A crypto course from a16z co-founder: What should Web3 learn from Web1?

Interviewee: Marc Andreessen, co-founder of a16z
Interview and writing: Bankless
Translation: Amber, Foresight News

"Cryptocurrency is actually no different from the early internet." ------Marc Andreessen, a16z

As early as the early 1990s, in what we might call Web 0.5, before the internet as we know it became truly widespread, a small group of people represented by Andreessen had already begun exploring. At that time, what we now take for granted was still a vast unknown. For example, before 1993, doing any business on the internet was illegal, and now, I believe there's no need for me to describe the booming development of e-commerce.

With the development of the internet, participants gradually split into two camps: one side consisted of researchers and geeks, while the other included governments and corporations.

Even more frightening is that this division had no middle ground.

By the mid-1990s, two mainstream visions for the future of the internet emerged.

The first was the "information superhighway." With the support of giants like Disney and Comcast (the largest cable company in the U.S.), the internet became a one-way communication channel from authority to consumers, similar to the services provided by Web2 giants like Netflix. You could pay for content but couldn't truly participate. You were a consumer, not a creator of data.

The other vision was an open, more decentralized internet where users would gain the ability to "read" and "write." In this version, users were active participants in creating the web, not just passive consumers.

These two visions were in direct "competition" with each other. Issues like identity ID and privacy were not valued at the time. The conflict between these two visions also represented a significant gap in the way VCs, startups, developers, politicians, and even power agencies thought about problems.

At this point in the story, do you feel a sense of familiarity?

Andreessen recalled that during a congressional hearing at the time, his Netscape browser was labeled a security threat for insisting on encryption and was accused of having potential destructive power comparable to cruise missiles.

For Netscape and similar products, encryption was a necessary condition for anyone to transact on the internet. Otherwise, things like your credit card data would be made public. However, this issue, which seems obvious now, was not recognized by those senators in Washington, who only heard one voice: that encryption meant black markets, terrorists, and evil activities.

Now… do you feel even more familiar?

Many of us began to engage with the internet in the late 1990s, with some becoming digital natives and quickly realizing that the development of the internet was an unstoppable trend. But in the 1990s, this perspective had to contend with the ever-looming regulatory stick and "survival challenges." This is one of the reasons why Andreessen and Dixon directly compare Web1 with Web3, as the challenges faced by the crypto world at this stage are very similar to those of the Web1 era.

However, it is important to note that the way people think about problems today is still not broad enough. Whenever some countries ban cryptocurrencies or some public chains experience black swan events, people often view it as the end of the crypto industry. But that is not the case.

Cryptocurrency, like the internet, has become a new "inevitable trend."

The wheels of history will not stop, and the crypto world will not have an end; there will only be more questions and solutions to those questions.

Is the solution to the problem, or is the problem itself the solution?

Sometimes the solutions we create become new problems. For example, the early internet was a non-commercial space. This foundational result meant that the surfing experience online lacked commercial value and, consequently, trust. While a non-commercial internet sounds appealing on the surface, it created significant structural limitations.

This lack of economic incentive is the direct reason your inbox is filled with spam. As long as you have someone's address, sending an email to anyone is free, so why not bombard others? In fact, Salesforce, the tallest iconic building in San Francisco, was "successful" by solving the spam problem.

The early internet's lack of economic incentives is also a major reason why Web2 companies' business models are generally based on advertising, extracting value from the internet experience through surveillance and monopolizing information.

Of course, sometimes the new problems you create can be leveraged to provide solutions to other problems. Computer networks used to operate in unreadable binary code to save precious byte space. As early as the 1990s, the internet pioneers at Netscape made a bold decision to present HTTP in a readable format, which helped promote it to more people and lowered the barrier to entry for development, undoubtedly a great decision.

It made the internet a platform where more people could build really cool things.

But this decision also severely slowed down the internet's speed. The limited modem capabilities were severely clogged by all this new, heavy, human-readable data. So at that time, it was a controversial decision. Many viewed it as a desecration of user experience and complained about it.

Once again, does this story sound familiar?

But the end result was that this decision created demand. Every day, people began to engage with the internet, fell in love with what they could do, yet felt frustrated by the slow speed. However, this also caught the attention of telecommunications and cable companies, as the emergence of this demand directly accelerated these companies' efforts to promote broadband networks on a large scale.

No network company could directly drive the development of global infrastructure, but massive demand for infrastructure could.

Andreessen stated that Netscape's plan was to deliberately create a performance problem in the short term to guide demand, and this demand would need a solution in the long term to unleash larger-scale growth.

At this point, I even feel like we are talking about the issue of Ethereum scaling rather than broadband proliferation. The only difference is that Ethereum relies on a decentralized global network of developers rather than telecommunications companies to find that ultimate solution to the problem.

As Andreessen said, critics list problems to blame innovation, while geniuses can discover opportunities behind those problems. Ultimately, the spoils will go to those with an optimistic outlook.

What does Web3 have that Web1 didn't?

In simple terms, decentralized things are definitely cooler than centralized ones, and disrupting systems is cooler than corporate collaboration. Reconstructing financial markets is not something that happens overnight, but the emergence of incentive mechanisms means alignment with capital. For something new, standing alongside the world's most experienced capital allocators and technology ecosystem builders can only be beneficial.

With venture capitalists like Andreessen, Web3 has the capital to fight against existing institutions and outdated government policies.

In the Web1 era, we went through a crossroads between a centralized, top-down, nanny-like internet and a decentralized, people-driven, distributed internet. After a fierce struggle, we were fortunate to find the right path.

In the Web3 era, we face the same crossroads, but this time we have the backing of Web1 venture capitalists, who once achieved great success in betting on the right path. These venture capitalists are directing the returns they gained from Web1 towards those who are truly like-minded and have chosen the same path as their former selves. The path they choose is one that opens up human creativity and opportunities without permission.

The potential of crazy things like NFTs is, in fact, a potential tool for generating "levels of creativity beyond everyone's imagination."

Although the recent market cooling has prompted our reflection, we can maintain an optimistic attitude. While the growth rate of the crypto industry is rapid, achieving truly disruptive "systemic destruction" still requires the accumulation of time.