With the advent of Web3 comes a promise of a more decentralized internet built on blockchain and fueled by token-based economics. This can pave the way for a transfer of ownership from the monopolistic few to the democratized many.
NFM talked to a crypto entrepreneur and a crypto investor about what they see Web3 has in store for the future of finance.
What role does Web3 play and how does Web3 affect the future of finance?
Ted Moskovitz: Web1 was the read only internet. With Web2 we moved to read and write and having accounts and usernames. Still it has been owned by centralized hierarchical organizations. Now, we are seeing examples of moving towards an ownership economy with Web3. In the very early days you will see wealth accumulation in the hands of the few who understands and builds the systems. But over time, it sets up a system where Web3 democratizes ownership a lot more than anything we have seen so far.
David Schneider: Web3 enables tokenized finance. There are many types of tokens ranging from community/DAO tokens to utility tokens that power decentralized infrastructure. Just looking at infrastructure tokens specifically, the open and tokenized nature of decentralized networks enable individuals to learn and participate early in growing projects opposed to the Web2 alternative where the average individual can only get skin in the game of the companies they are impressed with after an IPO.
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What is exciting about the future of finance?
Ted Moskovitz: The opportunites are limitless. Obviously we have the democratization of finance and venture capital. More people will be included in wealth than ever before, and more people will have access to global financial systems than ever before.
David Schneider: Firstly sovereign and highly portable money, which also applies to personal data, which is valuable but not innately financial. The major opportunity is for each person to have self sovereign automation, aka agents, of their data and finances.
Wealth has historically been accumulated in the hands of the few. How do you see Web3 change this?
Ted Moskovitz: The decentralization in the crypto movement is about alignment incentive and making sure that everyone who brings value to the table receives value in return. The greater financial inclusion means you don’t have to be wealthy to play the VC game. You can get carried interest on deals not in exchange for putting money in but in exchange for bringing value to the table that has historically not been compensated. Right now, so many people are providing value to the venture ecosystem through networks, introductions and content that get nothing in return. They will be able to become VCs because of the infrastructure set up for them to leverage and monetize their own network.
David Schneider: In a open systems world it’s easier for individuals to behave like late stage venture capitalists and make investments that they are expecting to sell in 10+ years. With that said, I disagree that everyone can become a venture capitalist because the liquid nature of tokens means that buying and holding is no longer the only option.
What this means for people is not too dissimilar to how they might think about public equities today. Case and point, being able to buy and sell stocks doesn’t make someone a venture capitalist; they are a investor.
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Which challenges does the future of Web3 hold?
Ted Moskovitz: A big thing is trust and the lack of community. In Web3, people are often just a jpeg, you can be totally anonymous. There is a lack of personal connection between people because it is not required for the way things work now. This is not an ideal way to create resilient systems. Then there are also the technological challenges. A lot is nascent and new. The tools that would make it easy haven’t been created yet. We are doing the best we can and building as we go along.
David Schneider: The main challenges are around key management and custody, and the fact that in an open systems world, scammy and malicious actors have more opportunities to dupe people.
Web3 might marginally help with income inequality, but this issue continues to exist outside of the revolution in digital ownership and computing that is Web3.
