The weird amalgamation of business, technology, art, culture, and finance that is Web3

Before I start, just a disclaimer. None of this is financial advice, because I’m not qualified to give financial advice. Thoughts are my own, which is why they don’t make sense half the time.

Let’s get back into it. As I was finishing up some thoughts this weekend around brands and non-fungible tokens (NFT), something occurred to me. And that is, just how weird and different this Web3 space is.

For instance, when lurking in Discord, you see many projects talk about how amazing NFT NYC has been last week and that we’re building a new cultural movement. In reading project strategies, I see people building and innovating on their ecosystems and value propositions. From scrolling Twitter and I see 3AC (a crypto hedge fund) file for bankruptcy and lenders like BlockFi and Voyager who lent to 3AC likely to lose millions.

And when you get all these different narratives and focuses from different channels thrown at you, it really makes you think how different and complex Web3 is in comparison to the “normal” world.

I can't name an industry where you have the intersection of complex financial instruments, with luxury Veblen goods and retail fashion, with culture and social communities, with gaming and entertainment, and with art and collectables. Top it all off, with new technology that will supposedly decentralise governments and may be bad for the environment.

It’s this complexity that I believe why it’s so hard to wrap our head around Web3, crypto, decentralised finance (DeFi) and NFTs. It’s also why the space struggles to onboard people where many are sceptical and scared of jumping in. Not only does it move so incredibly fast, but there is so much to learn that I always feel like I can never keep up.

And you might be thinking… Well, not all NFT projects are securities, and not all DeFi products are Veblen goods. And yes, you’re right. But the challenge is that they are tightly intertwined more often than we’d like. I think this is partly because the underlying technology and infrastructure are, and can, be interoperable between these.

Let’s take the most famous Bored Ape Yacht Club (BAYC) NFT collection as an example.

1. BAYC started off as a 10k profile picture project (PFP). Which created a 10,000 large exclusive club where each member felt a sense of place and belonging in a community.

2. Because each of the BAYC NFTs are tokens on the blockchain, they now can be collected, traded and sold. Very similar to a collectables market, where rare Pokemon cards are collected and can appreciate in value (provided the demand is there).

3. But buying BAYC is not just buying a collectable. In fact, you’re “investing” (debatable) into a technology start-up. A team that operates against a defined strategy with a balance sheet and expected earnings. A Web3 company that is building its brand presence through various channels such as merchandise, TV shows, sponsorships, etc. I like to think of it like a cross between Supreme and a private golf club. I’m sure people don't pay thousands for membership just to play golf…

4. You can also “stake” your BAYC and earn new tokens, which turns this into a financial yield-generating asset - like property. And because these are crypto tokens, they can be used within the wider DeFi ecosystem (be traded, deposited, and collateralised).

5. You get the point…

And this is not too dissimilar to thousands of other Web3 initiatives and projects out there.

What this means… is that to fully 'get it’, I would need to have knowledge in business, finance, Web2 tech, Web3 tech, social media and behavioural economics.

This is why I think a core barrier to Web3 from taking off is that it is too hard for the average user. Web3 is waiting for its Netscape moment. Where it gets easier to onboard, use and get value out of.

To make matters worse, it is hard to learn about Web3 as there is quite a lot of misinformation out there. This space is growing and innovating completely out in the open. And when it’s a firehose of opinions, facts, learnings, and hypotheses - it’s really hard to know what’s what.

I don't believe the majority of misinformation is nefarious, but rather a genuine misunderstanding of topics that are highly complex, nuanced and changing by the day. What you learn one week, might need to be unlearned the very next.

I’m seeing this creates pockets of narratives, that often conflict or can suddenly grow like wildfire to be the ‘truth’ of the moment. Especially so if people have been taken over by their emotions from losing money.

For example, the 3AC insolvency creates a strong narrative saying DeFi is a scam and does not work. But I think this is attribution bias where the fall of 3AC paints the whole industry with a bad brush, even if the cause is different.

This is one of the reasons why I wanted to start writing about Web3, crypto and NFTs. It's a changing area that has much to discover and learn. Whether it's failed experiments or new ways of doing things that no one has thought of or implemented. And the best way to wrap our heads around it is to dive in, experience it and talk about it.

I do believe that there is something fundamental transformative in the technology. But right now, what the final destination looks like is unknown as it continues to be clouded by the complexity and the constant stream of new ideas in every direction. But this is also what makes this space so exciting. It feels like uncharted waters, and we're the ones making that map.