The Swyx Mixtape

Listen to Infinite Loops: https://www.infiniteloopspodcast.com/alex-danco-what-is-web-30-all-about-ep95/ (37mins in)

Transcript

Alex Danco:
Yeah. So one of the cool things is that, I can say this from a vantage point at Shopify, is that all of this is
fairly obvious to us and it's not because we're smart people, it's because when your whole life is working
with merchants, it's like, these are merchants whose job is not terribly dissimilar from musicians. It's
create meaning, create community, create a reason to come back and talk to each other, and therefore
products get sold because of that underlying meeting. It's like, no, shit, that's what this is for. This is
what we already were doing, this isn't new, this is kind of like it just makes a lot of sense.
Jim O'Shaughnessy:
Right. And it's repackaged and it gives the tool to greater extend the reach. But yes, I agree with you.
Alex Danco:

So, hey, we should NFT this conversation and sell it, and then if you buy this NFT, you'll become the only
person who gets to understand what NFTs are for. You have the exclusive rights to it, everybody else
gets to be wrong.
Jim O'Shaughnessy:
Everyone else is wrong.
Alex Danco:
Unless somebody right clicks and saves the audio file of our podcast, in which case they have stolen it
from you.
Jim O'Shaughnessy:
Yes. And you're fucked.
Alex Danco:
Good luck to you. Sorry for your loss. Sorry, you got hacked.
Jim O'Shaughnessy:
Well, this leads into Web3, because I was very eager to hear you do a bit on Web3, it's like so much stuff
is being written, talked about, blah, blah, blah, blah, blah. What are your thoughts?
Alex Danco:
I mean, to some degree, I think it's like being able to draw a precise box around Web3 is a little silly
because it's like there's just the web and it's all these cool tools. And certainly at Shopify, our job, I mean
on the blockchain team and also generally is not to give merchants the best of Web3, as opposed to
Web2, our job is to give them good things that help them.
Jim O'Shaughnessy:
Exactly.
Alex Danco:
And it's like if you want to draw a box around this bunch of stuff that's Web3, fine. However, in an
attempt to not be sarcastic and actually answer your question correctly, here is I think a good way to
think about what Web3 is. So if you go back to this whole idea of, okay, there are these things called
blockchains, what is the point to them? What do they do? Why do we care about them? It's like, okay,
what is the blockchain? A blockchain is a new kind of network computer that is designed around a really
interesting set of constraints.
And the constraints are very expensive and but they do something really interesting, which is
they allow for a bunch of people to create this shared state that everybody can agree on the inputs and
everybody could agree on the rules. And it's very, very constrained in how you're able to modify this
state, but everybody can agree on what has been done. And different blockchains have different rules,
the rules of Bitcoin are different from the rules of Ethereum or different from the rules of flow
blockchain or polygon, any of those things. But ultimately you create this shared bit of state that can
grow in ways that are very, very constrained, but are highly observable and agreed upon.

So what is the point of that? Who the fuck cares, what is this for? Well, what's interesting about
this is that this creates this new format for something that you can call code that can make
commitments. What does that mean? Well, it means that you can submit some code to this that will
run, and once it's running, you can actually trust that it will run in a fairly deterministic way,
independent of any of the actors involved. So long as you trust that Ethereum will exist, then you can
expect that this smart contract will behave in a certain way. It's code that can make commitments, that's
neat. Well, what's the point of that?
Well, what's really interesting about code that can make commitments is that it makes possible
a new setting for running certain kinds of applications. Well, what are those certain kinds of
applications? It's like, well, it's a new setting for whether, it's like developers to go create little instances
of rules that will follow those codes that can make commitments. And that might have some value to
people, both because of the inherent work that they do, but also because of the shared state that they
do it in. Again, going back to this, well, there's a shared meaning and that has some interesting value,
and if you're also participating in this, then that's really cool.
And I'm sort of building and building there, but what ultimately that makes possible, and really
it's like it took us the better part of a decade to actually really settle on this as the atomic unit of what's
the point of this is wallets. We had all these false starts with crypto about how regular people could
think about what the atomic unit of it was. Like, is the atomic unit the coins? It's like, well, yes, but then
largely what you think of what you're doing is speculating. Is the atomic unit like network and ICOs as a
way of bootstrapping a certain thing? It's like, oh, maybe, if what you think of what you're trying to do is
various kinds of incentive design and whatever.
But ultimately now I think we're sort of at this point that largely actually mimics the beginning of
the internet and the web where it's like there was 10 years of web before the web browser where it was
very hard to actually do anything with it. And then the browser came along, it was like, ah, okay, now I
can actually do stuff. Same thing with wallets, I mean, wallets have existed since the beginning of
blockchain. It's literally just like an address and then a key that you sign with to show you're you, but it's
like it wasn't until I want to say Metamask is the first sort of modern wallet that let you actually do
things.
And now these modern wallets, like Rainbow that are amazing where you're like, "Oh my God, I
get it." The point of this is for me to be able to say, "Hey, this is a way for me to do informed consent for
things where you know it's me consenting because of the blockchain in the back being you know it's me,
and you know it's informed because of what is basically called, if you ever interacted with this, it's like,
sign this message. Sign this message to inform consent to X. And it can only be you because it gets all go
back to, so the point of the blockchain is so that why wallets can do informed consenting to things and
the wallets can do informed consent that has meaning because of the shared state that's in the
blockchain back.
So pause for a second. Now what on earth is that good for, if again, this is only useful in this
super slow, clunky Web3 environment that doesn't actually have any real work it's doing yet? It's like,
well, now you can go back and you can say, "Okay, well now we can think about this web space full of
web apps and full of databases and applications and abstractions about what's in those databases and
APIs through which you can access them and then applications that build on top of them and then users
who use this applications. And it's like, all of that web stuff can still exist, just now bookended with these
two very strong concepts of the wallet and informed consent and removable informed consent.
I can take it with me, I can remove my consent from somewhere and add it to somewhere else.
This is all the idea of how Unfollow is the most important button on Twitter? Remove Wallet is the most
important button in Web3, it's like you can just leave and go somewhere else. But again, it's like you 

now have this whole set of web stuff that can now do work, except for when it's bookended by these
strong forces at the ends of this shared state on one side, on a blockchain and wallets and your keys that
you sign with, and only you sign with on the other hand. All of a sudden this radically, it's not like it
requires you to rewrite the internet from scratch, it doesn't and that's important.
It sort of rechanges a lot of the relationships between those things and what is strong and what
is weak and what is powerful and what is not. And most importantly, it changes where the switching
costs are. And that changes everything about how the internet actually works because I've explained to
so many people, I explained them to this whole idea of, I tell people, "Imagine a merchant storefront,
and you can just connect your wallet. And because of what's in your wallet, now all of a sudden, the
storefront reacts to you. You get special discounts, you get special this, you get special that."
And they're like, "How is that different from login with Facebook? Isn't it the same thing? Isn't it
just now like login with Metamask. Doesn't Metamask now be the owner?" It's like Metamask is just like
UX. Metamask, it's your key pair that is associated with the thing. That's very, very hard for people to
understand. The fact that all the stuff is in public is just associated with you and this thing you have,
which is just a string of numbers, numbers of letters, it's just literally like a password, like a seed phrase
that you have, that is this big key to all of this that you can remove and add and remove and add and do
what you like.
And it doesn't change what any of the stuff in the middle does, that's still all these web
components and we can still do stuff, but it changes the degree to which you have switching costs,
navigating around it, and therefore what people can get away with. Like, what actually are the power
dynamics along these sets of things. And so specifically, actually, this is all very abstract, let me give you
a specific example here, which is, right now, you have all these, so there is this NFT collection called the
Bored Ape Yacht Club, which is one of the most famous/infamous NFT collections, because it has all
these celebrities in it and all these crypto bros.
And to a lot of people, they kind of represent the most distasteful, it's high pro behavior. Bored
Ape does ultra pro behavior and it's one of the richest NFT sets. And these people because they're these
idiots, a lot of them are constantly getting hacked and getting their NFT stolen from them for various
reasons. And so there's this big thing of, oh, go to Opensea and have them freeze the NFT. And so you
might say, "Well, this is crypto. You can't freeze an NFT. It's on the blockchain now. It's like, whoever
owns it now really owns it." It's like, okay, well, what Opensea can do is it can go to any of the...
Opensea can say, "Okay, well, we're just going to take that particular smart contract and token ID and
say, 'well, that is not going to appear in any more Opensea search results, you can burn from this thing."
So you might cry foul and be like, "Oh my God, wait a minute. This is just central law, what's the
point of all this? If somebody in the middle can just turn it off, what on earth is the point about this? This
gets to a really big, important aspect of this, which is that Web3 doesn't mean un-censorable, it doesn't
mean ultimate, it doesn't mean nobody can do anything. It just means it is relatively different. The
power of what you have versus what you don't have is relatively shifted towards your ability to just
move to another NFT marketplace. You can just move your wallet to somewhere else and maybe if
they're not censoring it, then you show up there. The thing you fundamentally own, the meaning is
always there.
Now other people might decide to not recognize it, that's what censorship is. That's real
censorship and you can never stop that. If everybody agrees to ignore you, that's actually something
that nothing can stop, but it doesn't mean that you don't have the original thing, which is that key pair
associated with your ID, this is maybe significantly going into the abstract cloud. But to me, to get back
to your original question, though, of what is Web3? It's like Web3 is basically Web2, plus these two
booklets of the blockchain, plus the wallet that give you this web ability to take your informed consent 


with you and take your idea association with this meaning around with you, such that your freedom to
move is significantly increased. That's Web3. And so Web3 is the set of apps and behavior and stuff that
emerges in this new understanding about your ability to move around. That's Web3.
Jim O'Shaughnessy:
Bingo. Bingo.
Alex Danco:
Is that what you wanted?
Jim O'Shaughnessy:
Yeah, it is exactly what I wanted because, and I put very, very succinctly because that isAlex Danco:
I wasn't succinct, that took 10 minutes, but you just take the last 30 seconds, get rid of all the crap at the
beginning.
Jim O'Shaughnessy:
Succinct for you, Alex. B