Thu. Jan 20th, 2022

It’s my last working day of the year, so we’re going to have fun. Obviously we are talking about crypto this morning.

Jack Dorsey, former Twitter CEO and current CEO of Block, the company formerly known as Square, recently rocked the crypto pot, making explicit his preferences in the larger blockchain landscape by taking swipes at decentralized internet projects not covered by the under the auspices of Bitcoin.


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To avoid being accused of misinterpreting Jack, here are his key statements, starting with: the genesis tweet of the conversation:

That went down as a party mistake with well known web3 stans:

And a few hours after Jack’s tweet, Elon Musk joined in the fun:

Several things are said here, and a few of the tweets could use some explanation if you don’t live on Twitter. The Exchange has your back:

  • About who “owns” web3: Jack states that regular users do not own web3 projects. Instead, the CEO claims that venture capitalists and, in turn, their investors are. In fact, Jack doesn’t expect this dynamic to change; instead, he expects centralized capital pools that support a plethora of crypto projects to maintain quite a bit of control thanks to entrepreneurial incentives.
  • About being critical on web3: After being criticized for the “suffocating” web3 work, Jack dismissed the complaint, saying that “critiques” can help people choose to work on more satisfying projects.
  • About who will own web3: Elon Musk jumped in the fun of asking where web3 is because he’s having a hard time finding it. Jack then subtweets a16z, the venture capital firm, as the nexus point for web3 project funding, and thus control.

What matters in the above is that Jack, a well-known proponent of the original cryptocurrency, Bitcoin, is not big on web3 projects.

It’s worth noting that these two characters come up to argue against the tide of greed that’s been surfacing in the decentralized economy in recent years, with every traditional pile of cash looking to join in alleged web3 returns.

Who owns what?

The gist of Jack’s complaint is that leading Web3 companies are owned by venture capitalists and will therefore have to live with entrepreneurial incentives.

“Venture incentives” is of course a polite way of saying: run a company in such a way that venture capitalists and their lenders make a lot of money.

The complaint is quite true. In the third quarter of 2021 alone, venture capitalists invested more than $6 billion in crypto projects. That should give you an idea of ​​the scale of the crypto world currently being bought by traditional, private market investors. In simpler terms, pension funds own much of the crypto economy.

Jack’s dissertation on venture capitalists and web3 didn’t stop there. Jack said not only that web3 projects have a weakness at their core thanks to the economic bargains their predecessors have made with outside capital, but also that they centralized.

Aside from calling someone a “nocoiner” who alternatively remains “poor” or “ngmi”, saying that a crypto project is centralized is perhaps the rudest comment.

Is Jack wrong? No he is not.

It is true that venture players are flooding the zone in web3 with cash and help thinking it will make them money. This leads to a lot of centralization. For example, I think it’s really funny that a16z is an investor in both Coinbase and OpenSea. And that Coinbase plans to join the NFT game. You know, what OpenSea currently rules.

In fact, projects like Solana sold some of their song tokens to venture capitalists, effectively handing out a benefit frozen forever in already bloated bills. Centralization? of property and returns in that case.

Centralization is at odds with the original, somewhat punk Bitcoin ethos. As far as I know, Web3 advocates are perfectly happy using outside funds to power their new token-based projects as a way to accelerate the future they see. Fiat as a crutch, I think.

But Bitcoin didn’t have to pick up three venture rounds in a year to grow. It just came to an idea that still resonates. Something to think about.

Now we come to a very large Yes but.

Bitcoin is religion; web3 is greed

While it’s nice to agree with someone about cryptocurrencies, I don’t agree with Jack everywhere.

For example, I disagree that Bitcoin is not centralized. It’s to some extent that I don’t think many people really growl. A new study this week found that “about 0.01% of Bitcoin holders control 27% of the 19 million Bitcoins now in circulation,” Baystreet said.

This is why when I look at the two warring religious camps in the crypto world – the Bitcoin maximalists who think the original crypto project is a decentralized Jesus and the web3 “gm” crew – it is clear that they are quite different.

Bitcoin maxis are religious in their belief that the OG crypto nailed it, and successive projects are bunk. And web3 is greed, a way to fund everything online in a way that allows traditional investors to own toll booths and tax collectors in the decentralized landscape.

So while I’m more than happy to nod to Jack stirring the web3 pot, I don’t agree with his overall philosophy. Still, Jack managed to point out that a bunch of naked wannabe emperors are in fact au naturel. And that’s a good way to start the day.

Merry Christmas.

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