First, some current events.

Apparently GDAX rebranding to Coinbase Pro was not enough.

Coinbase is now just merging everything into an "advanced trade" option. Hopefully they don't sneak in any bullshit like adding fees. We'll see.

Hive deposits back online with Binance/Mandala

After a multi-week wait time and two hardforks, deposits are back online with Binance. I tested the speed three times. It takes one to two minutes for the money to process and become available. This is slightly disappointing, as I was hoping it would be faster because of instant block immutability. I'm not sure if it's an improvement or not from before; it might be a slight improvement as I seem to recall waiting longer than 2 minutes for funds to clear in the past. Maybe someone can back me up on that (or not).

Also important to note that it may get faster because the system just came online and is not fully operational. Withdrawals are still frozen, and the backlog of frozen deposits has not been cleared. I'll circle back to this some other day and see if we've made any improvements.

New King in the Castle.

People are losing their damn minds because Elon Musk is "Setting the Bird free" and unbanning a ton of accounts including former president Donald Trump. Never thought I'd see the left cry about instituting free speech, but here we are.

https://twitter.com/elonmusk/status/1585841080431321088

I must say it is a bit surreal to see it actually happening after all the drama. I honestly can't see how this could possibly be bad for Twitter, especially crypto Twitter. I guess we'll see though.

_{On to the main event!}

Speaking of Twitter.

I was extremely triggered yesterday.

https://twitter.com/Pacemak3r/status/1585731003896991744

Jack Dorsey spewing his WEB5 nonsense again.

But after I had a moment to reflect, I thought I really should look into it a bit more because it is so intrinsically connected to Hive and WEB3 and what we have going here.

Where does WEB5 even come from?

How did this new version of the web get its name? Laid out in a Google Doc presentation published by Dorsey, the name is derived from Web 2 + Web 3 = Web 5.

Haha. Wut?

So Jack Dorsey literally just added together 2 + 3 = 5?
Someone should tell him that's not how math works.
If we take the average of 2 and 3 we get 2.5, which is much more accurate.

There are many problems with Web3 as it stands today. Web3 currently works as a tokenomics pitch for a centralized company trying to raise funds in an ICO-like fashion.

The teams then use these funds to create a system of distributed networks that supposedly no one single entity owns, although this is almost always demonstrably false.

Instead of promising to be owned by users, it is owned and controlled by various venture capitalists, beneficiaries of private sales, and centralized API infrastructures.

Okay so we already know the answer to this question...

If something has a premine with venture capital involved it isn't WEB3. So rather than try to make the argument that all these centralized projects out there are not WEB3, Jack steps up and says he's building WEB5. Honestly... it's not the worst strategy even though it is extremely triggering to those of us who are actually trying to build WEB3.

As Web3 gained massive momentum in 2021 with the goal to "tokenize everything" and connect assets to blockchains, Web5 takes a different approach, relying on only one blockchain, Bitcoin, and only for a single use case: Identity.

lol so absurd.

To think that "WEB5" could possibly be built on top of the Lightning Network. The LN can barely sustain itself, let alone a completely different model built atop it. There is so much to parse here it's difficult to even know where to begin. Time to just grind through it randomly.

Blockchains provide decentralized, authoritative, and costly-to-modify data, which is known to be inefficient for many of the use-cases for which Web3 intends to use blockchains.

HIVE

_{fixes this...}

So how does Web5 promise to change all this?

A Web5 application will use decentralized identifiers, verifiable credentials, decentralized web nodes (DWNs), and decentralized web applications (DWAs) to offer only two use cases – data sovereignty and full control over this data.

Well look at you and your fancy infographics.

I already know in advance that Jack's plan is to basically assume everyone is going to run their own node. So rather than wait till we find it I'll just point out that it isn't going to work. This entire system lacks the proper incentives to scale up in a decentralized way. The killer dapp of crypto is inflation. We allocate inflation to the behavior we want to incentivize. Jack is building on Bitcoin, so there will be zero inflation, and thus zero incentive to provide infrastructure. @theycallmedan has been beating the wardrums to this affect for over a year now, and he is absolutely correct.

Self-Sovereign Identity Service (SSIS) is a decentralized identity management service that enables individuals and organizations to control their own digital identities. SSIS is built on a blockchain platform and utilizes smart contracts to provide a secure, decentralized, and tamper-proof way to manage digital identities.

Um... sorry?

There's an entire codebase dedicated to 'managing digital identities'?
You know what Hive's solve to this is?
Logging in with your posting key across every app.

Why would Jack need to build a full scale node system for identity when we can quite simply just store a list of public keys associated to someone's account, and require them to sign a message with their private key that matches the public key on file? If it wasn't obvious before, the overcomplexity of this project is a problem. There really is no reason to do it like this unless something shady is going on in the background (like the MIT CBDC implementation that forces users to track their own transactions to create a closed system with no API).

SSIS? More like ISIS!

Again, I'm having a hard time even acclimating to what's being talked about here because it's just so seemingly over-redundant and triggering. I'll definitely keep my finger on the pulse and try to find something of value within these tomes.

So your identity is approved... by a bank?

What is an IDV issuer?
Yeah... shady as hell.

Again... it's just very unclear how much infrastructure Jack expects users to run. A DWN is a decentralized web node. It looks like the local node is just run on your smartphone, but the remote node is an actual server. Who's going to pay for that? The user? Who's going to run the node? The user? The number of users that would run their own node is less than 1%. The number of users that will pay for service is also small, but still higher than those who will actually run infrastructure.

This means there will obviously be node custodians that run hundreds or even thousands of virtual nodes for other users (probably all on the same node). On actually decentralized networks like Hive... we call this a Sybil attack. It looks like he is baking a centralized Sybil attack directly into the cake of 'WEB5'.

And again, it would be great if this system has value. It's going to be built on Bitcoin. Anything good for Bitcoin is good for everybody. I would love if this 'WEB5' architecture actually works. That would be incredible (literally incredible at this point). I remain skeptical.

Hey boss, how should we visualize this innovative decentralized flat-architecture?

Make it a pyramid.

You got it boss, I see no problem with that.

lol

No comment required.

Seriously though after doing this deep dive I'm beginning to think that the conspiracy theorists that hinted that Jack might be making a CBDC play are perhaps... exactly correct. Which is interesting... because tech like this could act as the pseudo-decentralized bridge between BTC and CBDC. Honestly, that wouldn't be a terrible outcome. Everyone gets what they want. No one gets forced to use CBDC... a bunch of NPCs opt in voluntarily. Everyone who knows better just continues to use Bitcoin and other real cryptos. Would be interesting, to say the least.

Onto the original post.

Yep, I haven't even gotten to the main thing that triggered me hard enough to write this entire post. Jack's Tweet:

https://twitter.com/jack/status/1585724288274931714

WeB5 iS hAPPenInG!

https://blog.zion.fyi/announcing-zion-v2-a-web5-app-44ac7d66b1e1

This may be a bit redundant considering all the research we just did, but I'll skim over it again just to make sure I didn't miss anything.

A DID refers to any subject as determined by the controller of the DID private key. In contrast to typical, federated identifiers, DIDs have been designed so that they may be decoupled from centralized registries, identity providers, and certificate authorities.

Oh...

So they "might be" decentralized.
Literally 'maybe'.
That inspires a lot of confidence, eh?

Imagine a new world where you could…

• log into any site on the web without creating an account?
• switch to new streaming service and keep your preferences
• leave Twitter and Instagram and take all your connections with you

Alright I'm imagining it... and... it never happened.

How are you going to convince Facebook or Twitch or insert_WEB2_platform_here to connect to this new API that has zero adoption? The statement itself literally implies mainstream adoption, but is a paradox because if it had mainstream adoption... then WEB2 services like Facebook and Twitch and Youtube and Instagram would no longer exist. What came first, chicken or egg?

The vast majority of these globally unique identifiers are not under our control. In many cases, they can be fraudulently replicated and asserted by a malicious third-party, which is more commonly known as “identity theft”. This is the core of how censorship begins on the web and our solution enables you to own your identity online for the first time.

Literally solved by simply signing any message with your private key. It doesn't need bells and whistles attached to it connected to banks. But we've already been over this so, yeah. Redundant.

A Decentralized Web Node (DWN) is a data storage and message relay mechanism entities can use to locate public or private permissioned data related to a given Decentralized Identifier (DID). Decentralized Web Nodes are a mesh-like datastore construction that enable an entity to operate multiple nodes that sync to the same state across one another, enabling the owning entity to secure, manage, and transact their data with others without reliance on location or provider-specific infrastructure, interfaces, or routing mechanisms.

I'm all for mesh networks, but to assume that Jack solved the problem on the very first try without even creating a token is... I don't want to say 'impossible' but... Impossible.

The Lightning Network acts as Zion’s native payment infrastructure on our mobile app and relay. Because exchanges of content are secured by the same cryptography that underpins financial transactions, all payments on Zion are instant, immutable, and untraceable.

Again, the LN implementation is a cool idea, but to call it immutable and untraceable seems like a gigantic stretch. No one even claims that Bitcoin transactions are untraceable, and LN is way more centralized than Bitcoin.

Nodes connected to the Lightning Network route high volumes of instant micropayments directly between peers, without relying on facilitation or custody from a third party.

AKA everyone will run their own lightning node.

Simply not going to happen.
No contest.

Building new software is hard. Building new software on new primitives for products that have not existed before is exponentially harder. So it will take time.

Most honest statement in the entire piece.

Kudos for that.

Conclusion

It's very clear that Jack's version of WEB5 (which is clearly WEB2.5) expects every single person in the network to run their own node. Basically this tech is just dead on arrival. Causal users would 'never' do this. I mean maybe they would 30 years from now, long after mainstream adoption... but not now.

Intrinsically this implies that a centralized custodian will be managing the personal nodes of potentially million of users. And what incentive do those custodial nodes have to actually run the infrastructure? It's already been stated by Jack himself that selling ads/data is a wholly unacceptable business model. Leaving the rest of us to wonder: How in the world could such a product have the proper financial incentives? For now, we have to assume that these incentives do not exist and that Jack is 100% full of shit. But it sure would be nice if he wasn't.

WEB2 + WEB3 Obviously does not = WEB5. It's WEB"2.5" AT BEST. The jump in paradigm from WEB1 to WEB2 was huge. WEB2 provides 'free' services without paywalls. Free to play is a very popular model. The jump from WEB2 to WEB3 is even more massive. Now we control our own accounts and even our own sovereign currencies. To say you are building WEB5 and skipping over WEB4 entirely is an embarrassingly childish endeavor. I guess marketers gonna market.

If I had to guess, WEB4 will be breaking the light speed barrier. That will be the next huge hurdle when it comes to upgrading the Internet. Right now everything happens at the speed of light (electricity), which is fine if you live on Earth. But what if you need to connect the Internet on an inter-planetary level? If we create a colony on Mars, it would take 24 minutes for a light-speed transmission to reach Earth when both planets are on opposite sides of the solar system (average time is 12 min). 12 minutes of lag is wholly unacceptable. Bitcoin could not exist on Mars using light-speed architecture. It would be a separate chain.

For frame of reference, Alpha Centauri, the closest star system to Earth, is 4 LIGHTYEARS away.

So I bet you're asking what WEB5 would be. If WEB4 is cracking through subspace transmission (the term literally comes from Star Trek) and creating an interplanetary network... then WEB5 is cracking through the interdimensional network. Jack is literally implying he is creating a quantum interdimensional Internet. The chance that even WEB4 is built within our lifetimes is pretty thin. The average of 2 and 3 is not 5.

Jack looks like a jackass.

Nuff said.

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