Summary: Consumer facing products only achieve widespread market use if they solve a pain point neatly. Consumers don't care *how* they solve that pain point. Products that only take a political or technical stance on something as a point of difference never take off because it's not a compelling enough hook for the mass-market. Web3 is just a politicized iteration of database technology that doesn't actually solve any pain points (if anything, it adds new ones).
I can summarize this whole article very quickly here:
- Consumers do not care about how tech works, they just care about the product
- Web3 technology is really just a gaudy form of database technology
- In fact - for almost all use cases outside of Cryptocurrency, it's usually worse than existing database technology
- Therefore, as consumers don't care about *how* tech does something - web3 based tech will never actually find product market fit outside of a subculture of enthusiasts
Consumers prioritize functionality over the underlying technology:
For the average consumer, technology is simply a means to an end. They prioritize reliability and seamlessness over understanding intricacies and protocols. While Web3 technology, with its focus on decentralization, blockchain, and smart contracts, may be technically fascinating, consumers care more about practical benefits in their daily lives than how it's built. To achieve widespread adoption, any technology must address real pain points or offer substantial advantages over existing solutions. Web3 doesn't introduce unique solutions that can't be achieved with current technology. Consumers outside of niche subcultures are not motivated solely by novel architecture or decentralization. They seek efficiency, convenience, and usability improvements. Unless Web3 applications can deliver tangible benefits without unnecessary complexities, widespread acceptance is unlikely. Pitching a consumer with "this pain point is solved with tech" is more meaningful than using Web3 as the selling point.
Web3 is just database technology with extra steps:
At its core, Web3 technology relies on decentralized databases, where information is stored across multiple nodes. While this may sound revolutionary, it's important to recognize that decentralized database technology has existed for decades. Web3 simply builds upon existing principles with the added layer of blockchain and smart contracts. In essence, Web3 is not an entirely novel concept but rather an evolution of existing database technology with added complexity. All of the above could be achieved with existing database architecture, a few APIs and some SQL calls. Blockchain's inherent limitations, such as scalability and energy consumption, can significantly hinder its practicality and performance. Additionally, the complexity of smart contracts and the irreversible nature of blockchain transactions can introduce new risks and vulnerabilities. These factors make Web3-based solutions less efficient and potentially less secure than traditional database technologies.
Good consumer products begin by addressing the problem and then work backwards to the tech:
So many Web3 companies I see are built with the tech in mind first and then work backwards to the consumer problems. This is a recipe for disaster. The best consumer products are built by identifying a pain point and then working backwards to the tech. This is why so many Web3 companies are doomed to fail. They are built by tech enthusiasts who are trying to leverage the buzzword of the day into a fundable company. They are not built by people who are trying to solve a real consumer problem. The tech itself is also pretty useless outside of cryptocurrency applications.
Decentralization of databases sounds cool as a politicized buzzword but is unlikely to be a good fit for your consumer product's tech stack:
- Security vulnerabilities: Decentralized databases introduce additional security risks compared to centralized databases. With data distributed across multiple nodes, each with its own security measures and potential vulnerabilities, it becomes more challenging to ensure consistent and robust protection against unauthorized access or malicious attacks. A single breach in any node could compromise the entire database, potentially leading to catastrophic consequences.
- Data integrity and consistency: Maintaining data integrity and consistency becomes more complex in a decentralized database environment. In a centralized system, updates and changes are easier to manage and verify, ensuring that all users have access to the most up-to-date and accurate information. In a decentralized setup, achieving consensus among multiple nodes becomes crucial, introducing challenges in synchronizing data across the network and resolving conflicts or inconsistencies. As a founder, your time is better spent focused on finding product market fit, not constantly worrying about your shitty database stack.
- Scalability and performance concerns: Decentralized databases can face scalability and performance issues due to the increased complexity of managing data across multiple nodes. As the number of nodes and data volume grow, it becomes harder to ensure efficient data retrieval and processing. Coordinating transactions and queries across numerous nodes can lead to increased latency and reduced overall system performance.
- Operational complexity and maintenance: The decentralized nature of databases requires ongoing maintenance and coordination among different nodes. Ensuring consistent backups, updates, and data recovery procedures become more complicated compared to centralized databases, where a single entity is responsible for these tasks. This complexity adds to the operational overhead and may require specialized knowledge and resources to manage effectively - again - your time as a founder is better spent basically anywhere else.
- Regulatory and compliance challenges: Many industries, such as finance, healthcare, and government, operate under strict regulations and compliance requirements. Decentralized databases can pose challenges in adhering to these regulations, as data governance becomes more intricate across multiple entities. Ensuring privacy, data protection, and meeting regulatory obligations can become more burdensome in a decentralized database ecosystem. It might be fine to build with a buzzy tech stack when you first get going, but what are you going to do when your product starts blowing up and you suddenly have GDPR regulators knocking down your door in Europe and realize you need to re-write your whole stack.
To conclude: Next time you see a web3 founder, simply ask them why they didn't use dynamoDB, Aurora or some other existing stack. I guarantee you they will not be able to engage with you on this issue because if they could, they would have simply built a real consumer product as opposed to trying to leverage buzzwords into a fundable company.