sovereignty with the need for user support and security. Concepts such as dynamic key sharing, like my friends at INTU developed, or social recovery, and technologies like MPC and ERC 4337 are steps in the right direction, but they are not enough. The current state of web3 resembles a beta version, reminiscent of the first tech-focused iteration of the Pied Piper app from Silicon Valley. While the ethos of self-sovereignty is admirable, its practical application in everyday transactions is questionable.
A hybrid system that allows for a seamless transition between full control and assisted asset management could work. This approach can include dynamic key generation and shared custody options. However, given the entrenched nature of today’s Web3 account systems, significant evolution is required. I know INTU does this, but this isn’t built into the entire web3 stack, nor should it be. I’m not trying to scare INTU here, but I’m friends with those guys for a reason; they get it. In my opinion, the rest of the room should also solve the problem. The current way we build web3 feels like we have tunnel vision and need to open our eyes a little more.
Another project I’m publicly a big fan of is Core Blockchain and its CorePass app, which offers a decentralized approach to KYC and data control. Such innovations point to a future where users can manage their data securely and autonomously. However, achieving widespread adoption of such platforms remains a huge challenge. Core Blockchain is currently isolated from the rest of web3, and to achieve the network effect needed to make this work, there needs to be visibility not only of the solutions, but also of the problems they solve.
Right now I feel like we’re burying our heads in the sand and building new NFT marketplaces and liquid staking platforms instead of looking at the hard issues at the root of the problem.
My closing thoughts.
Finally, while the appeal of blockchain and web3 is undeniable, the recent Ledger incident and similar vulnerabilities have exposed critical flaws in the current ecosystem. To achieve mainstream adoption, we must develop systems that are not only technologically advanced, but also user-friendly and secure.
The need for human-readable transaction simulations, more explicit on-chain protocols, and more secure asset management strategies has never been more urgent. The goal should be a web3 environment where participation doesn’t mean risking your entire digital wealth. It’s time for the industry to evolve and ensure that our digital future is not only innovative, but also inclusive and secure.
To be clear. I’m still a big fan of what’s being built in web3. I just want to make sure that we don’t ignore critical issues in favor of building better technology and ignoring some crucial things that we still need to solve in terms of onboarding and day-to-day use in space.
Merry Christmas, Merry Christmas and a Happy New Year to everyone. Let’s make 2024 the best year ever for Bitcoin, blockchain and web3. To do this, take a step back this holiday season and ask yourself:
“Are we doing our best to offer everyone a better solution? And do you really feel safer in web3 than using comparison tools like ApplePay in your local store?”
If not. Let’s pivot where necessary, build these much-needed safeguards into web3 and accept that compromises are part of development and progress.
These are the views and opinions of Akiba, Senior Editor at CryptoSlate, and not of the company itself.