Web 3.0 more like Web 0.1

This week is not going to make me popular with the crypto community. I would like to share my experience with one of 2021’s blockchain superstars and the supposed slayer of Web 3.0. Say So-long to Solana, at least this is my view after my interactions with the blockchain over the last 10 days.

Web 3.0 (~2021) is the next generation of the World Wide Web which is trying to transition to more decentralised blockchain type data sharing versus the more centralised database type operations controlled by big tech with Web 2.0 (2004 – still main player today). Web 1.0 was the early period of the World Wide Web from 1991 to 2004. Ok with those timelines in place let’s dive in.

From about August 2020 until 30 June 2021 I became pretty obsessed with the blockchain. I wanted to understand better what was all the fuss with crypto. I had started investing again when Bitcoin was around $7,000 and was watching the crypto markets take off.

Time for a humble brag but you will see there is a connection – promise. I bought 10 Bitcoin when they were $100 and wrote a blog post in early 2014 about the trade of the century when I sold them shortly thereafter for $1000. The problem at the time was if you thought it was hard to buy Bitcoin 8 years ago it was far harder to sell your Bitcoin, welcome Solana into the story.

As mentioned above I poured my energy into understanding the blockchain. As somewhat of an extremist I was up all hours of the night (morning) reading and more importantly getting my hands dirty with the code and trying my best to run a blockchain node. I became a little obsessed with running CLI code, for no practical reason other than scratching deep unresolved complexes. However, getting my hands dirty trying to run a relay node on different protocols, which is geek speak for hosting the entire blockchain ledger and then authenticating a block, gave me a decent insight into the various protocols strengths and weaknesses.

So when the 9th of June 2021 came along I was already a fanboy of Cardano, what I believe to be the most sophisticated robust protocol, but a news release caught my attention.

Solana Labs Completes a $314.15M Private Token Sale Led by Andreessen Horowitz and Polychain Capital.

The big thing about Solana is its incredibly fast transactions per second speed advantage as well as its low fixed transaction cost $0.00025. To provide some comparison, Solana can theoretically process 50,000 transactions a second, compared to Bitcoins 7, Ethereum’s current capacity is 15 – 45 (they are hoping to be able to do 100,000 when their protocol upgrade ETH 2.0 is fully implemented) and then there is my favourite Cardano with its current 250 transactions per second with speculation that they can get up to 1 million per second. The current average cost of Cardano is $0.31 compared to Ethereum’s crazy expensive $36.40 and Bitcoin’s averages $2. For the sake of completeness Visa can do around 1,700 a second and Mastercard says they can do 5,000 per second.

When I read the press release about Solana’s tech and saw Andreessen Horowitz had just cut a sizeable cheque I wanted in. For me an early web entrepreneur (I launched South Africa’s first internet grocery business Micksons in 1996) I fell in love with the web browser Mosaic developed by a young Marc Andreessen and could see the potential this new medium might have on society. I provide this backdrop to show that my comments to follow are not written by some newb with no internet experience. Also anyone who has followed Andreessen’s and Ben Horowitz’s career will know that these guys are the smartest guys in the room bar none and if they are bullish then so am I.

If I am not mistaken the private token sale was done at a price of 40 something. With SOL trading at 22 I climbed in, if only I had backed up the truck. Over the course of the next 137 days I saw my investment grow from 22 to 241 that is 1,370% probably the trade of the millennium if I closed out at the top. Will you believe the market cap of Solana at its peak was an incredible $69 billion, its currently trading at a $37 billion market cap it started 2021 at $ 1 billion.

As the year 2021 ended I started getting a little disappointed at the quality of projects coming through the Web 3.0 pipeline. I could see Solana languishing as its community of largely hardcore developers just doesn’t seem to have the breadth of adoption that Bitcoin, Ethereum and Cardano have which is essential for anything meaningful to happen in a mass market space.

I decided I wanted to “cash-in” or at least “token-in” as I was no longer confident about Solana’s future. I figured it had maybe just done too much and it will spend the next few years trying to live up to its 2021 expectations and do very little in terms of price upside from current levels. The decision was made to sell which I did at SOL 168, that was before reading about the DDoS attacks on the network on Dec 10 and then again a few days ago on Jan 4 which has only strengthened my decision to sell.

Cashing in SOL

It turns out cashing in wasn’t as simple as I thought it would be and is the reason for me sarcastically titling this letter Web 3.0 more like Web 0.1.

Any self respecting investor in a token that is using Proof of Stake as its validation method should have their tokens staked. I did my staking through the only official Solana wallet that existed when I bought the tokens – Solflare. Unlike my Cardano stake pool operator who has taken his stakers on a journey, staking with Solana is quite faceless so I simply just left my tokens in my Solflare wallet earning around a 9% p.a.

Keeping your seed phrase passwords and all the security protocols secure and up to date can be overwhelming, for this reason I didn’t check on the wallet too often. I had written on a piece of paper stored in a safe place what needs to be done if I got hit by the proverbial bus. I barely understood what I needed to do, good luck to my next generation trying to read my handwriting and my garbled instructions.

Ok its the 30th Dec 2021 I want out. I login or I should say try to login to my Solflare wallet and there are problems. In the months since my last visit there is a whole new update to the platform and nothing looks familiar and its telling me to create new accounts and import your old wallet, etc.. all of this sounded a little like Greek.

Eventually after quite a bit of kerfuffle I managed to get into the wallet to see that my tokens were there- phew. Do you have the same experience when logging into your online bank portal?

Don’t ask me why but for some reason I had to create a new 24 word seed phrase, these things are scary, lose them and you lose your money – thats it, they are gone forever. Ok so now I see my tokens but I also see that they are staked which means they are tied up. Remember I want to sell and I am just hitting what seems like endless roadblocks.

I see something interesting in the wallet. It says if I switch to mSOL for 0.3% I can access my SOL immediately with no lockups. As a typical gunslinger who likes to shoot first, ask questions later. I did the switcherooo. It was super easy, probably the only thing that was easy. If you are interested in things spicy you can read about Marinade here.

You are excused if you think the rest will be easy after all that heavy lifting. Little did I know my journey was just getting started. I now have a bunch of mSOL and I am keen to get my money out so I try and sell my mSOL which trade at the same price as SOL. I sell at SOL 168 for the Bitcoin equivalent. Very quickly my wallet updates with the BTC and I am feeling relieved and happy having traded and realised an 860% return. Happy days – not so fast.

It is now time to transfer my BTC from my Solflare wallet to my regular BTC wallet, something that I was blocking out of my mind is coming into play. As I am inputing the appropriate addresses I notice something peculiar. If you look at the snapshot below you will see that the BTC I own are called Wrapped Bitcoin (Sollet) (BTC) – WTF are these. It turns out I have been marinaded with some additional lubricant flavouring. How the hell do I get rid of these wBTC that I have never heard of. There is next to no helpful advice on the net unless you are a hardcore developer close to the space. I try to get hold of support, there is only a Discord channel which is more chaotic than a pharmacy selling Rapid Antigen Tests.

I post my question on a general channel and its as if nobody in the history of Wrapped Bitcoin has every sold. It reminds of the Eagles song Hotel California, “you can check-out any time you like, but you can never leave!” I am not sure exactly how but I am now in private discussion with a support guy from Solflare, or so I think. He says he knows how to help me and proceeds to give me more complex instructions than a professor teaching partial differential equations. I am busy driving during this discourse on my way to pickup takeaways. He says he will stay up for me to get home to my computer to complete the process. I think it a bit strange that he is happy to wait another hour when it is 3am. I wolf down a burger, I made sure it had very little marinade, and start to follow Mr X’s instructions. I cannot get it to do what he expects to happen. Its now 5am his time and his patience is starting to wane. He clearly thinks its time, so he tells me to give him the 24 word seed phrase for my wallet. At this point I know I am in the process of being scammed. Mr X must have seen this rookie’s question on the General channel and figured I will be able to steal his coins. At this point I am wondering if the trade of the millennium is turning out to be fail of the century.

To cut a long story short there was one person on the Discord general channel who threw out an idea that at first I thought was unnecessary but at this point I was happy to try anything. She said open an account with FTX as they trade in wBTC. I will spare the gory details but this proved my way out. I was able to open a new account with FTX and then sell my wBTC for BTC – more fees – the system need more lubrication. Then from there I was able to do what I needed to do.

Concluding Remarks

What this exercise taught me is that the Solana ecosystem despite being worth many billions of dollars is extremely immature. I realised that Web 3.0 has a really long way to go before it becomes mainstream and efficient. In order for the true vision of Web 3.0 to unfold it will need mass adoption, I am talking hundreds of millions of people involved with a project. Not a few 100,000. We are talking real money here and the current ecosystem feels like we are playing Monopoly. There is so much work to be done. The part that worries me the most is security.

I think it is unacceptable that the blockchain system does not have contingencies for the loss of “keys”. If I forget my password to my bank account I haven’t lost my money. I was a big advocate for DEX where I can control my funds and have safe custody of my tokens and not have to worry about being co-mingled at a CEX. No that is not some kinky nightspot. The fear of being responsible for the security and accessibility of the wallet is real and its a living nightmare. I was thinking that perhaps some biometric protocol can be used but the more I think about it the risk then is bad actors will chop peoples fingers and poke their eyes out to access wallets.

I am not an expert in this field by any stretch of the imagination, I just wanted to share my experience and the immediate reaction I had to the Web 3.0 space. So as a final word I remain bullish the blockchain technology and the growing ecosystem. I feel however that in this risk-on speculative environment, the central banks have created, the pricing of these tokens has gotten way ahead of itself. There are more than 7000 tokens I believe and more than 500 exchanges its all happened very fast. I think entrants over the last 6 months are going to seriously loose a ton of money. This space is exciting and will make serious inroads to the Web 2.0 incumbents. It will unlock huge potential through its ability to transact seamlessly around the world with very few middlemen, it will provide huge boosts in productivity and reduction of costs through smart contracts. However, ……..

Rome was not built in a day!

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5 Comments

  1. avatar
    Michael Berman says:

    Just saying:

    Binance has confirmed that there are issues affecting Solana (SOL) withdrawals. In a notice on its website, Binance warns that the Solana (SOL) network is currently experiencing congestion due to an increase in high compute transactions, which is reducing its network capacity to several thousands of transactions per second and leading to some failed transactions for users.

    Withdrawals on Binance via the Solana (SOL) network may be paused from time to time to clear the backlog.

    Below is the full announcement:

    β€œNotice Regarding the Solana (SOL) Withdrawal Issue

    2022-01-11 09:05

    Fellow Binancians,

    The Solana (SOL) network is currently experiencing congestion due to an increase in high compute transactions, which is reducing its network capacity to several thousands of transactions per second and leading to some failed transactions for users. Withdrawals on Binance via the Solana (SOL) network may be paused from time to time to clear the backlog. We are actively working with the project to provide a stable, long-term solution. We apologize for any inconvenience.

    For further information, please refer to the following: The Solana Network Status Update

    Risk warning: Cryptocurrency trading is subject to high market risk. Please make your trades cautiously. You are advised that Binance is not responsible for your trading losses.

    Thanks for your support!

    Binance Team”

  2. avatar
    Albert says:

    Yup; we can squarely peg Web 2.0 w/ social media

    The future is the next media movt will not be TV (thanx God) podcasts, films ..tho I do like ’em; or social. They will be components but they will not drive it; or lead it. ..

    Intersection of Ar, VR and ext. reality ..It’s gonna create worlds whose influence will be governmental.

    ..You did right; screw Solana after how they treated Melania Trump; no, not f Reebok (Jerry Maguire) but Solana Labs. πŸ˜€ good to see my prayer is working ..

    This yr is gonna be another altcoin boom ..it’s always the same Dec 22 – crypto gens (btc? eth?) take a dip until after the New Year’s and come back roaring w/ steam end of Jan and Feb but this year .. seasonals, baby ..

    For me at any rate was pretty easy t buy bitcoin ..want the trade of the century? Seeing them (in 2011?) for $10 ..I knew to go chck b/c prior had seen them being offered when arriving in Finland for free (! :s)( (ya, say nothing then again did I know? No) to try it out ..I had no idea ..

    You sound like me πŸ™‚ Mike, extremist ..short of (knowing to) code ..get used to late office hours in this biz ..omgoodness I’ve worked soo hard I still knew to enjoy the Christmas period but knew I had to, work, through it ..shudder to think now if hadn’t ..

    ya, if you want a fun exercise compare USDC on ERC and Solana; and drewl ..

    I’ve tried that in, what, 2016 hosting the entire ethereum ledger ..no, this isn’t dissociation; back then was pretty easy to d/load, man it took long

    Solana actually like TRC20 is actually like a dollar in fees..

    ..:D a catalyst, thought now know what to look out for (a16z) then w/in the same hr pro in me sets in in the kitchen ..where to get out, either for profit or loss? Ah/man ..ok, well, locker for use later on ..

    Ethereum’s main problem is its crazy high gas fees..30 shld aim for , it to be, in that ballpark ..’cos we’ve seen close to $200 ..Buterin just released EIP-4488 where he talked abt lowering gas fees ..but the real way is POS

    Yea, like EIP-4488 is a bandage solution the long-term is shifting from PoW to PoS for ERC20/the network ..like it won’t increase block space; buuut if it allows Ethereum to scale (w/ its plans to scale just from there) well, then it de facto does.

    I just love crypto for some reason it’s the only mkt that’s intuitive ..

    Time to share my war story ya, i had to send litecoin to Hoo, fund another exchange via Ripple, then tried sending via Tron but that was congested (highly unusual?) worked the next day – super fast ..was shocked

    Ya, on the other hand my fx broker closed my account! :p System thought i hadn’t logged in in 6mths, doesn’t detect MT4 closing trades, etc. had to pass verification again ..

    This is true; Buffett applies here ..get to know the team, mission of the coin, long-term goal ..and invest in what benefits society ..TRON (trc20), FIL (decen storage), CRO (gr8 exchange) ..

    SA Jewish Times? lol Passover Edition .. πŸ™‚ no but cool to see you guys had a paper ..

    This reminds me of a Wall St. Sucker Play – stock (or commodity) which doesn’t quality as blue chip (ie. SP) but low-priced stocks that immediately have a big runup 12-20 dollars essentially experience a trend change and don’t come back spend yrs lingering there ..

    ..you wanna stake on an exchange can also get around that, same return in stable(coin) and man if want more risk well can only go up in rates..also, flexible; yeah, you’ll incur a penalty but you can get out ..like a bank ..

    lol this reminded me, spend time in the pit, and eventually you’ll be able to point out ok, this guy.. this guy’s a broker ..and then the real learning starts ..

    Mike, give Coinjar a try, in the UK and also Aus, I hear ..

    (Rips at additional (crossed out) marinade
    ;D lool )

    exchanges also have πŸ™‚ wBTC ..man, bro, next time, hit me up ..

    And first thing you shld’ve done after this is eat another burger πŸ™‚ – not wolfing it down ‘cos of this.

    Ya, from exchange to exchange πŸ˜‰ ..you can be sure everyone will take their share of the pie ..

    ..welcome to being an early adopter. But this is a bit unfair; Web 3.0 has already made life-changing money for some, but, yes, mass adoption. Bitcoin is mainstream ..tho how adopted ..

    Yea, I was gonna say not keep more than 10k on an exchange ‘cos hackers can see this, we dunno how, but there are ppl staking 6-figure sums, so ..

    Keys – this is true, and gets talked abt ..

    There is smth to be said abt centralization. Like the CME Group know what they’re doing, but not in the case of fb/meta do we want that. It’s not abt big or less govt again, tho the latter is preferred – it’s abt smart govt. And divine such

    What we have to remember here this relies heavy on responsibility. As it should.

    Biometric is coming , yea, I didn’t like the idea either in passports – turned out to be smooth, tho. They’re trying to achieve that w/ Corona now ..it’ll exist in Web 3.0 ..

    yea, there’s no way you, we can cover all exchanges it’s impossible ..

    This might interest you https://www.youtube.com/watch?v=9hzM0Q1tpd0 on chains 39:10 – 40:47

    ’22 .. (Facebook) Big Tech will be bankrupt in fact, can’t time it, but in fact now’d be a good time to start looking for puts on fb, twitter, google, MS, pfizer, AstraZeneca, media outlets ..

    as to mass adoption https://news.bitcoin.com/amc-theatres-accept-dogecoin-shiba-inu-payments-q1-ceo-confirms/

    https://news.bitcoin.com/report-kenya-set-to-scale-up-adoption-of-cryptocurrencies-in-2022/ Africa, L America, Eastern Europe ..

    There’s malls in America where you can buy bitcoin, trade ..next is pt of transaction; where you can just hop over into Taco Bell’s, McDonald’s ..

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