Posts from Web3

Chris Dixon, who leads the A16Z crypto fund, and has been an entrepreneur, VC, and friend of mine for over twenty years, has written a book called Read Write Own that is available for pre-order now and will start shipping at the end of the month. Chris gave me a copy right before the holidays and I read it over the last week.

I asked Chris why he wrote the book and he had two answers, one personal and one practical. The personal one is “I have focused my career on investing in blockchain networks. During the recent downturn, I felt a need to rearticulate to myself why I am doing that.”  The practical one is “I want to explain blockchain networks to young adults who are thinking about where to start their careers, to the mother of the software engineer at Coinbase who wants to understand what her child is working on, and to lawmakers and regulators in DC who need to understand why they are important.”

What Chris calls Blockchain Networks, I call Web3. The term Web3 is important to me because my investing career first took meaning during the initial phase of the web, which I think of as Web1. It took off during the second phase of my career which many call Web2. And I’ve spent the last decade of my career imagining what a better version could be, which I call Web3.

Chris takes the same journey but he calls these phases Read, Write, and Own. The initial phase of the web, when the web browser arrived, was mostly a reading experience. Then in the early 2000s, the web became two-way and we could Read and Write. What Blockchain Networks have unlocked is the ability to own things on the web. You can own your identity. You can own your social media posts. You can own your money. You can own your art. You can own your music. And so on and so forth.

Chris’s book has three parts. The first part is a history of the web and how we got to where we are right now. The second part is a detailed description of what makes Blockchain Networks work and why they are important and powerful. The third and final part is a series of descriptions of new kinds of applications that are being built on Blockchain Networks.

While I enjoyed all three parts of the book, I was energized by the final section. Chris imagines a future that is very different from where we are today. It is one I very much want to see emerge. I think you will too.

You can pre-order Read Write Own here.I encourage you to do that. I expect you will turn that last page and be excited, like I am, about what is coming now that we can own the Internet instead of it owning us.

On Saturday, September 9th, the Gotham Gal and I arrived at JFK airport after an eight-hour flight from Paris. While waiting for our luggage, I got pushed a notification in my web3 wallet that there was an NFT drop underway that I could participate in. So I clicked on the link, signed the transaction, and nothing happened (or so I thought). So I tried again. Again nothing happened. Frustrated, I turned my attention to the luggage, retrieved it, got in a car, and headed home. On the way home, I tried again a few times to no avail.

It turns out that each of my failed attempts to mint an NFT was a scam that allowed a thief to eventually take 46 of my most valuable NFTs out of my wallet. I did not realize any of this until I woke the next morning to a text from a friend saying:

did your wallet get compromised? your NFTs from fredwilson.eth were transferred out and sold

That’s when I realized that all of the failed minting activities from the night before were actually me getting scammed.

For much of August, I along with a lot of NFT enthusiasts had been participating in something called “Onchain Summer” which was a rollout of the new Base layer two blockchain from Coinbase. Part of Onchain Summer was a daily NFT drop. You simply clicked on the link in the message in your web3 inbox and went and minted. It was fun and I collected some great NFTs that way.

The message I was scammed with looked exactly like those Onchain Summer messages but was not from the same sender. I should have noticed that but did not. Mistake number one.

The fact that I signed a transaction and nothing happened should have been a sign that something was wrong. Normally when you sign a minting transaction, a new NFT shows up in your wallet. When it did not, I should have sensed something was wrong. I did not. Mistake number two.

The fact that I was signing transactions in the same wallet where I keep my NFTs is also bad practice and I knew it. The best practice is to hold NFTs in a “vault” wallet where you never sign transactions and to have a separate “mint” wallet where you hold nothing but do all of your signing. Mistake number three.

What I was doing by signing those scam transactions was giving the thief access to a number of smart contracts that secured multiple NFTs that I owned. So even though I did not sign 46 scam transactions, the thief was able to take 46 NFTs.

Signing transactions is risky business and needs to be done carefully. I knew that but did not take the required care on the evening of September 9th.

This story has a happy ending. With the help of my USV colleague Nikhil, I have recovered 38 of the 46 NFTs that the thief took from me for a fairly modest sum. As I put it to a friend, it cost me between weeks and months of my personal ETH staking rewards. It was enough to sting and that’s good. It was a lesson that I learned the hard way and it was worth every ETH that it cost me to get them back.

There are a few NFTs that I am not going to try and get back, but I am still trying to buy back these two NFTs that the thief sold to others who are likely unaware that they are holding stolen goods:

Anticyclone #212 currently held by this wallet

WoW #8105 currently held by this wallet

If you recognize those wallets and know who holds those NFTs, I would appreciate an introduction so I can offer to buy them back at their cost.

I do want to thank everyone who sold me back my NFTs (including the thief who we bought quite a few from). Many people sold them back to me at their cost when they heard they were taken from me. I really appreciate that.

For many years, there were three ways to subscribe to AVC:

1/ Email – Get new posts delivered to your inbox

2/ RSS – Get new posts delivered to your RSS reader

3/ X – Follow AVC on X

X revoked the API access that I was using to autopost three or four months ago. I have not been active on that service for almost a year now and have no interest in dealing with it.

So if you are one of the 25.5k followers on X and want to keep getting alerted when I post, I suggest you go with option 1 or option 2 going forward. There is also a new third option that I will talk about at the end of this post.

If you subscribe to AVC via RSS, you are likely using the old Feedburner feed. That has become unreliable and I would suggest moving to the Feedblitz feed which also powers the AVC email delivery.

I finally moved the email delivery off the old Feedburner feed this week when last week’s post did not go out via email. I suspect most of you missed it as a result.

All of this is a perfect example of the fragility of relying on centralized services like X and Feedburner (owned by Google). USV was an early investor in both services and I was a big user of them.

But all things come to an end in the world of centralized services and the challenges of getting AVC delivered to the ~100,000 subscribers reminded me of that last week.

There is a world where services just keep running because they are open source and decentralized. I wrote about that back in June and I am excited about that world to emerge.

AVC is available in the decentralized world and you can subscribe there if you’d like.

So now there are three ways to subscribe to AVC:

1/ Email – Get new posts delivered to your inbox

2/ RSS – Get new posts delivered to your RSS reader

3/ Web3 – Subscribe to AVC on Mirror

If you are using the email delivery method, you are all good. If you are using the old RSS feed or X, I would suggest moving to something else. Or you could just stop getting AVC if that suits you. Many of you already have thanks to X and Google (and me).

USV has been an investor in the Helium network since 2019. I have always loved the idea of using web3 technologies to let consumers to “peer produce” a communications network creating a people-powered network.

Helium started out powering communications between low-power “Internet of Things (IOT)” devices but with the introduction of Helium Mobile back in May, they are now powering a cell phone network.

My friend Stephen started using Helium Mobile last month and so I decided to join him. I signed up for Helium Mobile yesterday ($25/month but free during the beta period) and added it as a second SIM on my phone.

Now on the upper right of my home screen, I have two cell networks instead of one:

For now, I am going to use Helium Mobile alongside my primary carrier, T-Mobile, but I do plan to eventually scrap T-Mobile and use Helium Mobile exclusively.

Helium Mobile offers members the opportunity to earn Mobile tokens by sharing your location with the network. They call this “mapping”. I turned that on yesterday and should start seeing Mobile tokens in my Helium Mobile app today.

If you want to join me as a Helium Mobile customer, you can do that here.

I’ve written about this topic a bunch over the years. It is something I’ve been interested in for quite a while.

Our homes are filled with big hunks of plastic hanging on the wall that are off most of the time. They look like this:

Now that’s a lovely scene. Some nice plants. A cool wood cabinet. A nice lamp. A few books. And a piece of black plastic.

Here’s what our family room looks like when we are not watching the TV:

That’s a Sony TV with nothing special in it. I have done some work to make the art run on it, but that work is getting easier and easier. I’ve been playing around with this stuff for almost a decade and I feel like we are about to get to a place where everyone can do this.

Here’s what is involved.

1/ It is now simple to collect digital art that you can show on your TV. Here is the NFT that is showing on that photo. I minted it five days ago for about $90. It is part of a series of NFTs, but mine is unique. There is not another one that looks exactly like this one. There are hundreds of places you can mint NFTs these days and new NFT mints are offered every day, possibly every hour.

2/ It is relatively easy to write software to show NFTs on a TV. My partner Nick did that for the TVs at USV last year. We run that software on an inexpensive device called a Yodeck. I am currently using software written by the Bright Moments DAO for their NFT events and that runs on a Mac Mini.

3/ I expect a number of companies and projects will write consumer-grade software to do this over the next few years and I also expect the big consumer electronics companies to start shipping smart TVs with this kind of software in them.

Here is how I see this market working.

1/ You buy a smart TV with an NFT app in it.

2/ You connect it to the address that holds your NFTs. For me that is fredwilson.eth. You can see my collection here.

3/ You create playlists like you create playlists on your favorite music app.

4/ You tell the TV to play those playlists when the TV is off.

All of the pieces are in place for this to happen. We just need the software to be written and the consumer electronics companies to adopt it. That feels inevitable to me.

The term “censorship resistant” is used a lot in the decentralized computing/web3/crypto space to talk about a core feature of these systems. I don’t love the term censorship resistant because it is a wonky term.

Software that is encoded in smart contracts (and other ways) on fully decentralized blockchains can’t be shut down or turned off.

So why is this a big deal?

Let’s make up a story:

Imagine that an AI is trained to teach children to read better than humans. But the powers that be decide that teaching children to read is something that humans need to do. So they make this AI illegal and block access to it.

Well if this AI is written in a smart contract on a fully decentralized blockchain, it can’t be shut down. As long as there are nodes somewhere around the world willing to maintain the blockchain, this AI will continue to run and anyone that has access to the Internet will be able to use it.

That’s a made-up story, but hopefully, you get the point. I picked AIs and education, but you could also go with self custody and your money. Or you could go with image detection and speeding cameras.

The point is that the powers that be have, from time to time, decided that certain things are bad and attempted to shut them down. Alcohol, for example. Or sex between two people who love each other, for example. Or books about racism, for example.

Fully decentralized blockchains offer something powerful. Software that can’t be turned off. Data that is open to everyone. AIs that can’t be shut down.

We are in a moment with enormous posibilities brought on by the computer science revolutions in machine learning, decentralized systems, and new user interfaces. It will be tempting for powerful entrenched interests to seek to put the genie back in the bottle on some of this stuff. But if the genie is deployed on a fully decentralized blockchain, there is no going back in the bottle.

Back in 2014, USV got subpoenaed by the New York State Department of Financial Services (DFS) over our web3 investing activities. We hired a law firm, answered the subpoena, and that ultimately landed me in public testimony in front of the DFS staff.

In my testimony, I explained to the DFS staff that the difference between the US and China is that the US respects the freedom to innovate:

REMINDER: ANYTHING THAT CHINA BANS, INVEST IN!@fredwilson @cameron @tyler @BarrySilbert @Winter #Bitcoin pic.twitter.com/LGtDYef7U7

— Mr.Buidl🦇🔊🇺🇸 (@MrBUIDL) May 21, 2021

I was reminded of that moment yesterday when, in our quarterly call with our Limited Partners at USV, we were asked if the regulatory pressure on web3 in the US would result in us cutting back our web3 investing.

To which I responded:

When they want to shut it down, I say double down

The most powerful technologies send waves of fear through the establishment.

When you see that fear in their eyes, invest in the cause of that fear.

USV’s current thesis is:

Enabling trusted brands that broaden access to knowledge, capital, and well-being by leveraging networks, platforms, and protocols.

https://www.usv.com/#thesis-3-0

That last word is powerful but unfortunately less understood than the other words in that sentence.

Protocols have been around forever and are well-understood codes of conduct between people.

In computer science, protocols are the same thing, codes of conduct.

I like this definition of computer protocols from the Cloudflare website:

Standardized protocols are like a common language that computers can use, similar to how two people from different parts of the world may not understand each other’s native languages, but they can communicate using a shared third language. If one computer uses the Internet Protocol (IP) and a second computer does as well, they will be able to communicate — just as the United Nations relies on its 6 official languages to communicate amongst representatives from all over the globe. But if one computer uses IP and the other does not know this protocol, they will be unable to communicate.

https://www.cloudflare.com/learning/network-layer/what-is-a-protocol/

Protocols have been around for as long as computers, but we are at the beginning of a golden era of protocols that I like to call “web3.”

Until recently protocols were mostly free and unmonetized. We all use the HTTP protocol every day to access web pages. We all use the SMTP protocol every day to send email. But these protocols are free to use and don’t make money for any company or project or individual.

With the arrival of Bitcoin back in January 2009, we got a protocol that had monetization built in.

And since then, computer scientists have been creating web3 protocols for all sorts of things, most of which have a token that monetizes the protocol.

The monetization is not just about enriching the creator(s) of the protocol. It is also used to incentive usage of the protocol and operation of the protocol. In the Bitcoin protocol, that is operating mining computers that secure the Bitcoin network. In the Helium protocol, that is operating hotspots that connect the network. In the Ethereum protocol, that is staking to secure the network. In the Filecoin protocol, that is operating storage systems that provide decentralized storage.

It is the monetization that sustains these protocols and makes them reliable for others to use and build on them.

And with sustainable and reliable protocols, we will get a new architecture of services that will be much more interoperable.

Let’s look at mobile messaging. Most of my friends and family are on iPhones. I use an Android. Messaging does not work very well between iPhones and Android phones. Many people in the world use Whatsapp for mobile messaging. But Whatsapp doesn’t speak to iPhone’s messaging app. Nor does Signal. And Signal doesn’t talk to Whatsapp. And so on and so forth.

If every mobile messaging app was built on a monetizable protocol, that was sustainably reliable because operating it made people and companies money, and if developers were incentivized to build on it so they could also make money, we would have a different situation. All of our mobile messengers would interoperate with each other.

The same situation will play out in every computing sector over the next few decades as these web3 protocols are designed, built, shipped, and built on. We are in the early days of this golden era of protocols, but we already have many working extremely well in the decentralized infrastructure and decentralized finance sectors.

It upsets me that protocols are both so powerful and also so poorly understood by the media, the mainstream, and the government.

The White House recently put out a document that said “crypto assets currently do not offer widespread economic benefits” suggesting that web3 was not economically important to the US. While the economic benefits of web3 are not widespread today, they are quite powerful and will eventually impact every economy and every market. And pouring cold water on them will not make them go away. Thankfully.

The first project launched this week on our portfolio company Blackbird‘s platform.

It is a friends and family program at a restaurant in Williamsburg Brooklyn called Gertie.

Blackbird wrote about it today on their excellent Supersonic blog:

Throughout, when you tap Gertie’s Blackbird-powered NFC chip (shown above), wonder awaits. On the first tap, a free cookie sourced from a nearby bakery comes your way. On the second, coffee is on the house. Over time, one-size-fits-many freebies give way to the kinds of perks you’d expect as a regular, like a personalized coffee mug that is always at the shop awaiting your arrival.

I also really love how Blackbird’s founder Ben Leventhal describes the company’s mission:

Blackbird is here to create meaningful connectivity between restaurants and their customers. By connectivity, we mean direct connectivity, where guests know that the more they show up, the better their experience is going to be. We hope to help restaurants think about benefits as a line of business, not just a bunch of random comps. If we can, restaurants will begin to deliver magic at scale, and get more profitable in the process. We’ll turn good restaurants into bonafide thrill rides — spontaneous, consistent, and compulsively enjoyable.

The Blackbird platform is a great example of what can be built on a web3 stack when most of the web3 stuff is under the hood, invisible to the users but powering things that can’t happen on a web2 stack. Some people call this “web 2.5” but I just call it awesome.

Blackbird will continue to introduce capabilities and develop its platform much further. So in the weeks, months, and years ahead, when you see this on the host stand when you walk into an establishment, you will be in for some of that awesomeness.