Posted by My basic model of Web3 is that any Web3 project consists of (1) the ostensible project plus (2) a Ponzi scheme. If you do a thing in a Web3 project, you get some tokens, and then if more people do it the tokens become more valuable; you are rewarded for doing the thing to the extent that new investors put money in after you. Mostly this strikes me as bad! However! If you take a worthy but not especially sexy distributed project and add, like, a little bit of Ponzi to it, maybe that is something? At the New York Times, Kevin Roose writes about Helium:
On a basic level, Helium is a decentralized wireless network for “internet of things” devices, powered by cryptocurrency.
The network is made up of devices called Helium hot spots, gadgets with antennas that can send small amounts of data over long distances using radio frequencies. These hot spots, which cost roughly $500 apiece and can reach 200 times farther than conventional Wi-Fi hot spots, share their owners’ bandwidth with nearby internet-connected devices — like parking meters, air-quality sensors or smart kitchen appliances.
Anyone can use the Helium network, although most of its users so far are companies like Lime (which has used Helium to keep tabs on its connected scooters) and the Victor mousetrap company (which uses it for a new line of internet-connected traps). …
Helium, which was founded in 2013, didn’t start off as a crypto company. Its founders originally tried to build a long-range, peer-to-peer wireless network the old-fashioned way — by persuading people and businesses to set up hot spots and stringing them together. But they struggled to get enough participants, and the network stalled. …
So the company tore up its old business model and settled on a new one. Instead of building its network itself, Helium would make it fully decentralized and let users build it themselves by buying and connecting their own hot spots. Participants would be paid in crypto tokens, and they’d get to vote on proposed ideas for changes to the network. If the price of those tokens rose, they’d make even more money, and set up even more hot spots.
“This,” writes Roose, “is one of crypto’s superpowers — the ability to kick-start projects by providing an incentive to get in on the ground floor.” The more people who join the project after you, the more money you make. Ordinarily a network benefits from network effects, and you should join a network that a lot of people already use. But crypto networks benefit from “token effects,” and you should join a network that a lot of people will use in the future. There is some guesswork involved there of course, and some incentive for hype. (“A cardinal rule of Helium’s 140,000-member Discord chat server is that you’re not allowed to discuss token prices,” notes Roose, which should reduce hype.)
Here it seems fine, sure, why not. I do not know a ton about Helium. It is plausible that, without the financial innovation of crypto tokenomics, the world would be under-provided with internet-connected mousetraps and scooters. (I kid! I’m sure it’s good.) It’s just, you know, this basic approach is somewhat independent of the value of the underlying project, and can work with things that are less socially beneficial than internet-connected mousetraps.
Elsewhere here is Ian Bogost on Web3: “The Internet Is Just Investment Banking Now.”
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