Jamie GoldsteinHow far will we go to gain full control and ownership of our data?
In our new series BUIDL with the Best, Pillar VC’s Jamie Goldstein sits down with some of our favorite builders to talk about the reality of building on web3 today – what can be decentralized, what must still be centralized, and the implications for builders and users.
In our second episode, Jamie chatted with Sean Neville, Co-Founder of Circle, a global FinTech company that “enables businesses of all sizes to harness the power of digital currencies and public blockchains for payments, commerce and financial applications worldwide.” Sean was also instrumental in the foundation of the CENTRE Consortium with Circle and Coinbase, which created a regulated digital stablecoin: USD Coin (USDC).
The answers to these questions and more, below:
Web2/Web3 tradeoffs that matter to the end user
Before diving into the state of web3, it’s first important to define what web3 is. As Sean notes, the term web3 has become an easy way to refer to a wide range of technologies, but at its core, it refers to technology that enables people to have greater control over their own data, and transparency of how that data is used. More info on the original piece that coined web3 here.
Sean considers applications that have implemented these ideas of data control and transparency through economic and governance incentives to be more valuable than traditional web2 applications. That being said, he mentions, there is debate about how decentralized different components of the architecture need to be in order for users to experience these benefits.
Some people care about data control and transparency more than others, but the key is really speaking the users’ language. While the average person may not care much when asked about decentralization, if users are asked specific, non-abstract questions about how their data might be offered to advertisers on social networks, for example, their interest might suddenly increase.
Sean notes that builders will need to make decentralization trade-offs, analyzing which elements should remain in web2 to prioritize high-speed and low latency access points (that will most likely be centralized) and which parts should be decentralized, so that to the user, the value of data control and transparency is far outweighed by any user experience lags.
Let’s dig into the example of Web3 Uber.
Decentralizing parts of Uber allows users to participate in the economic upside and have a say in the Platform's future
Sean says when building in web3 right now, it’s important to think about the user experience first. When it’s 3 am and you’re calling a ride, do you want the cheapest, fastest ride home? Or do you want the one that comes from a completely decentralized network? Most likely, you chose the first.
There isn’t a strong need for complete decentralization (particularly at the expense of UX) with Uber. However, implementing economic and governance incentives through tokens would allow both drivers and riders to have a say in how the Platform is being built, while also getting to participate in the economic upside of the Platform as owners. In our previous episode, Corbin Page specifically calls out adding the features of data portability, transparency, and tokens for in-app rewards or tipping could be good starting places.
Sean adds that while drivers / rides can do versions of those things indirectly in the centralized version today (stocks!), it is more difficult, and much of the value ends up accruing to founders, venture capitalists, or mega shareholders.
Testing the user experience is key when building a web3 application
For the developers building web3 Uber, it’s again important to think about the user experience.
A vision for a Web2/Web3 Uber
If you were to build web3 Uber starting today, you would likely find the answer to the decentralization vs. user experience question lends itself to a hybrid model, where some parts of the Platform are centralized, and others are decentralized.
For example, while the Platform would be built with users in complete control of their data and Platform usage (a key tenet of decentralization), Sean notes that execution of smart contracts today is still mostly centralized through Infura.
Sean believes that there will still be a need for centralized access to services in a year from now, with users accessing many decentralized aspects of Platforms through centralized gateways, such as the Infura Ethereum API or Alchemy API. However, with time, specific central gateways will be eliminated as the development of decentralized infrastructure accelerates.
While web2 architecture pushes users to trust middle-men to handle their data, web3 will fundamentally change the way users interact with Platforms. Decentralization continues to liberate users, allowing them to own and govern their data fully, and with that, the possibilities are endless.
While we’re not living in a fully decentralized world yet, the time to start building is now.
Help us get there!