Web3 is far from its iPhone moment

On January 9, 2007, a man in a black turtleneck sweater delivered the Keynote Address at Macworld 2007, in San Francisco, California. He was wearing “Dad” jeans and flavorless white running shoes. He promised the world three products: a widescreen iPod with touch controls, a revolutionary new kind of mobile phone and a breakthrough internet communication device, but he was really only talking about one: the iPhone. 

The first such product of its kind. 

iPhones quickly became the best-selling product of all time. Steve Jobs didn’t offer free trials. He didn’t hold giveaways or go on TV and beg for users. He and Apple just delivered an undeniably superior, paradigm-changing product to the market, and mass adoption happened as naturally as a falling apple hits the ground.

The iPhone did away with physical keyboards and the stylus in order to make the phones intuitive for anyone in the world to use. Web3 leaders would do well to make their projects equally intuitive and accessible too. 

Until the leaders of Web3 are able to deliver a new system to the market that is so far superior to the old ways of Web2 that mass adoption happens naturally and speedily, Web3 will continue to be little more than an interesting set of failed projects and fringe idealists.

Doesn’t anybody in crypto own a black turtleneck?

Learning from how Big Tech successfully captured our parents as customers

My mother has never owned a computer in her life, and even she has an iPhone now. This is the lesson that Web3 must learn if it is ever going to reach the fabled promise land of mass adoption. 

My mother has an iPhone because she has to have one. She learned to use one because she had to learn. She didn’t want to. She still doesn’t want to. But iPhones are so ubiquitous and have so completely changed the way the world works that she has been forced to use one to continue doing a job she started back in the 1980s.

If Web3 is ever going to reach this level of paradigm-shifting impact, if they are ever going to achieve mass adoption and displace the arcane tyranny of Web2, then they are going to have to build and offer a system to the market that is undeniably better than what’s currently out there: the longstanding kings of Web2.

Steve Jobs and his iconic black turtleneck are gone, but Apple still charges a 30% fee for apps and in-app purchases on the iOS, iPadOS, watchOS and macOS App Store. Of the $279.81 billion of revenue Google generated in 2022, $162.45 billion came from monetizing their users’ data by selling search ads (and not sharing this revenue with their users). It took Elon Musk buying Twitter and taking it private as X in order to launch an ad revenue-sharing program in July 2023, which allows revenue from verified users’ organic impressions of ads to be shared with the users who created the content posted on X.

The promise of Web3 is an alternative. An Internet of Value. A digital world where users own their data. A chance to have a digital identity and digital property rights. A chance to break the vice grip that all of these centralized corporate overlords hold on their platforms, their users and the money they make from exploiting both. The promise is appealing, but the results have not materialized.

Where Web3 falls short

Crypto offers users the opportunity to self custody their assets, giving them total control of their value, free from third-party governments or corporate masters. However, private keys can be lost and the assets become unrecoverable. Chainalysis estimates about 25% of bitcoins have been lost forever in this manner.

Celsius offered to custody user assets and generate yield off of them, the bulk of which would go back to the users who actually owned the assets. But their slogan “Unbank Yourself” became “Bankrupt Yourself” when unsound management led to bankruptcy in July of 2022.

FTX adopted the tagline, “Built by traders, for traders,” which captures the Web3 idea of user ownership. FTX also made a grand show of their philosophy of effective altruism. But that all ended when it was revealed that the entire business had been a house of cards.

NFT technology is mostly being used by Web3 projects like a child’s trading card game, instead of being used to create “the next generation of markets” by tokenizing real world assets as BlackRock CEO Larry Fink has publicly suggested. And most NFTs are just links to a picture hosted on a Web2 server, not a truly on-chain piece of digital property.

Solana and Ethereum have both recently launched their own phones to compete with the iPhone, but I don’t think Apple is worried about losing my mother as a customer any time soon.

Though Web3 isn’t where it needs to be yet, let’s not forget the reasons for its existence: Traditional finance and Web2 have failed real people time and time again.

Lessons for Web3 to actually do better than its forefathers

The value of data ownership must be communicated and it must have real-world financial results. Security and data integrity must be assured and not depend on users remembering complex private keys. DeFi must become actually decentralized and not subject to manipulation by a few large players. It must be accessible and inclusive of all market participants. 

The language of Web3 must be plain and dapps must be as easy to use as, well, an iPhone. Or better yet, a light switch. 

Above all, Web3 must be safe, transparent and trustless. It can no longer allow centralized bad actors to destroy the market’s belief in the promise of the Internet of Value.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.