Introduction: Yesterday, by chance, I learned from a friend that they had received a substantial investment return in the BTC inscription field, which deeply stirred up a sense of missing out within me. For two consecutive days, I felt anxious, which is truly embarrassing. Recalling the time when the Ordinals technical architecture was just released, I studied the relevant documents. However, as a developer, I was quite skeptical of this technical path. At that time, I felt it was like reversing the progress of cryptographic technology because its design concept seemed similar to that of a distant altcoin project, Color Coin. The idea was about how to issue independent tokens using BTC’s technical architecture. But unlike Color Coin, Ordinals did not develop a new blockchain; instead, it chose to reuse the currently widely accepted BTC network. Compared to the proposal of on-chain virtual machines (such as EVM or other WASM), this architecture has been proven by the market to be somewhat crude and lacking scalability. Constrained by BTC’s lack of a Turing-complete execution environment, development at the application layer is relatively difficult, and it is also expensive! Even after reading the relevant documents on the so-called orthodox Runes technology, I was also quite skeptical. It only established some standards to make the so-called BRC-20 tokens look less rudimentary. However, compared to on-chain virtual machine solutions, this is hardly worth mentioning, as designing an ERC-20 token is something that even a beginner in Web3 development can accomplish… However, in the face of tangible wealth effects, these judgments seem pale and almost laughable. After calming down, I have some related thoughts to share with you and explore the core value of Web3.

The tangible fact at the root of all our thought-distinctions, however subtle, is that there is no one of them so fine as to consist in anything but a possible difference of practice. To attain perfect clarity in our thoughts of an object, then, we need only consider what conceivable effects of a practical kind the object may involve—what sensations we are to expect from it, and what reactions we must prepare.

——William James

Anarchist Post-Snowden Web3

Many of my friends marvel at the emergence of Bitcoin, just like the golden age of ancient Greece. It seems to be an unconventional and unexplainable genius product. However, I do not agree with this view. I think the invention of Bitcoin is not accidental at all. It was an inevitable result of the network environment at that time.

In the previous introduction, we have reviewed the development history of the Web. In the classical liberal network era, the Internet protocol design principles of openness, inclusiveness, globalization and neutrality were gradually formed. However, with the emergence of a large number of Web applications, the composition of Internet users has undergone great changes, from the previous subcultural group of users, that is, coders, to a universal mainstream cultural group covering all types of people, with pragmatism prioritizing efficiency and low cost taking the lead.

But this doesn’t mean that the principle of open protocols has disappeared entirely. Unlike political revolutions, the evolution of technology is non-violent, so the corresponding evolution of ideology is a gentle fusion process. In fact, a group of developers, whom we can call classical liberals, have been adhering to the principle of open protocols in technology development and related concept promotion. We can easily find them through organizations like the Free Software Foundation, the Electronic Frontier Foundation, and the Wikimedia Foundation. They have funded and promoted many interesting technological solutions, such as Tor, VPN, SSH, etc. Moreover, they were among the earliest users of Bitcoin, using it for fundraising. Therefore, there is reason to believe that the design of Bitcoin originated from this group of people, with the initial purpose being to develop an unregulated, payment-oriented, anonymous electronic cash system for organizations.

With the tremendous success of Bitcoin, it sparked the interest of some computer experts. I believe Vitalik and Gavin Wood are among this group of people. Leveraging Bitcoin’s most important original technology, the POW consensus algorithm, they established a decentralized, anonymous computer system. This completely changed the classic client-server web development paradigm into a possibility.

With the sensational Prism event, the credibility of both technological and political authorities has greatly diminished. This provides an excellent opportunity for the promotion of new concepts. Thus, we can see the emergence of Web3 with the latest semantics, which is Gavin Wood’s proposal of Web3. Here, I believe it is necessary to quote this classic description once again:

Web 3.0, or as might be termed the “post-Snowden” web, is a re-imagination of the sorts of things we already use the web for, but with a fundamentally different model for the interactions between parties. Information that we assume to be public, we publish. Information we assume to be agreed upon, we place on a consensus ledger. Information that we assume to be private, we keep secret and never reveal. Communication always takes place over encrypted channels and only with pseudonymous identities as endpoints; never with anything traceable (such as IP addresses).

The core vision of this version of Web3 is to build an online world that is decentralized, uncensored, and fully protects personal privacy. This can be seen as a classic interpretation of anarchy in the online world, so I am willing to call it Anarchism web3. It is worth noting that the significance of making such a clear distinction is that we need to figure out what principles to use to guide our application design in order to achieve the final vision, so as to complete the construction of the network, which is most in line with our demands.

Under the guidance of such an ideology, the ultimate pursuit of decentralization and privacy has given rise to a series of interesting Web3 projects. Successful cases in such projects usually focus on the underlying infrastructure. Just recall those exquisite cryptography and consensus and you can find many well-known projects. No specific examples of algorithms here. However, there is few projects related to application layer and protocol layer. Perhaps ENS is an exception.

Ultra-financialized liberal capitalism Web3

Since 2013, when MasterCoin designed the ICO crowdfunding method, the crowdfunding financing model with cryptocurrencies as the target has gradually become popular. With the improvement of protocols such as ERC20, it greatly reduced the issuance and participation thresholds, reaching its peak in 2017.

Let’s review that period of history. As the target, Coin (Token) has evolved into different types, with the most representative being utility tokens and ownership tokens. The former is similar to a ticket, granting the right to use the target project only to those who hold this token. In fact, in the early days of ICO development, most of the tokens issued by projects belonged to this type, including Mastercoin, NextCoin, and even Ethereum (which did not include POS planning in the early design of Ethereum).

The emergence and rapid development of ownership tokens, in my opinion, can be attributed to two factors. The first is the geek named Sunny King proposing Proof of Stake (POS) in 2012 and developing Peercoin. I believe the biggest contribution of this concept is that it introduced a paradigm design that uses tokens to carry the ownership of a specific network for the first time (although here, tokens mainly carry a kind of dividend rights). The paradigm design around network ownership became a hot topic, and with the development peak of EOS’s ICO in 2018. However, excessive development bubbles and the delayed explosion of applications hindered progress.

The second development opportunity for ownership tokens, in my opinion, can be traced back to Compound‘s issuance of Comp, which completely opened the era of ultra-financialized libertarian Web3. Before this, for a long time, the focus of ownership token development was mainly on the allocation of ownership of the underlying network, while the application layer seemed unresponsive. In fact, the birth of some well-known Dapp projects was very early, and at that time, “administrator governance” + “pay-as-you-go” was basically the mainstream model. Until the emergence of Comp, the development model of Dapps that achieves “community governance” through token-carrying application ownership and “Mining incentives” around the key purposes of these Dapps gradually gained widespread acceptance and rapidly developed. Due to the characteristics of lucrative financial returns, smooth exit mechanisms, and a free market environment, large and small investors have entered Web3 with massive capital. Similar to the transition of classical liberal networks, the industry has once again welcomed changes with changes in the composition of major users, and the meaning of Web3 has undergone significant changes. Let’s recall Chris Dixon’s definition together:

Web3 is the internet owned by the builders and users, orchestrated with tokens. In web3, ownership and control is decentralized. Users and builders can own pieces of internet services by owning tokens, both non-fungible (NFTs) and fungible.

The difference has become very obvious at this point. Web3 has gradually transformed from its original pursuit of authority and personal privacy to carrying network ownership through digital assets, thereby realizing the redistribution of network resources. Under such a vision, private ownership of digital assets and an absolutely free market are the ultimate goals, while deauthorization and personal privacy degenerate into means to ensure the above two goals. This is an important change, which is basically equivalent to the political pursuit of liberal capitalism (indeed in political philosophy liberal capitalism is basically equated with a specific, concrete kind of anarchism).

Under the guidance of such an ideology, innovation in the value categories and ownership distribution methods carried by digital assets has become the main evolutionary direction. Basically, before the arrival of the recent intense wave of deleveraging, the main innovations in the Web3 industry were concentrated here. We need to be very clear about the difference between the two, because this will bring about two completely different evaluation criteria. Some Web3 projects are very good in the eyes of anarchist Web3 supporters, but they look dull to liberal capitalist Web3 supporters. It’s meaningless. Of course, there are completely opposite situations. In the final analysis, it’s because of ideological differences.

Innovations surrounding digital assets will continue to be the core driving force of Web3.

After understanding the difference between these two propositions, I hope to explore what might be the core driving force behind the rapid development of the next wave of Web3. Personally, I tend to agree with some pragmatic viewpoints. In my opinion, the significance of judging a concept or idea lies in its effects on human behavior and the value it generates. Relying on metaphysical top-down thinking is often not conducive to social development. From this perspective, I also endorse socialism.

Guided by such ideas, I believe the development of the online world will likely follow a compromise, low-friction path. Do you remember the network ideological map we mentioned in the previous article? Broadly speaking, we can categorize classical liberal networks, anarchist Web3, and libertarian capitalist Web3 into the same category, which is a part of the technical authoritarianism network. The future ideological landscape of the online world will burst with greater energy in the blue shaded area. The core driving force behind this development lies in whether new, more universal value propositions will be discovered. From some existing achievements, I believe that digital assets fundamentally possess such capabilities, or rather, innovations surrounding digital assets will continue to be the core driving force of Web3.

Firstly, I need to clarify that I do not dispute the value of work related to decentralization and privacy protection. On the contrary, I believe that the results are often enlightening. However, based on the current practical situation, these two goals usually rely on the evolution of cryptographic technology. Constrained by the development of related technologies, many products under this ideology often perform poorly in terms of performance. Compared to some mature computer network technologies, these products still have a lot of room for improvement. Moreover, cryptography, as a fundamental discipline, has the characteristics of high input and long output cycles. This does not align with the current development status of Web3 enterprises, and I do not believe that this situation will change in the short term.

However, discussions surrounding digital assets will be different. So far, I still marvel at the ingenuity of the design of ownership of digital assets (or crypto assets) in the Web3 world, with the most direct impact including three aspects:

• A method of ownership confirmation that relies solely on technical guarantees.
• A method of ensuring the exclusivity of ownership of digital assets in physical form.
• A method of digital asset transfer relying on the network.

It is not an exaggeration to say that any previous technical solution and specific product for the implementation of digital assets is not as perfect as the Web3 solution. This has brought more practical value to digital assets in Web3, namely high liquidity and low-cost trust guidance, injecting new vitality into the development of the online world. Therefore, I believe that the core driving force behind the rapid development of the next wave of Web3 will continue to be innovation surrounding digital assets. Simply put, innovation may proceed in the following aspects:

Paradigm innovation: Similar to FT and NFT, the introduction of each new paradigm of digital assets injects unprecedented development momentum into Web3. This is because the introduction of new paradigms provides specific boundaries for innovation and has guiding significance. Superficially, Fungible and Non-Fungible, this pair of opposites, seem sufficient to cover all types. However, I want to express that this is not the case. Imagine gender; for a long time, we believed in the binary theory of gender, but look at the achievements we have made now. In fact, I think it’s interesting to propose token paradigms with different characteristics under specific conditions. Fungible is just one dimension, and more dimensions will be discovered. Of course, the premise of innovation is to propose specific application scenarios for the corresponding paradigm. Recently, the introduction of new digital asset carriers such as Runes is, in my opinion, a very good start.

*Value innovation: By combining existing FT and NFT paradigms with a certain economic model or application design, carrying a new type of value is also a very meaningful direction for innovation. Taking FT as an example, I believe that the value carried by current FTs can be abstracted into several types, including utility value, growth value, dividend value, and governance value. In the following articles, I will analyze the differences between these four types of value in detail. Considering the current industry development, I think credit value is very likely to serve as the fifth dimension, and I will supplement this in the analysis.

*Business innovation: This type of innovation usually starts with specific business operations, attempting to solve old problems with new methods in order to achieve better results. Here, I see two potential paths for innovation. The first is the transformation of traditional Internet businesses, utilizing certain characteristics of digital assets to optimize or transform existing business models, thereby creating new competitiveness. The second is the optimization and transformation of existing usage patterns combined with digital assets, or what can also be called innovation in token models. These innovations often act as catalysts for industry development, similar to concepts like Yield Farming and Play-To-Earn, all falling into this category.

In summary, although protocols like Runes may seem like a step back from a technical standpoint, as a new carrier of digital assets, their value still deserves recognition. What the future of Web3 will look like, we can only wait and see.

Statement:

1. This article originally titled “Runes 的火爆是加密技术发展的倒退，但也是 Web3 核心价值的最好体现” is reproduced from [chaincatcher]. All copyrights belong to the original author [@Web3Mario]. If you have any objection to the reprint, please contact the Gate Learn team, the team will handle it as soon as possible.

2. Disclaimer: The views and opinions expressed in this article represent only the author’s personal views and do not constitute any investment advice.

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