Why this matters: Decentralization, Chris Dixon (Andreessen Horowitz)

Chris Dixon from Andreessen Horowitz recently wrote this piece discussing Web 3.0 and why a decentralized internet is important for future innovation.  This is a topic that will be explored in depth by Olaf Carlson-Wee at our upcoming time Summit event in April.

During the initial era of the internet, Web 1.0, web services were built upon a common set of open protocols that were developed and controlled by the internet community. These protocols (ie. http, tcp/ip, ftp, smtp) were not owned or controlled by any one individual or organization and provided the basic plumbing for some of today’s leading internet companies who built tremendous value with the understanding that this infrastructure was permanent.

In Web 2.0, large tech companies built centralized platforms whose capabilities outstripped what could be developed using open services.  These organizations (ie. Google, Amazon, Facebook and Apple) currently control much of the internet landscape and with it the vast amount of user data.  While we have gained access to life altering software and services, there are two disadvantages that have become apparent. First, the rules of the game have changed for startups and developers.  They are tasked with innovating on unstable ground as open protocols have been replaced by these centralized, competitive platforms. As a result, startups are boxed out and innovation is suppressed.  Today’s engineers and entrepreneurs are incentivized to develop elsewhere. Second, users are becoming increasingly aware of the downside of centralized platforms. Users give up privacy, control of their data and are subject to data breaches, “fake news” and social engineering.  We believe this will strengthen with time.

“Software is simply the encoding of human thought, and as such has an almost unbounded design space” – Chris Dixon

The development of decentralized, blockchain based internet services could bring about a new era of innovation (Web 3.0) while directly addressing some of the issues mentioned above.  These “cryptonetworks” all stem from the idea put forth by Satoshi Nakamoto is his Bitcoin white paper.  Engineers and startups are in the early stages of developing decentralized software services that look to compete with and disrupt many of the offerings from their centralized counterparts.  These services offer economic incentives for those who participate in developing, maintaining and using the network. While many of the current issues stem from scalability, we believe the embedded incentive structures of these networks will continue to draw the best developers who will find a solution.  In addition, these incentive structures will entice user’s who are looking for more control of their digital profile and will create strong network effects. We don’t think this will remain localized to Silicon Valley but will be a global issue across many disciplines.