What are blockchains and how are ongoing mutations of this ‘distributed ledger technology’ impacting Internet governance? Debates about the pros and cons of blockchains for the unity and diversity of the Internet abound. In this contribution, we examine attempts to consolidate blockchain-based activities in the push towards a so-called Web3. This push for unity, we show, emphasizes technical interoperationality at the expense of socio-economic diversity. Unity in Web3, we contend, is being achieved through highly constrained forms of diversity, a regrettable but not entirely surprising trajectory for the future of Internet governance given tendencies of blockchain applications to re-create rather than overcome existing pathologies of Web 2.0.
What blockchain?
Arising initially with Bitcoin in 2009, blockchains are novel modes of bookkeeping that enable digital transactions to be undertaken, verified and recorded amongst Internet-based networks in which no one node is in charge. Rather than centralizing control in entities like banks or governments, blockchains enable their users to reach consensus on what transactions have happened and to record these transactions into bundles or ‘blocks’ every few minutes, depending on the specific blockchain. When sequentially added to one another, these blocks of transactions form a chain, the blockchain, an overview of transactions that can be seen by all users but altered by no one single user. Akin to pages in analogue bookkeeping, blockchains are said to enhance trust in an expanding Internet and in Internet governance more generally. Blockchains are equally said to not only support existing forms of governance, but themselves serve as a novel form of digital peer regulation.
Since interest in Bitcoin exploded a few years after the appearance of the first cryptocurrency in 2009, blockchains have continued to spark frenzies that have (re-)captured wider public attention and resources of varied groups. From artists to bankers, financial regulators to government officials, projections of what blockchains are – or ought to be – have continually morphed and mutated, often accompanied by fraud and scandals (Campbell-Verduyn and Hütten 2019). For instance, the boom in Initial Coins Offerings around 2017 promised new forms of crowdfunding. No sooner had this bubble burst than the more recent Non-Fungible Token (NFT) hype started, promising the ‘tokenization’ of objects ranging from art to videos.
A sense of chaos surrounding the technology has grown with each cycle of boom and bust. The seeming ‘chaos of crypto’ has been marked by strong divisions between supporters and detractors of the main applications of the technology. Critics stress that the technology does little beyond enabling scams and fraud. Supporters insist on its still-to-come transformative potential.
Adding to the chaos, each camp of supporters and detractors has divided further internally (Brekke, Beecroft and Pick 2021). Within the promoter camp are bitterly opposing stances over how a growing range of these Internet-based applications should come into official regulatory remit. Vexing tension plagues debates over when and how applications of the technology ought to be integrated into, or replace, existing systems of financial and Internet governance. The initial blockchain application, Bitcoin, was developed to replace banks and centralized forms of governance. Yet, banks and other financial institutions have increasingly engaged with cryptocurrencies and related applications of blockchain technology (Bleifeld and Hütten 2022). Such integration has raised concerns about co-option of original ‘challenger’ intentions. Within the detractor camp, meanwhile, divisions plague a wide and equally fraught spectrum of issues. Many critics completely write off the technology. Others critique certain blockchain applications.
In a surprising twist, however, the sense of chaos surrounding blockchains has recently begun to dissipate. Web3, the latest and perhaps most ambitious blockchain craze to date, starting in 2021, appears to be unifying blockchain booers and boasters. While this calm may not last, recent mutations in blockchain activities nonetheless have wider implications for Internet governance.
What Web3? Diverse applications, similar goals
What is being called Web3 does not yet (fully) exist. It also does not have a settled definition. Web3 involves a flurry of highly varied blockchain-based applications ranging from digital art to virtual land in emerging ‘metaverses’. Within this emergence, Web3 is frequently described as pluralistic. Yet, in contrast to the factionalism of cryptocurrency blockchain applications, Web3 proposes far greater unity. Although it might not remain as such, Web3 appears to involve significant unifications of dispersed, divided and seemingly chaotic Internet-based activities.
Ideationally, a widely shared promise drives thousands of Web3 blockchain protocols. Since 2021 this promise has entailed not just reform of one segment of Internet-based commerce. Rather, the promise of Web3 is nothing less than a return to the decentralized origins of Web 1.0 and the original Internet itself. As its name indicates, Web3 has far more than merely monetary ambitions: it is broadly pitted against a Web 2.0 where user-generated content and interaction has become largely controlled by few dominant platforms and monopolies.
Web3, in other words, holds a very conservative promise. It harks back to the future of Web 1.0, but without offering the static websites of the 1990s. However, rather than treating the Web 1.0 decentralization that is being echoed in Web3 as a source of chaos, peer regulation underlying blockchain is framed as unifying and beneficial for the present and future of Internet governance.
Slowly emergent Web3 applications are increasingly becoming entangled not only with one another, but also with Web 2.0. As blockchain technologies seek to finally achieve the long promised goal of becoming the ‘new tier” of the Internet', interoperability has become all the rage, both amongst Web3 projects and between Web3 and the existing Web 2.0. New blockchain protocols promise to enable different blockchains to operate seamlessly together at scale in ways that are uniting the ‘tribalistic culture’ of both cryptocurrency and earlier Web 2.0 applications.
A sign of less fractured times was illustrated by former Twitter CEO Jack Dorsey’s promotion of Web5 as the addition of Web 2.0 plus Web3. Instead of the succession of Webs characterized by new numbers, Dorsey’s proposal suggested potential for co-existence or even synergies among long bitterly opposed visions for what the Internet and its governance might entail.
What implications for Internet governance?
Web3 unity poses two related implications for Internet governance. First, Web3 unity comes at the expense of diversity. The shared ambition of Web3 reproduces and reinforces socio-economic inequalities characteristic of the deeper ‘underlying orders’ of Internet governance (Scholte 2021). Second, Web3 seeks to evade the extension of official regulatory powers to blockchain applications. Cryptocurrencies and other liabilities of blockchain-based ‘digital assets’ have been under scrutiny for years and are now becoming officially regulated globally. Web3 attempts to build on international efforts to distinguish responsible blockchain disruption from the reckless chaos associated with divisive cryptocurrencies (Campbell-Verduyn and Hütten 2022). We explore each of these implications in turn.
First, while it is not entirely jettisoned, socio-economic diversity becomes severely constrained in the push for unity in Web3. Countless blockchain projects claim to promote gender and racial equality, ecological sustainability, the unbanked and financially excluded. Yet, more often than not, ambitious diversity goals remain unfulfilled in the obsession over technical interoperability. Disconnects have remained between male-dominated blockchain communities centred in the Global North and the various proclaimed diversity goals, such as promoting Web3Women into actual standardization efforts. Insistence on Web3’s ‘novelty’ entrenches hierarchies of who is heard and who participates in this expanding corner of Internet governance. Long disenfranchised and marginalized actors from the very groups that Web3 projects claim to promote risk becoming further excluded in the pursuit of the narrower goal of technical interoperability.
Second, and relatedly, Web3 unity removes Internet governance from an encroaching official remit. A growing variety of blockchain activities are falling under enhanced regulatory scrutiny: for instance, the Market in Crypto-Assets legislation of the European Union and the Lummis-Gillibrand Digital Asset Bill in the United States. In this context, stress on harmonious interoperability in and across Web3 metaverses attempts to affirm industry capacities for self-regulation. Blockchain-based Web3 activities seek to move beyond the peer-regulated chaos that has very belatedly attracted efforts at official regulation. Positioning Web3 as a bearer of ‘new and better worlds’ is reminiscent of both Big Tech and Big Finance’s construction of ‘too big to know’ and ‘too complex to regulate’ systems that have continuously avoided adequate regulation in spite of recurring crises and governance failures (see for example Daub 2020).
Cracks in the unity barrel?
Through a focus on interoperability and return to the decentralized potential of Web 1.0, Web3 unity both extends existing shortcomings of Web 2.0 as well pre-empts regulatory efforts underway in increasingly wide areas of blockchain-based activities. Yet, the current trend of Web3 unity may not last long. While mobilizing a great deal of resources and attention, Web3 is also once again raising huge expectations for what the next instance of the Internet should be and whom specifically it serves. These expectations could crumble before they solidify in the medium-to-longer-term. Web3 unity may in particular dissipate as debates about the past, present and future of Internet governance open up, while in parallel established governance institutions increasingly regulate activities that ‘Internet independence’ purists seek to keep from official purview.
As it expands then, Web3’s promise of keeping unity in what amounts to highly constrained forms of diversity and separation from official ‘political institutions’ seem unlikely to hold. Emerging as counter-weights to Web3 unity are efforts at reimagining digital worlds beyond narrow ideas of technical optimization through insistence on pluralism. We agree that Web3, Web 4.0, Web5 or whatever label is attached to our Internet experiences should focus on overcoming rather than recreating pitfalls of Web 2.0. If a renewed push for Internet governance that works for everyone and everything on our planet emerges out of peer-regulated chaos, then blockchain will have earned the ‘revolutionary’ title hitherto unjustifiably accorded to the technology.
References
Bleifeld, Roxanne and Hütten, Moritz (2022). ‘Demokratisierung der Technokratie durch Technik? Zentralbanken, Banken und Blockchain’, in Bernhard Emunds, Michael Faust, Jürgen Kädtler, and Ulrich Klüh (eds), Was sollen und dürfen Banken tun?, Frankfurt/New York, NY: Campus, 389–422.
Brekke, Jaya, Beecroft, Kate and Pick, Francesca (2021). ‘The Dissensus Protocol: Governing Differences in Online Peer Communities’, Frontiers in Human Dynamics, 3: 641731.
Campbell-Verduyn, Malcolm and Hütten, Moritz (2022). ‘Governing Techno-Futures: OECD Anticipation of Automation and the Multiplication of Managerialism’, Global Society, 36(2): 240–260.
Campbell-Verduyn, Malcolm and Hütten, Moritz (2019). ‘Beyond Scandal? Blockchain Technologies and the Legitimacy of Post-2008 Finance’. Finance and Society, 5(2): 126–44.
Daub, Adrian (2020). Was das Valley denken nennt, Berlin: Suhrkamp.
Scholte, Jan Aart. (2021). ‘Structuring Polycentrism: Norms, Practices and Underlying Orders in Internet Governance’, International Studies Review, 23(4): 1988–2018.
About the Authors
Dr. Malcolm Campbell-Verduyn is assistant professor in International Political Economy at the Department of International Relations and International Organization, University of Groningen, as well as Associate Senior Fellow at the Käte Hamburger Kolleg Centre for Global Cooperation Research, University of Duisburg-Essen. His research is generally concerned with the roles of emergent technologies, non-state actors, and expert knowledge in contemporary global governance. He studies the ongoing and varying implications of big data and blockchain technologies at the intersections of global environmental, financial, and security governance.
Contact: m.a.campbell-verduyn@rug.nl
Moritz Hütten is research coordinator at Darmstadt Business School, Germany, fellow at the Center for Sustainable Economic and Corporate Policy (SECP) and PhD candidate at University of Amsterdam, Netherlands. His research focuses on the normative and social implications of blockchain technology. He has also conducted research in the field of banking regulation in Europe, and financial literacy. He was involved in several research projects at Goethe University Frankfurt and Darmstadt Business School, as well as the research centre 'Sustainable Architecture for Finance in Europe' (SAFE).
Contact: moritz.huetten@h-da.de – m.hutten@uva.nl