Where is this going?
All you need to know is transactions will become easy and cheap, just like communication did over the past decade. Costless Transactions mean in 10-20 years, we will be making 100x more transactions per day than we are currently making.
Capital Thinking · Issue #944 · View online
In web1 and web2, the internet transformed our world by making it cheap and easy to move information.
This has happened in two big waves so far:
Web1 = ~Costless Publication
Web2 = ~Costless Communication
(Ok, it’s not perfectly costless, but “cost approaching zero.” Negligible costs. It’s easier to imagine the impact when you think “costless” or “free” so I’m sticking with that.)
What is Web3? “Costless Transactions” is my mental shortcut
Web1 made it cheap and easy for anyone to publish a website. There were millions of new blogs, stores, and cat photos. Since it was costless, millions of people started publishing things never previously published.
Web2 made it cheap and easy to communicate – to exchange information. This enabled Facebook, Twitter, Marketplaces, Chatrooms, and more.
How many more communications do each of us make today than we did in 1990? I’ll guess 100x more communications per person per day.
On web2, we created social networks, review sites, Discord servers, Pinterest boards, and sneaker marketplaces. Costless Communication unlocked a massive amount of value for us all and created some of the world’s biggest companies.
Web3 = ~Costless Transactions
What Blockchains… Shit. What Bl******ins enable is actually Costless Transactions.
All you need to know is transactions will become easy and cheap, just like communication did over the past decade. Costless Transactions mean in 10-20 years, we will be making 100x more transactions per day than we are currently making.
Sidebar for the reasonable interjections:“But transactions are expensive on the blockchain!”(Hey you said it this time, not me!)
Well, some are.
Demand for Ethereum is high right now, sometimes costing $50-$100 per transaction. We have to believe prices will come down as developers work on deploying new solutions and new chains. (No jargon-y details here, but google “Layer2” and “Sharding”)
Let’s remember websites in 1998 were pretty damn slow, dial-up internet was pretty damn loud, and everything on the web was clunky, scary, and weird. The cost of transactions on web3 technology will come down and ease of use will improve, just like the early web did. Trust our brilliant developers and designers (millions of them now!) to quickly solve these problems.
The fact you can send $50,000 in Bitcoin to anyone on earth in 10 minutes for <$1 is already an actual miracle of technology.
“But the internet already has transactions!”
Not really.
It’s fairer to say you can “initiate offline transactions through websites.” Your money is still moving from your bank account to a vendor’s bank account over some period of days through banks, credit card companies, and ACH or EDI transfers.
It still costs ~3%. Just because you used a website instead of a credit card swiper doesn’t change the fundamentals of the transaction – or the cost.
As transactions get actually internet-ified, they become like other communications in web2 – fast, easy, trivially cheap. We have never seen that before.
Possibilities of Web3 Technology
So, if we have Costless Transactions with web3 websites, what changes?
- More transactions.
- Cheaper transactions.
If instead of doing 1-3 transactions per day we’re doing 100 or 1,000 – what could those transactions be?
Eric Jorgenson
Photo credit: Eric Jorgenson