The bad news first: I don’t really know. The word “really” is redundant in that sentence, I have no clue what Web 3.0 is about.
But writing about something, and that in the public domain, is a great way to learn, and what I’m going to try and do is build up a series of occasional posts about Web 3.0. Bear in mind that I am the exact opposite of an expert when it comes to this topic, and these posts are being written as much to help myself learn about this topic as anything else. But that being said, I hope you get to learn something from this exercise as well!
What makes for a “good” economic system?
A system, to me, is things that work together to generate some output. That output maybe planned, unplanned or both. The things that are working together may be living, non-living or both. They may be working together on the basis of a conscious plan, or otherwise.
An economic system is one (to me) in which these things that are working together have at least an implicit knowledge of the fact that there is a cost attached to whatever it is that they’re doing when they’re a part of the system. If they were not to be doing x, they could have done y instead. And so choosing to do x has at least the cost of not being able to do something else. There could be other costs as well. These costs could be measured in terms of money, or in terms of time, or perhaps something else. But those costs exist, they matter, and they can be (at least implicitly) priced. That makes it an economic system.
What is a “good” economic system? A good economics system is one in which some (and preferably all) of the following things happen:
- As much output is generated as is possible…
- using as little inputs as possible.
- This output is generated in as sustainable a fashion as possible, that is, without destroying the ability to produce more output in the long run
- All potential and actual sources of inputs are given a level-playing field as far as possible. One input isn’t discriminated against relative to the other.
- The system works with as little friction as possible
- The system has an appropriate level of risk-management built into it.
But what does this mean in practice, using real world examples? Consider the system that I am a part of, the education system at the Gokhale Institute of Politics and Economics, which is where I work.
- We should be able to produce as much learning as possible
- using as little of our teaching resources (classrooms, faculty members, software, non-teaching staff, electricity etc) as possible.
- We should not work our resources into the ground over the long run – we should not work our resources too hard. It shouldn’t, paradoxically, become harder to recruit people into academia.
- We ought to be indifferent to whether learning happens because of books in the library, faculty members in the classroom, or videos from Coursera or YouTube.
- Requests such as letters of recommendation, transcripts to apply to foreign universities – all kinds of administrative tasks, really – should be handled as quickly and painlessly as possible
- The system should be able to handle shocks (big and small). A faculty member not turning up on a particular day shouldn’t bring the system to a halt, and a pandemic shouldn’t bring operations to a halt either.
There’s much, much more to a “good” economic system, of course, but hopefully you see what I mean. Try and build up an idea of what is a good economic system for whatever system you happen to be a part of. It can be your household, your corporate job, this country or any other system, small or large.
Now, Web 3.0: rather than try to understand what it does in terms of the technology, or in terms of the jargon that it seems so very riddled with, let us try and understand it in terms of what makes for a good economic system.
That is, unless Web 3.0 adds to the things that makes a “good” economic system better, or reduces the things that makes a “good” economic system worse (or both), it doesn’t really change the world in any meaningful way.
So, Web 3.0…
- Does it help increase the output of a system?
- Or maintain the same level of output, while reducing the commensurate levels of inputs?
- Does it increase the sustainability of the system?
- Does it level the playing field for all inputs?
- Does it reduce friction?
- Does it help build in better risk management?
If it does all of these things, it really is a magic wand. If it dos at least one of these things better, but not at the cost of making any of the others much worse, then it is a useful thing. If it does none of these, it is plain hype.
This is my framework for trying to wrap my head around, well, anything. And hopefully it helps us understand Web 3.0!
I will say this much: writing this out helped me understand this write-up much better:
Send USDC from a wallet with your ENS to the entity’s ENS and get digital mirror assets back into your wallet. These assets are held in a mirrortable, which is an on-chain replica of a primary cap table maintained in an off-chain system like Carta for compliance purposes. The terms of these assets are kept current via periodic updates of the mirrortable’s smart contract.https://balajis.com/mirrortable/
Read the rest of this write-up, and try and see if you can fit this use-case into my framework. In my next article in this series, that is exactly what I will try to do – and let’s compare notes! 🙂