The Decline of Web3

Web3 was once celebrated as the "future of the internet," though this enthusiasm often felt more like a loud proclamation from the 'crypto enthusiasts' than a grounded reality. However, it appears that this vision has quickly sunk, marred by scandals and significant market downturns. The cryptocurrencies that form the core of Web 3.0 have seen dramatic declines: Bitcoin has dropped by 66% from its peak of $66,935, while Ethereum fell from $2,130 to $1,117 in just the last month. The entire cryptocurrency market has plummeted below $900 billion, down from a staggering $3 trillion six months ago. Unfortunately, further declines may still be forthcoming.

Transaction fees on the blockchain networks supporting Web3 have become exorbitant, rendering even simple transactions nearly impossible. Numerous projects, such as Terra and Luna, have collapsed, further destabilizing the crypto landscape. Additionally, Celsius, a crypto lending platform backed by major venture capital firms and Canada’s second-largest pension fund, along with Binance, have been accused of withholding users' funds, teetering on the brink of collapse. The NFT market is also experiencing a rapid decline in sales and public interest.

The reality is that practical applications for Web3 remain scarce. Instead of showcasing innovative possibilities, Web3's reputation has devolved into one dominated by digital monkey profile pictures and questionable coins, while its promised decentralization is still largely controlled by venture capitalists.

In short, Web3 has failed to deliver on its initial promise, leaving it in a precarious position.

The Rise of Web5

Yet, there’s a new glimmer of hope on the horizon — Web5.

Jack Dorsey, an outspoken critic of Web3, has unveiled his vision for the next evolution of the internet. He argues that the influx of venture capital and Silicon Valley insiders has led to a centralized platform masquerading as decentralized. In a tweet that stirred controversy among believers and investors alike, Dorsey stated, “You don’t own ‘Web3.’ The VCs and their LPs do. It will never escape their incentives. It’s ultimately a centralized entity with a different label.”

On June 10, Dorsey made an impromptu announcement regarding Web5, which will be developed by TBD, a division of his company, Block (formerly known as Square).

Web5 aims to deliver a decentralized internet where users have ownership of their data and identity, built on the Bitcoin network. The official description emphasizes its decentralized nature, stating: “Web5 is a Decentralized Web Platform that enables developers to leverage Decentralized Identifiers, Verifiable Credentials, and Decentralized Web Nodes to create Decentralized Web Apps, restoring ownership and control over identity and data to individuals.”

The Web5 framework promises to be open and permission-less, without third-party validators or tokens. However, the practical implications remain unclear. It revolves around themes of identity, ownership, and blockchain technology, but claims to offer a distinctive approach.

It’s worth noting that Web4 appears to have been entirely overlooked in this transition, perhaps destined to linger in obscurity. The reasoning seems to suggest that since Web5 is seen as a synthesis of Web2 and Web3, it naturally follows that this evolution could be labeled as Web5.

Although the announcement seemed spontaneous, it’s evident that Dorsey and his team have been working on this concept for some time. Daniel Buchner, a member of Block’s Decentralized Identity team, mentioned, “We’re currently finalizing the technical components of Web5, and they’re nearing completion.”

The future of Web5 as a transformative project enabling genuine decentralization remains uncertain. For it to succeed, it must prove useful to users and persuade them to abandon the myriad projects associated with Web3 that are currently in development.

Unfortunately for Dorsey and the influx of new creators eager to join the movement, it may already be too late for Web5.

The Broader Landscape of Internet Evolution

The coming months and years are likely to be tumultuous for the evolution of the internet, far more chaotic than the transitions from Web 1.0 to Web 2.0. To put this in perspective, Web1 lasted approximately 13 years (from around 1991 to 2004), while Web2 spanned roughly 15 years (from 2004 to about 2021). In contrast, Web3 has barely lasted a year, and Web4 was never realized.

It seems that Silicon Valley billionaires are intent on transforming this progression into a frantic race, each vying to disrupt the next iteration until they either achieve success or cause complete disarray.

One thing is certain: Web5 may not remain a fixture for long.

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