Continuations

The linked post[1], ironically, really helps to cement why I consider web3 to be interesting technologically but mostly nonsense from a product perspective.

> As a first approximation all the big powerful internet companies are really database providers. Facebook is a database of people’s profiles, their friend graphs and their status updates. Paypal is a database of people’s account balances. Amazon is a database of SKUs, payment credentials and purchase histories. Google is a database of web pages and query histories.

This is profoundly, naively, staggeringly wrong. The products that these companies provide to users[2] are not "the databases" - they are "the ability to do useful, meaningful, real-life impactful things". Facebook is not valuable as a service because of its database - it's valuable because I am able to interact with that database in ways that result in other people seeing the thing that I posted. PayPal is not useful to me because of those recorded balances - it is useful because merchants and financial institutions respect those balances are being equivalent to money. And so on - Amazon is useful because things actually show up at my door, Google is useful because it can use those links/queries to serve me the page that I was searching for.

This is, ironically, why many claims of web3's supremacy fall flat. As this[3] long-but-very-worthwhile rant about NFTs in gaming makes clear, simply claiming "ownership" is almost meaningless for anything other than…

3 Points about the the latest Piketty book:

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1) Churn in Inequality:

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12 percent of the population will find themselves in the top 1 percent of the income distribution for at least one year

39 percent of Americans will spend a year in the top 5 percent of the income distribution

56 percent will find themselves in the top 10 percent

73 percent will spend a year in the top 20 percent

Although 12 percent of the population will experience a year in which they find themselves in the top 1 percent of the income distribution, a mere 0.6 percent will do so in 10 consecutive years

54 percent of Americans will experience poverty or near poverty at least once between the ages of 25 and 60

Half of those who earned over $1 million a year did so just once during this period (1999 and 2007), while only 6 percent reported millionaire status across all nine years

Data analyzed by the I.R.S. showed similar findings with respect to the top 400 taxpayers between 1992 and 2009. While 73 percent of people who made the list did so once during this period, only 2 percent of them were on the list for 10 or more years.

via: http://www.nytimes.com/2014/04/20/opinion/sunday/from-rags-to-riches-to-rags.html

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2) How much is the inequality being driven by Technology?

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Sam Altman @YC:…

I don't know about that. There's a flurry of open protocols being built on Blockchain and maybe there's a golden age ahead . . .

> "Historically many key protocols, such as TCP/IP and HTTP, have come from researchers. Subsequent iterations of these protocols were often handled by nonprofit organization that tried to wrangle with more or less success the various commercial interests that sprang up around this protocols (the companies that were making and selling software and hardware based on them). The more money was involved the harder this became.

> "Now, however, we have a new way of providing incentives for the creation of protocols and for governing their evolution. I am talking about cryptographic tokens . . .

> "I can’t emphasize enough how radical a change this is to the past. Historically the only way to make money from a protocol was to create software that implemented it and then try to sell this software (or more recently to host it). Since the creation of this software (e.g. web server/browser) is a separate act many of the researchers who have created some of the most successful protocols in use today have had little direct financial gain. With tokens, however, the creators of a protocol can “monetize” it directly and will in fact benefit more as others build businesses on top of that protocol.
Given this new incentive I expect a lot of resources to be devoted to protocol innovation."

~…

The post this post links to a few times [1] is the more interesting one:

https://continuations.com/post/671863718643105792/web3crypto-why-bother

Still, it's unconvincing to me.

It argues web3 is about permissionless data. The problem with that is we already have permissionless data -- you can put almost any kind of data you want on a server and encourage people honor it. What they actually want is shared data, governed by rules that hard for anyone to change, and use that as scaffolding to build systems around consequential data. That's kind of interesting, but what happens when the rules conflict with reality. E.g., when the blockchain says you own the land but the law says someone else does? Now you could agree to make a blockchain database is the authority on something, even contractually, which would help it harmonize with laws to a decent degree. But that would be an individual decision and doesn't preclude scams, fraud, people acting in bad faith, etc.

Ultimately blockchains about data of any consequence will have to comport with applicable laws and regulations, just like everything else. The lack of flexibility likewise makes blockchain pretty useless for softer things, like social networks. (It's kind of silly to even bring up social networks in this context, but the post brings up Facebook.)

I wrote a post with my predictions here
https://medium.com/swlh/9-predictions-for-2020-2029-555312fc69fc?source=friends_link&sk=0a7319bbd3ea69cb363c87b91f642ba3

TLDR
1. Federated Learning will unlock value from previously inaccessible sensitive data.

2. Deepfakes will impact democracy and bring about a need for publisher certified content.

3. Nationalism will rise around the world, the internet will splinter.

4. eSports will take a huge chunk of attention and advertising dollars from sports.

5. Blockchain will get adoption in enterprise. Mainstream adoption will struggle until there is a key custody solutions that everyone can use.

6. Self driving cars will open up new business models. Regulations will be the main barrier to adoption.

7. Welfare systems will get strained.

8. Digital currencies and negative interest rates will open pandoras box.

9. Search will get reimagined.

I also enjoyed these posts

https://avc.com/2020/01/what-will-happen-in-the-2020s/

https://continuations.com/post/189997132065/an-agenda-for-the-2020s-inventing-the-knowledge

https://alexdanco.com/2019/12/17/ten-predictions-for-the-2020s/

there was a recent blog which dealt with rationality behind such high absurd evaluations: http://continuations.com/post/19000949472/a-rational-internet-venture-valuations-bubble

4. The winner-take-all nature of network-effects businesses in which the dominant business can be an order of magnitude more valuable than other competitors.

So it is entirely rational given the Internet environment to see a dramatic stretching of the valuations for market leaders with network effects. It does, however, not bode well for aggregate returns for the venture capital asset class:

1. In a race to pick the winners ever earlier, valuations get stretched even for companies that have not yet proven that they really have strong network effects and that they will be the leader in their respective market.

2. These stretched early stage valuations will lead to depressed returns in a large number of companies and will also make many of these companies harder to fund. There will be more of these companies and more capital invested in them (in aggregate) than in the winners.