By Alex Tapscott
The Rise of Web3
The Internet is entering a third era known as Web3. Web1 (1992-2002) was the Read Web, a one-way medium for presenting and consuming information. Web1 democratized access to information, but it was static and non-interactive. Web2 (2002-2020) is the Read/Write web, a platform for communication and collaboration. Web2 democratized access to publishing but was captured by large platforms and digital conglomerates. Web3 is the Read/Write/Own web. Internet users now have digital property rights and can be economic stakeholders in the platforms they use and services they consume. Web3 democratizes ownership of the Web.
Who will lead in the next era of the internet?
Where will Web3 be built? For the past thirty years, the U.S. and Silicon Valley in particular, has been the chief beneficiary of the commercial internet. Web1 and the Dot-com companies it spawned, were mostly American. Web2 giants like Facebook had a global userbase, but the wealth, jobs and influence remained in the Valley.
Silicon Valley historically has been home to the technology, the capital and the talent needed to breed new path-breaking ideas. While other countries have more recently entered the fray with their own internet giants (China comes to mind with Alipay, Tik Tok and others), the U.S. is still the leader.
Silicon Valley was once called a “Tech Galapagos” by historian Margaret O’Mara for the blend of talent, money, technology, culture and government research and development that led to the peculiar species of tech founders who went on to build the commercial web. Like an island isolated from the rest of the world, they developed certain traits and characteristics which made them well adapted to the changing times. Throughout history, technologies from the printing press to the steam engine to the railway have started as local breakthroughs before spreading, sometimes over centuries, around the world.
This time is different. The leaders of Web3 have unprecedented access to technological tools that only existed in the domain of science fiction a generation ago. Twenty-five years ago, half the world had never made a phone call. Now more than four-fifths of people own a smartphone. Web3 organizations, known as DAO’s are decentralized and global by their nature. They have contributors all around the world. For example, blockchain gaming is taking root in the Philippines and other Southeast Asian countries. When it comes to Web3, and perhaps for the first time in technology history, innovation is happening to “everything, everywhere, all at once”.
Silicon Valley will be fine. Many great Web3 start-ups have emerged from there. But the days of the Valley dominating the internet are over.
Dispersed technology also distributes power and control.
Canada’s Lost Opportunity
What can countries, and cities do to attract the talent, capital, and know-how to build great Web3 businesses? This topic is on my mind again following the Ethereum Merge (which we covered last week). It was a momentous achievement for a $200 billion computing and transactional platform which supports thousands of applications, millions of users, tens of billions of dollars of assets and hundreds of billions of dollars in yearly transaction volume.
The Merge led the business section of the New York Times, rightfully so. It was the subject of Bloomberg’s most popular podcast Odd Lots. However, in Canada, where I live, the Merge barely registered on anyone’s radars. The Globe and Mail’s story could only be found at the bottom of the ROB website, and it only tangentially dealt with the Merge.
This is surprising and disappointing for two reasons: First, Ethereum is one of the most important technology innovations in a generation and second, it's a made in Canada story! The founding team are Canadians from Toronto. For a golden moment at Ethereum’s founding it looked like Canada would lead the next era of the internet. Ethereum’s roughly $200 billion USD market capitalisation makes it about 5x bigger than Shopify and nearly double the size of RBC, Canada's biggest company.
In my opinion, the lead developer, Vitalik Buterin, should be given the Order of Canada, the country’s highest honour, for his contribution to Canada and the world!
Instead, Ethereum community has left. They’ve decamped to other countries like Singapore, Dubai, Germany, the United States and Switzerland, which offer more attractive conditions for Web3 innovation. Today, Canada's Web3 scene is a shell of its former self. The country's mainstream institutions, from banks to the media to government, have never recognized its potential for Canada. Today the discourse around Web3 has been reduced to mudslinging over Bitcoin, truckers and politics. That is regrettable. I worry Canada may once again miss an opportunity to lead a new era of human progress. There is hope. To learn more about what some of the industry’s Canadian leaders are doing, check out this week’s DeFi Decoded episode with Ethereum Co-founder Anthony Di Iorio.
