“Looking back at FTX and the Terra Luna crash, what we see is irresponsible behavior. Web3 is not about tokens and NFTs. It’s not about investments or speculation. Many people are making badly researched decisions and placing capital in protocols which are not Web3. While tokens can be a very important element of a crypto economic protocol, they should not be marketed as the product itself.”
Gavin Wood, the co-founder of cryptocurrency Ethereum, cautioned against viewing cryptocurrencies as the core of Web3 - a new, decentralized internet built on blockchains. He emphasized that tokens and cryptocurrencies are byproducts of Web3, and marketing them as high-yield investments is misleading and will only hinder the development of the Web3 ecosystem.
Wood is an English computer scientist best known for developing the Ethereum blockchain alongside Vitalik Buterin. He co-founded the Ethereum Foundation with Buterin in 2014 and was its chief technology officer until 2016. Wood played a pivotal role in the development of Ethereum, including helping create Solidity, the programming language for the Ethereum blockchain, and writing the Yellow Paper, a formal specification of Ethereum. In the blockchain industry, Buterin is often likened to Apple founder Steve Jobs, while Wood is compared to Apple co-founder Steve Wozniak.
Ethereum introduced smart contract functionality to the blockchain industry, which is considered a fundamental building block for decentralized finance (DeFi) and non-fungible tokens (NFT) applications. The coin issued by the foundation, also called Ethereum, has a market capitalization of $422.7 billion, the second largest of all cryptocurrencies. The U.S. Securities and Exchange Commission (SEC) recently approved a rule change allowing for Ethereum exchange-traded funds, signaling its potential acceptance as a tradable financial asset.
Wood also coined the term Web3, which refers to a blockchain-based decentralized internet that goes beyond the early internet known as Web1 and the platform-centric Web2. After leaving the Ethereum Foundation in 2016, he founded Parity and developed Polkadot, another blockchain platform and cryptocurrency. He then established the Web3 Foundation to support various Web3 companies and technologies.
In an exclusive interview with ChosunBiz before his lecture at Seoul National University on June 10, Wood shared his insights on the future of blockchain and Web3.
From the time Bitcoin first launched to now, I’ve heard that you’re not interested in cryptocurrencies. Why did you get involved in developing Ethereum?
“I wanted to create a digital system that doesn’t rely on the existing social order. I’m still not attracted to crypto; I don’t like ‘gambling.’ I just wanted to create a system that maintains social order in a more transparent, open, and flexible way. That’s why I joined the Ethereum business and why I’m still in the Web 3.0 industry today.”
You left the Ethereum Foundation in 2016 despite making great strides.
“Some people seek a stable environment. Others prefer a dynamic, creative environment, and my goal has always been to create. I decided it would be better for me to be with people who are trying to create something new. Although I left the Ethereum Foundation, I didn’t part ways with Ethereum itself. Parity is a company that Buterin and I founded together. Buterin has been an advisor to Parity, and Parity has been actively involved in the Ethereum client ecosystem.”
You first presented the concept of Web3 10 years ago. Is your concept of Web3 still the same today as it was then?
“The concept of Web3 in my head hasn’t changed, but the world has changed. The way the world is changing now has reinforced my belief that we need Web3 technologies. The world has become quite disrupted in the last decade for a variety of reasons, and we need resilient technologies that can help us recover from increasing disruption. I think that’s what Web3 is.”
Why do you think Web3 has not become mainstream yet, even though the concept was introduced 10 years ago?
“Because it doesn’t yet provide a sufficiently useful product or service. People will use a product when it makes sense for them to use it. Currently, Web3 technology is not sufficiently useful in terms of scalability and accessibility. There are other reasons too. In developed countries, the need for decentralization, a key feature of Web3, is not strongly felt because the social and economic systems are well established. I don’t think Web3 technology has advanced enough to attract the interest of people in developed countries. Currently, the utility of Web3 is more meaningful in the parts of the world where institutions and governments don’t function quite so well for the people.”
What do you believe is the first priority for mainstream adoption of Web3 in the financial sector?
“We need financial infrastructure. Financial-related applications require infrastructure beyond just handling numbers. Also, many financial applications rely on additional semantic context for transactions such as KYC (Know Your Customer) and supply chains. Therefore, Integrating this semantic information into a decentralized financial system requires substantial infrastructure. Integrating this information is challenging, especially within a Web3 system. This is partly why we haven’t seen truly groundbreaking Web3 applications adopted yet. We have to understand that this is a marathon, and currently, we are in the midst of a long run.”
You said speculative activities with virtual assets, especially tokens, also known as cryptocurrencies, hinder the development of the Web3 industry. Is that correct?
“Some may argue that tokens or cryptocurrencies are, in some sense, the first killer application for Web3 technologies because they facilitate unregulated speculation. When we look at FTX and the Terra-Luna crash, we see irresponsible behavior on both sides of the transactions. There is irresponsible behavior from those selling the tokens and equally irresponsible behavior from those buying the tokens, largely because they are not doing their research. They are not investigating why the tokens should be worth anything but are instead speculating based on others’ purchases. This is a sad reality of the industry. However, centralized exchanges like FTX and flawed protocols like Terra Luna do not represent true Web3.”
There are perspectives that view Web3 itself as a Ponzi scheme.
“As mentioned earlier, there are people within the industry who have little interest in anything beyond buying and selling tokens to maximize their profits. They do not engage in serious research on Web3 technology. The bigger issue arises when they create false information and mislead others. This point needs to be managed. Proper management would help dispel the negative notions that people might have about Web3.”
Recently, there has been growing interest in combining artificial intelligence (AI) and blockchain.
“It’s interesting to see what experiments can be done. Unfortunately, AI is an extremely centralizing proposition. Blockchain could help mitigate the level of bias towards centralization that AI brings. However, I’m skeptical whether collaborations between AI giants like Microsoft (MS) and Web3 companies would benefit blockchain development. Strictly speaking, colossal centralized organizations like Microsoft do not partner with blockchains. Instead, they partner with companies that run the blockchains. Such collaborations often fail to fully embody the core principles of Web 3.0 technology. The outcome of partnerships between Web3 firms and AI companies is not a Web 3.0 protocol. It is simply a company product.”
Do you believe that giant companies like Microsoft cannot implement proper Web3 technology?
“Indeed, Microsoft is not a DAO, and the world would have to change significantly before Microsoft would consider partnering with a DAO. I don’t think it will change overnight. When I hear news of a blockchain company partnering with Microsoft or IBM or anyone else, I am extremely skeptical that the product they are creating actually represents Web3.”
With numerous blockchains in existence today, including Bitcoin, Ethereum, and Polkadot, what are your thoughts on this proliferation?
“Thousands of blockchains and thousands of coins don’t really affect my business because what I create is a digital service platform, and I just need to have the means to secure the platform. It’s the same principle as how the number of stocks you can buy and sell on the New York Exchange doesn’t matter to Microsoft. A company rises and falls on its business performance. I don’t think the current environment, where thousands of blockchains are competing, will have a significant impact on the development of the Web3 industry.”
What are your goals going forward?
“I want to create a world where proof is less necessary, and trust is more abundant, which is the basic idea of Web3. Web3 is not about coins, NFTs, or investments. It’s about increasing transparency and contributing to a society where we don’t have to be suspicious of people. Ideally, I think people should be able to control their finances and act in their own interest.”
☞ Who is Dr. Gavin Wood?
▲ MSc in Computer Systems and Software Engineering, University of York ▲ PhD in Computer Science, University of York ▲ MS Researcher ▲ Co-founder and CTO, Ethereum ▲ Co-founder and CEO, Parity Technologies ▲ Founder, Web3 Foundation
