BTC and altcoins are attempting to end January on a positive note by overcoming overhead resistance levels as Bitcoin aims to flip $40,000 back to support.
Bitcoin (BTC) started 2022 on a losing note, dropping about 20% to its worst performance in January since 2018 when the price plunged 26.61%, according to on-chain analytics resource Coinglass.
Now, all eyes turn to February, which has historically favored the bulls. The only two negative closes in February were in 2020 and 2014.
One positive sign during the recent price decline has been that the long-term hodlers have not panicked. Glassnode data shows that the number of coins that last moved between five and seven years ago surged to a new all-time high.
El Salvador's President Nayib Bukele projected a “gigantic price increase” for Bitcoin. Bukele’s prediction is based on the fact that if the millionaires of the world, who are more than 50 million in number, want to buy at least one Bitcoin, there isn’t enough supply to fulfill that demand.
Could Bitcoin and the major altcoins end the month on a strong note? Let’s study the charts of the top-10 cryptocurrencies to find out.
BTC/USDT
Bitcoin has pulled back in a strong downtrend. In a sliding market, the sentiment is to sell on rallies rather than buy the dips as traders make more money on the downside.
BTC/USDT daily chart. Source: TradingView
The first sign of a change in sentiment will be a break and close above the 20-day exponential moving average (EMA) ($39,318). Such a move will indicate that demand exceeds the supply near the 20-day EMA resistance. The BTC/USDT pair could then march toward the 50-day simple moving average (SMA) ($43,791).
Conversely, if the price turns down from the current level or the 20-day EMA, it will suggest that bears are defending this level aggressively. The pair could then dip to $35,507.01. If this support cracks, the selling could pick up and the price could retest the Jan. 24 low at $32,917.17.
This is an important level for the bulls to defend because if it cracks, the pair could plummet to the strong support at $30,000.
ETH/USDT
Ether (ETH) is facing resistance near the breakdown level at $2,652 but a minor positive is that bulls have not given up much ground. This suggests that traders are buying the dips as seen from the long tail on Jan. 31’s candlestick.
ETH/USDT daily chart. Source: TradingView
The bulls will now again try to push the price above $2,652 and the critical resistance at the 20-day EMA ($2,802). If they succeed, it will suggest that the selling pressure could be reducing. The bulls will then see an opening and attempt to push the pair to the resistance line of the channel.
Contrary to this assumption, if the price turns down from the current level or the 20-day EMA, the bears will attempt to pull the ETH/USDT pair to the $2,300 to $2,159 support zone. The bears will have to sink and sustain the price below this zone to clear the path for a further decline to $1,700.
BNB/USDT
Binance Coin (BNB) re-entered the channel on Jan. 25, but the recovery faltered near $400. This suggests that the bears have not yet given up and are selling on rallies.
BNB/USDT daily chart. Source: TradingView
If bears sink and sustain the price below the channel, the BNB/USDT pair could again retest the critical support zone at $330 to $320. The downsloping moving averages and the RSI in the negative territory indicate that sellers hold the edge.
The pair could plummet to $250 if the $320 support gives way as several traders are likely to panic and rush to the exit. This negative view will invalidate in the short-term on a break and close above the 20-day EMA. The pair could then rise to the resistance line of the channel.
ADA/USDT
The failure of the bulls to secure a meaningful rebound off the psychological support at $1 indicates a lack of aggressive buying at this level. The bears will now attempt to build upon their advantage and sink Cardano (ADA) below $1.
ADA/USDT daily chart. Source: TradingView
Both moving averages are sloping down and the RSI is in the negative zone, indicating that the bears are in command. A break and close below $1 could signal the start of the next leg of the downtrend.
The ADA/USDT pair could first drop to $0.80 and then to the support line of the channel. The bulls will have to push and sustain the price above the resistance line of the channel to signal a change in trend.
SOL/USDT
Solana (SOL) has been consolidating in a tight range between $80.83 and $104.82 for the past few days. The bulls tried to push the price above the range but failed and now the bears will try to grab the opportunity and attempt to pull the altcoin below $80.83.
SOL/USDT daily chart. Source: TradingView
If they succeed, the SOL/USDT pair could resume its downtrend. The pair could first drop to the support line of the channel where the bulls may attempt to arrest the decline. If they fail in their endeavor, the pair could plunge to $66.03.
On the contrary, if the price rebounds off $80.83, the pair may extend its stay inside the range for a few more days. The buyers may gain strength if they push and sustain the pair above the breakdown level at $116.
XRP/USDT
Ripple (XRP) has been consolidating between $0.54 and $0.65 for the past few days. After failing to cross above the overhead resistance, the price could now drop to the support of the range.
XRP/USDT daily chart. Source: TradingView
The downsloping moving averages and the RSI in the oversold territory indicate advantage to bears. The critical level to watch on the downside is $0.54 because if it cracks, the XRP/USDT pair could drop to $0.50.
This level is likely to act as a strong support as a break and close below it could lead to panic selling. On the upside, a break and close above the 20-day EMA ($0.66) will be the first sign that bulls are on a comeback.
LUNA/USDT
Terra’s LUNA token is struggling to sustain the rebound off the support line of the descending channel. This indicates that sentiment is negative and demand dries up at higher levels.
LUNA/USDT daily chart. Source: TradingView
If the bounce again fails to sustain the higher levels, the sellers may smell an opportunity and try to sink the LUNA/USDT pair below the channel. If they succeed, the pair could drop to $37.50, which may act as strong support.
If the current rebound sustains, the bulls will try to start a relief rally, which could reach the 20-day EMA ($63). If the price turns down from this resistance, the pair could again turn toward $37.50. Alternatively, if bulls push the pair above the 20-day EMA, the rally could reach the downtrend line of the channel.
Dogecoin (DOGE) has been consolidating between $0.13 and $0.15 for the past few days. This suggests that bulls are buying near the support but have not succeeded in pushing the price above the overhead resistance.
DOGE/USDT daily chart. Source: TradingView
A minor positive is that the RSI has formed a bullish divergence indicating that the selling pressure may be reducing. However, if buyers fail to drive the price above $0.15, the bears may regroup and again attempt to pull the DOGE/USDT pair below the support.
A close below $0.13 could result in further selling, driving the pair to the psychological level at $0.10. The bulls will have to push and sustain the price above the 50-day SMA ($0.16) to ward off the short-term threat from the bears.
DOT/USDT
Polkadot’s (DOT) weak rebound off the strong support at $16.81 indicates a lack of buying at current levels. The downsloping moving averages and the RSI near the oversold territory indicate the path of least resistance is to the downside.
DOT/USDT daily chart. Source: TradingView
If bears sink and sustain the price below the $16.81 to $15.83 support zone, it will indicate the resumption of the downtrend. The DOT/USDT pair could then drop toward the strong support at $10.37.
Contrary to this assumption, if the price rises from the current level, the bulls will make one more effort to propel the pair above the 20-day EMA ($20.98). If they succeed, the pair could rise to the breakout level at $22.66 where the bears may pose a strong challenge.
AVAX/USDT
Avalanche (AVAX) is facing stiff resistance at the breakdown level at $75.50, which suggests that the sentiment remains negative and bears are selling on rallies. The downsloping moving averages and the RSI in the negative territory indicate that bears have the upper hand.
AVAX/USDT daily chart. Source: TradingView
The sellers will now try to sink the price below the immediate support at $61.06. If they manage to do that, the AVAX/USDT pair could drop to the strong support zone at $51.04 to $47.66. The bulls are likely to defend this zone with vigor.
A strong bounce off the support zone could brighten the prospects of a bottoming formation with the price remaining stuck between $47.66 and $75.50 for a few days.
The first sign of strength will be a break and close above $75.50. Alternatively, a drop below $47.66 could signal the resumption of the downtrend.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Privacy opt-ins are coming to Litecoin even as regulators continue to scrutinize anonymity-boosting protocols.
After two years of development, Litecoin (LTC) has finally launched its highly anticipated Mimblewimble upgrade, opening the door to more privacy-oriented transactions on the network.
Mimblewimble’s integration into Litecoin came by way of the Mimblewimble Extension Block, also known as MWEB, which allows the network’s users to opt-in to confidential transactions. MWEB lead developer David Burkett, who has been sponsored by the Litecoin Foundation, said the upgrade improves Litecoin’s viability as a fungible currency that can be used for everyday transactions, pay employee salaries and even purchase real estate.
Mimblewimble is a privacy-focused decentralized protocol that derives its name from a tongue-tying spell that was first made famous in the Harry Potter book series. The protocol has a confidentiality feature that allows users to conceal transaction information. It also provides a framework for other blockchains to enhance the usability of their cryptocurrency.
"You're a wizard, Harry."
Mimblewimble is not just a tongue-tying spell used in the magical series, but it's also a privacy-oriented decentralized protocol that structures and stores transactions on the blockchain. https://t.co/XCpNlb5AiD
Litecoin first embarked on Mimblewimble integration in a pair of Litecoin Improvement Proposals dating back to October 2019. The network launched its first Mimblewimble testnet in October 2020 following initial delays due to low community participation. The testnet was also launched around the time that regulators in Europe — chiefly, Europol — were sounding the alarm over privacy coins.
Privacy coins that promote anonymity and attempt to obfuscate digital ledger transactions have come under scrutiny around the world. As Cointelegraph reported, several exchanges ditched their support of leading privacy coins Monero (XMR), Zcash (ZEC) and Dash (DASH) in early 2021 amid regulatory heat.
In addition to anonymity and private transactions, Mimblewimble’s technology places heavy emphasis on fungibility and scalability — key features that are currently lacking across many blockchains. The Litecoin Foundation believes the Mimblewimble integration will contribute to LTC’s status as “sound money,” which is a broad concept that refers to stable monies that are less susceptible to depreciation and influence from monetary policy.
Despite being one of the earliest cryptocurrencies to hit the market, Litecoin has struggled to stay relevant over the years. LTC is currently ranked 21st in the market cap rankings with a total value of $7.5 billion.
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CCI board member Fred Ehrsam cited the WEF executive’s “in-depth knowledge of crypto” in addition to her experience working with governments across the globe.
Sheila Warren, the head of blockchain and distributed ledger technology at the World Economic Forum, will be assuming the position of CEO of the Crypto Council for Innovation, or CCI, starting in February.
In a Monday announcement, the CCI said that beginning on Wednesday, Warren would lead the alliance of crypto-friendly firms aimed at supporting lawmakers on crypto and blockchain regulation. CCI board member and Coinbase co-founder Fred Ehrsam cited the WEF executive’s “in-depth knowledge of crypto” in addition to her experience working with governments across the globe.
“The crypto ecosystem is poised to deliver large-scale economic growth, empower communities and improve lives all over the world,” said Warren. “I am excited to drive CCI’s mission of realizing the transformative potential of crypto through education and advocacy for a responsible, forward-thinking global policy environment that will ensure that crypto’s benefits are accessible to all people, regardless of their current economic privilege.”
We’re honored to announce @sheila_warren as the new CEO of CCI. Sheila will lead us in demonstrating and communicating the transformational promise of crypto to policymakers, regulators, and people around the globe. #FutureofInnovationhttps://t.co/ETGcYGp8SK
— Crypto Council for Innovation (@crypto_council) January 31, 2022
Formed in April 2021, the CCI includes supporters like Coinbase, Fidelity Digital Assets, Paradigm, Ribbit Capital, Andreessen Horowitz and Block — formerly Square. In July, the group hosted a virtual event called “The ₿ Word” exploring how institutions could potentially adopt Bitcoin (BTC) and blockchain technology.
As one of the major cryptocurrency exchanges, Coinbase seems to have stepped up its efforts to lobby lawmakers in the United States around "sensible regulation." However, Ripple Labs led an expensive campaign around the Securities and Exchange Commission's treatment of XRP tokens as securities, spending $690,000 on lobbying in 2020 without any concrete results in this area.
During her time at the WEF, Warren explored central bank digital currencies and promoted the adoption of blockchain technology. She has spoken at a number of events in the crypto space including the Hyperledger Global Forum and Unitize conferences and has written for Cointelegraph previously on the importance of crypto as an educational tool for empowering diversity and financial inclusion.
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Recently, death crosses between the 50-day and 200-day exponential moving averages have acted as a reliable predictors of bottoms.
Solana (SOL) looks poised to paint its first “death cross” this week, raising fears that its ongoing selloff would continue further into February.
Real selloff threat
Notably, the SOL price's 50-day exponential moving average (50-day EMA; the red wave) will eventually close below its 200-day EMA (the blue wave), signaling a bearish crossover, called a death cross, that typically prompts traders to sell.
SOL/USD daily price chart featuring its 50-200 EMA death cross. Source: TradingView
The threat surfaces as SOL looks to close January at nearly a 50% loss — as of the month's final day, the Solana token was down by over 2.50% to nearly $91, compared to almost $180 at the start. Meanwhile, the catalysts behind SOL's price crash remain pretty much intact.
Crypto-assets have fallen this month as traders have attempted to assess how fast the Federal Reserve would increase its benchmark rates from near-zero levels to tame booming inflation and tighter jobs market. Solana, as a result, has wiped half its market valuation in January from $55.19 billion to $28.79 billion; that is, after it closed 2021 at a whopping 11,144% profit.
That has got some financial experts to expect a "crypto winter" ahead, a term referring to concerning bearish cycles in the cryptocurrency market, such as the one seen during 2018 wherein digital assets' combined market cap fell by more than 80%.
It’s during crypto winters that the best entrepreneurs build the better companies. This is the time again to focus on solving real problems vs. pumping tokens.
As of now, SOL's interim bullish outlook hangs over its possibility to hold above $83, its current support level. A break below the said price floor could have the Solana token find its next pullback opportunity not until $65, as shown in the chart below.
SOL/USD daily price chart featuring its interim support targets. Source: TradingView
Both support levels were instrumental in sending the SOL/USD pair to its record high above $260 last year.
Philip Gunwhy, partner at Blockasset.co, remained long-term bullish on Solana, citing its exponential growth in the decentralized finance (DeFi) and nonfungible token (NFT) sectors that, in turn, tends to boost SOL's demand. However, the analyst noted that SOL's swift rebound in the short term depends on the performance of the broader crypto ecosystem.
"For Solana, maintaining solid support at $65–$85 area is undoubtedly the primary focus for the week while maintaining a longer-term focus to retest its All-Time High around $260," Gunwhy said.
Rebound scenario
No previous data shows how SOL traders react to a death cross since it will be Solana's first 50–200-day EMA bearish crossover to date. But considering that people who trade SOL have been trading Bitcoin (BTC) over the recent years, one can notice that death crosses bother them very little.
For instance, a 50–200-day EMA crossover, witnessed in the Bitcoin market in June 2021, followed a drop towards $29,000. But a month later, the BTC price bounced back strongly, eventually reaching its all-time high of $69,000 in early Nov. 2021.
BTC/USD daily price chart featuring recent death crosses. Source: TradingView
Similarly, over the past decade, death crosses in the S&P 500 (SPX) have lost their significance due to false bearish alarms. For instance, the last two bearish crossovers between the SPX's 50-day EMA and 200-day EMA — in December 2018 and March 2020 — led to bottom formations, followed by strong price rebounds.
That raises the possibility that SOL's death cross would have its price bottom out in the coming sessions, followed by a bullish reversal. In doing so, the Solana token may eye previous support/resistance levels for a potential rebound move towards its 200-day EMA.
More cues for a bullish rebound also come from the SOL price's oversold relative strength index (RSI), a classic buy signal.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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Data from Cointelegraph Markets Pro and TradingView showed BTC/USD climbing toward $38,000 on Monday, reversing a correction that had set in immediately after Jan. 30's weekly close.
With stocks giving some relief to bulls, many analysts remained hands-off on Bitcoin while higher levels nearer $40,000 remained unchallenged.
"Bitcoin chopping around and fighting resistance, while the volume remains low overall," Cointelegraph contributor Michaël van de Poppe summarized after his latest YouTube update.
"As stated, sub $38.5K not that much interested in any long entries, unless higher timeframe bullish divergences play out. $37.5K is a first minimal step."
Fellow trader Pentoshi added that a suitable buy-in zone lay immediately below current levels.
"I think you can likely bid 33K–36K. And scale in. And see yearly open on BTC in February. Lose 33K on HTF basis and cut it," he considered as part of Twitter comments on the day.
At the time of writing, BTC/USD traded at around $37,700, up $1,100 versus earlier lows.
Expect "ranging" to continue for BTC
Other sources were more somber on Bitcoin's upcoming prospects.
Highlighting signs from its Trend Precognition set of on and off-chain indicators, analytics suite Material Indicators revealed that no significant change of tact had occurred versus the start of Bitcoin's decline in November.
"Zoomed out to a MACRO view of Bitcoin as we approach the monthly close. Trend Precognition shows no signs that BTC has bottomed. Expecting to range as the downtrend continues," it commented on Twitter.
Such a perspective ties in with those who believe that a lower low is necessary for Bitcoin to put in a convincing floor and begin to tackle resistance.
Previously, fellow monitoring resource Whalemap identified $27,000 as an area of significant support should the current range give way.
#Bitcoin macro levels according to volume profile (the on-chain version)
Web3 or Web 3.0 as crypto boomers like to call it is a topical buzzword with only a very vague definition. Everyone agrees it has something to do with a blockchain-based evolution of the internet but, beyond that, what is it really?
Yet, the conversation surrounding the meaning and prospects for Web3 has become very fashionable in crypto communities. The term gets thrown about by big corporates trying to muscle in on the space while avoiding the negative connotations of crypto.
But, without an agreed-on definition, it cant be properly evaluated.
Crypto influencer Cobie is among those deriding Web3s lack of specifics:
Despite the deluge of undistinguished think pieces issued by the dominie of the day, nobody really agrees on what Web3 even is. Depending on which tribe you belong to, Web3 is a scam, Web3 is the future, Web3 is tokenizing the world, Web3 is VC exit liquidity, Web3 is just another name for crypto, you get the idea.
He adds: Even the crypto community cant make their mind up on whether Bitcoin is Web3.
Like many important terms in crypto, a key early crypto thinker coined the phrase and the community has had a few years to figure out what it means. Theres been a lot of reverse engineering driven by diverse ideologies and commercial realities.
Whats becoming clearer is that Web3 is not just one simple idea. It is a series of ideas. It was arguably first coined in a blog post from Ethereum co-founder Gavin Wood in 2014. According to him, Web3 could foreseeably bypass the geopolitical data boundaries and his definition included trustless transactions as part of its tech stack. Wood went on to create the Web3 Foundation and the Polkadot network, which trades on being a Web3 alternative future.
Web 3.0 will once again shake the world it will empower users on the internet where you can earn extra income with ad views and smart gadgets it will explode exploding like how the traditional internet appeared 30 years ago#PiNetworkpic.twitter.com/Ijd6NXEtFQ
— Pi Network News Game App Developer VietNam (@DevelopersVN) January 24, 2022
The 2013 Etheruem white paper had earlier given devotees a chance to imagine what a DAO, for example, might look like.
Web3 is now peppered with various concepts: sovereign digital identity, censorship-free data storage, data divided by multiple servers and other ideas requiring an exegesis of Biblical proportions such as decentralized autonomous organizations. These various concepts and ideas interlace discussions about the Web3 movement and its viability.
One thread links these concepts and Cobies starting definition of Web3. Web3 should include the decentralization of power and the ownership of value of ones own content and data.
Like many, though, hes cynical about the prospects of a utopian future coming to pass, noting that he wouldnt be surprised if crypto founders are too rich to care anymore and the new web gets built by late-stage capitalism greedcorps that make you buy a fractionalized micropayment NFT on Cardano to operate your electric toothbrush.
The concept of Web3 has numerous critics who argue that it isnt practical or achievable. Critics like Moxie Marlinspike (creator of sslstrip and Signal/TextSecure) can never see a day where people run their own servers, as might be imagined by Web3. Protocols are much harder to create than platforms, he argued, in a much-commented upon piece in early January.
While that may be true, some projects like file storage protocol IPFS split data between servers and allow users to select which jurisdictions to share their data between.
Yet, complete decentralization is a hard problem to solve. Blogger suhaza replying to Moxie noted:
People dont want to run their own servers companies have emerged that sell API access to an Ethereum node they run as a service Almost all DApps use eitherInfuraorAlchemyin order to interact with the blockchain. In fact, even when you connect a wallet like MetaMask to a DApp and the DApp interacts with the blockchain via your wallet, MetaMask is just making calls to Infura!
So, here are the questions that need to be answered: What is Web3? Is it viable? Will it really be that decentralized?
Web3 history is driven by the disappointment of Web2
This is a story all about how the Internet got flipped-turned upside down…
First, there was the vision. Free for content creation and accessible by everyone. It was popularized by decentralized open-source believers includingthe internets inventor Tim Berners-Lee.
And, then there was the reality: data trade-offs for content creation and accessible for a price.
Web1 was like a huge Wikipedia page married to a massive Craigs List. No ads, no logins and a private carve-up of its web pages. Web 2 is the current era of algorithmic targeted advertising and usually free usage in exchange for signing away your privacy and data.
25 years ago today, the web became public domain. Thanks to @timberners_lee and countless others who contributed to an open web.
Centralized by large corporates, our data is savaged by those giants. The internet is also fragmented by geopolitical walls such as the Great Firewall of China and their obtuse data localization rules.
Berners-Lee is desperately disappointed with how the internet has turned out and, so, a decentralized Web3 reflects Berners-Lees original vision: No permission is needed from a central authority to post anything… there is no central controlling node and, so, no single point of failure. He now runs Solid, his own Web3 data storage play.
So, Web3 begins with data privacy and decentralized servers.
Web3 starts with decentralized data storage
Decentralized storage of data is a key component of the emerging Web3 tech stack. In Web2, companies control closed databases. Large conglomerates including Facebook, Google and the other usual suspects go to massive lengths to hoard, control and monetize the data they collect. Web3 seeks to shift that.
Even by 2019, Web3 was being built at breakneck speed. (Source: https://ift.tt/QqzMbgw1h)
According to Gartner, five companies currently control 80% of the global cloud infrastructure market: Amazon, Google, Microsoft, Alibaba and Huawei. Web3 seeks to disrupt this status quo.
Decentralization means augmenting those power structures by giving participants partial direct ownership of the network. In Web3, users own their data on open encrypted networks. There are many projects in this space.
Censorship-resistant P2P data file storage and data sharing applications like Filecoin and IPFS have led the charge. A common characteristic for Web3 storage providers such as Filecoin is that data is replicated in multiple nodes across the network.
Yet, the emerging tech stack and ideology still leave many unresolved questions.
Empowering users to control their own data
Ryan Kris, chief operating officer of Verida, which is building in this space, described his Web3 vision to Magazine as empowering people to control their own data.
Veridas target audience is Software Development Kits (SDKs) that solve problems in the Web3 stack: identity, messaging, personal storage and data interoperability.
An ambitious suite of applications? Yes, but its a frontier technology, he says, without walled gardens. Pragmatically, they are not only targeting crypto clients and are currently building a credentialing system for decentralized health in Bermuda.
But, how will Web3 bring us a fairer internet by enabling the individual to be a sovereign? Kris, who has a decades-long background in telecoms, finance, cyber security and blockchain consulting, acknowledges that it is a tough ask:
There are also some good business questions as part of the viability of Web3, he says. How can personal data locked in centralized platforms be taken back by users? How are startups incentivized to build the products and tools to enable this transition? How are existing second- or third-tier Web2 companies incentivized to pivot to a Web3 business model so they can compete with existing market leaders?
Kris notes there are regulatory and practical issues too with the new technologies:
On storage, IPFS is great for sharing public data in a redundant and distributed manner, but it isnt designed for securing private personal data. It is distributed in a way that users cant own control. This introduces regulatory issues when data can not be guaranteed to be stored in a particular country.
There are also various levels of decentralization in each project. If DApps use centralized storage, they are no longer considered Web3 companies by the diehards. But, fully decentralized tech is extremely difficult to build.
Some argue that what were actually building at present is Web2.5, referring to businesses that are crypto-native but not fully decentralized in operation. This distinction is important. For example, the NFT itself might live on a blockchain but then there are centralized repositories of data connected to it such as OpenSea. If the server went down, valuable data could be lost.
OpenSea is the most high-profile platform for NFT sales, but it is not exactly community-led, notes Apollo Capital crypto analyst David Angliss. In 2021, OpenSea also took in major VC investing and made a failed Nasdaq IPO attempt, much to the chagrin of crypto folk.
This is where the Web2.5 definition is emerging.
Web3 is not a segment in crypto. Web3 can be anything that uses a blockchain for censorship resistance, including NFTs and DeFi gaming platforms, Angliss tells Magazine.
Web3 will enable users to be sovereign over their data and identity. This does not exist in the Web2 digital landscape.
Web2 is similar to feudalism, as in walled-off ecosystems, governed by a select few. For example, an honest user-owned (the account name) Meta on Instagram, Facebook then rebranded and then had to make up a reason for suspending that innocent users long-term account. Web3 can stop that from happening again. In Ethereums name service, if I bought Ethereum.ens, theres no way Ethereum can take that off me.
Angliss cites OpenSea as an example of a Web2.5 business. Being too decentralized, as in fully-censorship resistant, can be commercially unpalatable for a large business like OpenSea. For example, OpenSea facilitates buying and selling of NFTs. But, in instances, it also disabled the sale of stolen Bored Apes.
Web3 (or perhaps Web2.5, depending on what is being referred to) has been described as just another way to privatize the internet.
Just because it exists in the crypto ecosystem doesnt make it Web3, says Angliss. The big danger is that we could just see centralized closed ecosystems rather than a burgeoning Web3.
Community-led platforms that are more decentralized than OpenSea are emerging including LooksRare and OpenDAO. LooksRare has even been conducting a vampire attack on OpenSea (stealing users away with greater incentives) which means a Web3 competitor to the Web2.5 NFT king could find favor.
The introduction of a token allows more options for these new NFT platformsin how they want to build customer loyalty. For example, OpenSea charges a fee, none of which is directed back to the community. LooksRare charges a similar fee (2% for every swap) on every basic sale, with LOOKS token stakers earning 100% of those trading fees.
So, maybe Web3s time is coming?
Saw a bunch of journalists asking about web3 from a tech perspective today.
Look its not hard: web3 is just people trying to privatize the internet.
You know the basic libertarian herp derp we should privatize all of society stuff?
Sustained criticisms over the extent of decentralization in Web3 platforms may mean were just too early. New business models and spaces like the Metaverse and play-to-earn games mean users want to own and house their in-game assets and NFTs on decentralized platforms. This is where Web3-native start-ups like Arweave, Sia and Aleph.im offer a different approach.
Web3 being truly decentralized requires the creation of new off-chain models that side-wipe cloud computing and Web2.5 definitions.
According to the 2021 Messari Report: Arweave and Sia emerged this year as formidable competitors. They seek to protect the risk of an NFT being lost because part of the data on a centralized server was hacked.
Another Web3 cloud competitor, Aleph.im, seeks to replace the cloud computing layer with an alternative service network. Its a decentralized computing network supporting multiple blockchains by communicating with them through a messaging protocol to retrieve and encrypt important data.
Johnathan Schemoul, founder of Aleph.im explains to Magazine that: the solutions that the Aleph.im network provides are a truly decentralized alternative where its needed the most: storage and computing. Blockchains are not designed to address large storage volumes or high-performance computing, as they typically focus on consensus and security.
That means that large volumes of data are often stored off-chain, increasing the data storage risk for centralized databases like OpenSea.
Aleph.im enables users to rely on both blockchains as well as off-chain decentralized cloud technologies to provide true ownership of digital assets.
To build a robust decentralized web, we need to extend the decentralization beyond layer 0 and 1 where consensus and security is handled. The growth of the Aleph.im ecosystem is proving that Web3 can be decentralized and were committed to continue this effort.
Aleph.im raised $10 million in mid-January 2022, and its network is used by gaming company Ubisoft for its NFT storage, for example. This is the first time a mass consumer gaming studio has given this level of decentralized ownership to users.
Importantly, it also suggests Web3 could succeed as a B2B model, even if the average consumer doesnt care about decentralization. Crypto trends often start with gaming.
Aleph.im is a middleware blockchain agnostic play. (Source: Image: https://aleph.im/#/)
Will tokenomics help Web3 adoption?
Consumer adoption of Web3 is a different realm. All of this attention on decentralization may not be something the average user cares about. The question of our time remains: How much do people value privacy over convenience? Can tokenomics overcome the privacy versus convenience conundrum?
Jonathan Hooker, managing director at Holon Global Investments suggests to Magazine that human internet behaviors will change. He starts his Web3 explanation by asking: Do you own Bitcoin? How does owning and controlling your own self-sovereign wealth make you feel? And, then:
What if told you could own and control your own data like you control your Bitcoin?
The business model must find the thing that is important to that person, he says. Is that person suspicious of the government or placing their own health records on centralized systems they dont control?
How important is it for that person to have those medical records at a critical time anywhere in the world? Filecoin and IPFS can solve these data concerns.
Competition for NFT storage will be important for Web3 adoption. Filecoin launched its NFT.Storage in April 2021, also providing free off-chain storage of NFT metadata and assets.
One of the most significant implications of denationalization and blockchain technology is in the area of data ownership and compensation for lending, staking or using that data. This is the ground-breaking claim of Web3. Web3 provides value to users through tokenization and by enabling complex integrations with smart contracts.
Tokenomics can provide an Internet of value over just the internet, says Hooker.
Yet, as many simply sign into Web2 apps through a Facebook API without thinking twice, we have to question how much tokenomics can truly change human behavior. The big players, the Googles, Baidus, Tencents and the Facebooks (and its parent company Meta) all already own our data. Is it too late to get it back?
Maybe not. Data is like fruit, at the beginning it is fresh but it decays over time, he says. Big techs data on us will have a shelf-life.
Kris, the Web3 founder, agrees with Hooker that privacy is not the issue, value for data is the issue. People accept that they will lose their data privacy, so they might as well tokenize it. People give up their data readily, why not get paid for it?
Personalized data offering is valuable in a personalization context, he says. Ill sell my social media data but I wont sell my health data, for example.
Key management is a problem for both Web3 purists and mass consumer adoption
Others dispute this optimism about data tokenomics. Aaron Levie, founder of cloud computing company Box, while noting its great potential, questioned the viability of Web3 models in a Tweet thread:
Why? Because data nearly always works in the context of an app. Twitter social graph, YouTube channels, Spotify playlists, Airbnb listings, Shopify stores: these develop over *years* within the context of a product and APIs that moved quickly to build value and trust over time.
Levie argues further that tokenomics may make things more difficult. With Web3 ideals, weve likely added community governance and tokenomics into the mix, which adds a new negotiation vector.
This is the ease of adoption problem: These are hard problems about human coordination, not about software or blockchains. Many will choose a Facebook API for ease of use. Its the business model and UX/UI experience that is crucial.
For example, theres a common meme about the ease of logging to Web3 by the crypto faithful that is quite misleading. It goes something like: In Web1 there were usernames and passwords. In Web 2, you could sign in through a Google, Facebook or Twitter API and in Web3 you just connect your wallet. Sign in to MetaMask and pay with Ethereum, for example.
But, in truth, Levie is right. This meme ignores the stress of key management for blockchains. Even seasoned crypto folk have a heart attack every now and again, let alone the newbies.
Kris, the start-up founder argues that: Web3 needs a better UX, public-key cryptography is a different way to login, it needs to be improved. What does key recovery look like for a user?
And, at this stage, any possible solution is most likely not 100% decentralized. So, theres room for improvement in Web3 key management. The second someone loses control of their keys, its no longer Web3, says Angliss.
So, fully decentralized key management remains a major problem for Web3 purists. Add this task to the too-hard basket for now.
Web3 needs to solve various problems first before it will be embraced by the mainstream. Importantly, it needs to be better and cheaper or have other significant advantages over Web2.5.
Scalability without sacrificing decentralization protocols remains a clear goal for Web3. But, decentralization is hard and centralized services are more user-friendly in many ways.
Ethereum co-founder Vitalik Buterin himself stated recently this is why (centralized) Binance to Binance transactions trump Ethereum payments in some places because they dont have to be verified 12 times to be processed.
Referring to very high Etheruem gas fees, he went on to say: I do think a lot of people care about decentralization, but they’re not going to take decentralization if decentralization costs $8 per transaction.
In order for blockchains to able to actually be something that people are going to adopt for mainstream applications, it has to be cheap not by the standards of whales who bought crypto in 2014, but it has to cheap for the people who enter the system today.
For now, it seems that Web3 is still an aspirational concept held hostage by the crossover between scalability, tokenomics, mainstream adoption and the diehard Web3 believers in decentralization.
