This century is a turning point in human history. Let’s navigate it together.
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Hey team! Cross-posting my Coindesk piece. Read it at Coindesk here or check it out below.
Ten years ago, the rebels hadn’t won.
There was no Web 3.
No NFTs, no DeFi, no DAOs.
No Coinbase, no Ethereum, no a16z Crypto.
But now, in 2022, we have all of these things.
Elon memes Dogecoin on Twitter. The Miami Heat shoot hoops in the FTX Arena. Matt Damon shills crypto to millions during the Super Bowl.
Now our feeds are full of NFT profile pictures, there are tokens worth $100B staked across dozens of DeFi ecosystems, and DAOs buy constitutions and Parisian art.
Meanwhile, SBF casually becomes Biden’s second-largest donor.
Web 3 is the biggest wealth creation event in history.
The crypto rebels have won.
But we’re only 10 years in. What will happen in 2040? What does this mean for society? What does this mean for philanthropy?
To understand what will happen in 2040, we will look at three angles:
Past: Web 3 in the History of Wealth Creation Events
Present: How crypto whales are leveraging their wealth today
Future: Decentralized Solarpunk Society
A decade ago, crypto billionaires didn’t exist. Now there are dozens of them, with Twitter-optimized acronyms like SBF and CZ.
We’ve seen this before. The old rich give way to the new rich.
Emperors like Ghengis Khan and Caesar used to control all wealth.
Then the Industrial Revolution birthed billionaire oil magnates like John D. Rockefeller and steel magnates like Andrew Carnegie.
Computers and Web 1 birthed billionaires like Bill Gates and Michael Dell.
Web 2 created the GAFA elite of today: Bezos, Jobs, Zuck, Brin and Page.
And now, Web 3 has created SBF and CZ.
But are these crypto billionaires like SBF and CZ just a temporary flash in the pan? Or are they forerunners of an impending wave of wealth creation?
1. How People Get Rich Now
In April 2021, Paul Graham wrote an essay on How People Get Rich Now. By looking at the Forbes top 100 richest people, PG shows how wealth creation has shifted over the past century from Industrial Tech to Inheritance and now to Digital Tech.
First, PG shows how wealth shifted from Industrial Tech (in 1892) to Inheritance (in 1982):
In 1892, the New York Herald Tribune compiled a list of all the millionaires in America. How many had inherited their wealth then? Only about 20%. Instead, Hugh Rockoff found that "many of the richest ... gained their initial edge from the new technology of mass production."
But by 1982 the most common source of wealth was inheritance. Of the 100 richest people, 60 inherited from an ancestor. There were 10 du Pont heirs alone.
We can visualize this on the simple graph below to show how wealth became more inherited over the course of the 20th century.
Meanwhile, Jobs and Gates were working on computers in their garages, while Buffett was investing from his house in Omaha.
This led to the rise of Investing and Digital Tech. Paul Graham again:
By 2020 the number of heirs had been cut in half, accounting for only 27 of the biggest 100 fortunes.
Of the 73 new fortunes in 2020, 30 derive from Digital Technology, 26 from Industrial Technology and 17 from investing.
What about crypto, the intersection of Digital Technology and Investing?
PG didn’t look at crypto in 2021, but by 2022 we now have two crypto billionaires in the top 100: SBF and CZ.
The graph has a new player in town, crypto (in orange at the top).
It may not seem like much, but rarely do we find an entirely new category for how the wealthiest people create their wealth.
More importantly, is this a trend? Will the graph soon be covered in orange?
2. How many crypto billionaires will there be?
Balaji Srinivasan and Olaf Carlsen-Wee estimate that:
That’s a massive shift in who controls wealth. Does it hold up? We can do some napkin math to find out.
How many billionaires are there? There were only 15 billionaires in 1982, but there are now 2,668 and we'd expect that number to rise to around 3,300 by 2025.
But how many crypto billionaires are there?
Given crypto’s volatility and pseudonymous nature, this is a difficult question to pin down.
For simplicity, let’s use Forbes’ estimate of 19 crypto billionaires.
So our graph actually looks like this:
Again, this new crypto blip is pretty small. Right now only 1% of billionaires are crypto billionaires (19 / 2668).
However, this is something categorically different. The real question is: what’s the trendline? Will orange crypto take over the chart?
More napkin math:
As I write this, BTC is at $30,000. What happens if, by 2025, BTC goes to $200,000 and the rest of crypto rises with it?
This would give you roughly 400 BTC billionaires, 200 ETH billionaires, and 200 other billionaires.
With 800 new crypto billionaires, we’d get a graph like this:
800 crypto billionaires is around 20% of the total.
With this rough napkin math, I disagree with Balaji and Olaf that $200,000 BTC makes 50% of billionaires crypto billionaires. I think it’s more like 20%.
Still, 20% is a huge increase. And $200,000 BTC is not unlikely.
Coming back to PG’s article on How People Get Rich Now, we could expect the graph to look something like this:
That’s a huge change! Orange number go up.
Finally, all of the math above doesn’t even include the long tail of wealth creation.
BTC mining created thousands of millionaires. The ETH ICO created thousands more. DeFi created thousands of degen millionaires too.
No matter how you do the math, Web 3 is a huge wealth creation event. How will the nouveau riche leverage it?
We all know the famous quote (misattributed to Gandhi):
First they ignore you, then they laugh at you, then they fight you, then you win.
There’s a version of this but for digital technology in Web 2 and Web 3:
First they ignore your protocols. From TCP/IP to ERC20 and ERC721.
Then they laugh at your superbowl ads. From Pets.com to Crypto.com.
Then they fight your influence. From the US banning file sharing to China banning Bitcoin mining.
Then you win…and get a crappy government implementation 😂 . From Healthcare.gov to GovCoin Coming Soon™.
Another framework of technology adoption is Carlotta Perez’s S-Curve. All tech goes from the Installation Period to the Deployment Period.
Web 3 is still in the Installation Period. How is it impacting society today?
We can break this up into three categories:
Value Creation: The Direct Impacts of Web 3
Excess Capital: Philanthropy and Web 3
#SquadWealth: Collaborative Ecosystems in Web 3
1. Value Creation: The Direct Impacts of Web 3
First, we can understand Web 2 impacts by looking at tech company mission statements:
Microsoft: A computer on every desk and in every home.
Google: To organize the world's information and make it universally accessible and useful.
Facebook: To make the world more open and connected.
Amazon: Where customers can find and discover anything they might want to buy online.
But in Web 3, mission statements are focused on money instead of information:
Coinbase: To increase economic freedom in the world.
OpenSea: Building an open digital economy.
FTX: A cryptocurrency exchange built by traders, for traders.
The direct impacts of Web 3 will be a digital economy, open to the entire world.
2. Excess Capital: Philanthropy and Web 3
Web 2 birthed a set of “traditional” foundations like:
Bill and Melinda Gates Foundation
Schmidt Futures
Chan-Zuckerberg Initiative
MacKenzie Scott Foundation
Open Philanthropy
Web 3 is going a bit weirder.
3. #SquadWealth: Collaborative Ecosystems in Web 3
Finally, we can look at the long-tail of wealth creation.
In Web 2, this primarily manifested as AngelList syndicates and angel investor networks. Groups of early employees who exit with tens of millions of dollars invest that money back into tech.
In Web 3, this goes even further. Every round is a community round, with NFT degens and crypto VCs aping in together. This will be supercharged with the Web 3-native version of syndicates, syndicateDAO.
As a visual example, the hundred first investors of syndicate DAO are below. Crypto fundraising is community fundraising.
But we also have a fully new form of community fundraising that is built on abundance, impactDAOs.
These are collaborative networks that have positive externalities built-in.
Gitcoin Grants give back to the open-source community. KlimaDAO gives back to the environment. #DeSci gives back to fund new science research.
I like to think of these as DAOs that succeed in the presence of other DAOs, that also succeed in the presence of them. Here’s a map of the ImpactDAO space from Gitcoin and FiftyYearsVC:
People give back to fund crypto infrastructure through Gitcoin Grants. And then those grantors are rewarded later with retroactive public goods funding.
This concludes the present of Web 3. We’re seeing the huge impacts of crypto wealth through direct company impacts, philanthropic initiatives, and new forms of #SquadWealth
What will happen in 2040?
We can project these three trends into the future to understand a Decentralized Solarpunk Society (#DeSoc).
Value Creation: The direct impacts of Web 3
Excess Capital: Philanthropy and Web 3
#SquadWealth: Collaborative Ecosystems in Web 3
The ideas below are speculative, but should give us a rough sketch for where we’re headed.
1. Value Creation: The Direct Impacts of Web 3
Software is eating the world.
Web 2 started by eating bits then moved to atoms.
Web 3 will finish eating bits then move to atoms too.
Meatspace and the metaverse will be fully intertwined with internet and blockchain protocols.
Just as the Enlightenment separated church and state, crypto will separate money and the state.
Every community will have a currency.
Every person will have a Soul (a far-reaching identity token idea) and every Soul will work in trusted networks.
The Network State will form in the cloud, then will push down into every acre of land.
https://olihb.com/2014/08/11/map-of-scientific-collaboration-redux/
2. Excess Capital: Philanthropy and Web 3
In addition to Coinbase Giving and FTX Future Fund, there will be dozens of massive Web 3 foundations that give in a bottom-up way.
These foundations will take the form of what Nadia Asparouhova calls idea machines, funded organisms that turn ideologies into outcomes:
3. #SquadWealth: Collaborative Ecosystems in Web 3
In 1976, Vanguard gave retail investors access to the stock market index. Now we have new indices on crypto like the Coinbase 10, DeFi Pulse, DeFi Innovation, and NFT Index. Through indices like these, the public will collaboratively own and benefit from Web 3 (and AI) wealth creation.
There will be a clear risk-adjusted investment ladder for public goods projects, like VC is an investment ladder for startups. We will have Seed, Series A, Series B, etc. but for nonprofit public goods. Donors will be repaid through retroactive public goods funding.
Company M&A will phase out in favor of DAO token swaps and shared liquidity pools. The ecosystem of DAOs will rise and fall together as a complex adaptive system.
Software is eating the world. Crypto accelerates that process.
By 2040, Web 3 will be the water we swim in—full of crypto whales, millionaire minnows, and the rest of us small krill.
Let’s make the water (and the land!) nourishing and balanced.
Hope you have a great week!
Warmth, Rhys
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