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When Kickstarter revealed its ambition to develop a blockchain-based crowdfunding system, the company identified the move as a way to bring creators closer to their audience.
“Backers should be able to more easily discover and participate in projects, have better control over their data, and have more robust tools for assessing the trustworthiness and feasibility of a project,” Kickstarter said in a blog post earlier this month.
The user response was hardly the kind of response Kickstarter had hoped for.
A tweet from the company announcing the news was immediately rejected by Kickstarter customers who threatened to discontinue the service, citing concerns about the environmental impact of cryptocurrencies.
Bitcoin and other digital currencies require huge amounts of electricity to process transactions and mint new currency units. For its part, Kickstarter announced that it would use Celo, a “carbon negative” crypto payment platform, for the initiative.
Kickstarter envisions the new crowdfunding mechanism as a “decentralized” protocol that would make it easier for people to raise funds for projects, even outside of their own platform. Ultimately, the entire website is to be converted to the new infrastructure.
Kickstarter’s proposal is part of a brisk new movement in the technology world known as Web 3.0 or “Web3”.
Web3 proponents argue that today’s online platforms are too centralized and controlled by a handful of large internet companies like Amazon, Apple, Alphabet and Facebook’s parent company Meta.
Like the “Metaverse” touted by Meta, Microsoft, and others, Web3 is still a fuzzy concept.
Most proponents describe it as a decentralized version of the internet based on blockchain, the technology behind many major cryptocurrencies. You can think of the blockchain as a transaction book that is constantly updated by multiple computers around the world.
It has generated a lot of interest – and money – from venture capital firms like Andreessen Horowitz and big tech names like Twitter and Stripe. Several conversations on Twitter about the trend have come from people with NFTs or non-fungible tokens as profile pictures.
Kickstarter isn’t the first to see a backlash for moving company to the world of Web3.
Discord, the online chat app, recently unveiled some features that users can use to connect their crypto wallets to their account. The tool, shown in a tweet by CEO Jason Citron, met with quick backlash.
Some users expressed concerns about the potential for fraud and money laundering in cryptocurrencies and NFTs, while others criticized the enormous amount of energy required to process transactions on the blockchain.
“We currently have no plans to ship this internal concept,” Citron said in response.
“Right now, our focus is on protecting users from spam, fraud, and fraud. Web3 has many good problems, but also many problems that we have to resolve to the greatest extent possible. More shortly.”
What it means
Big companies and investors with big wallets rave about Web3. But there is a discrepancy between how tech and finance professionals view crypto and how the public perceives the technology.
With crypto, the main consumer use case continues to be speculative trading. And there is still a huge education gap. According to the UK’s Financial Conduct Authority, 69% of people under 40 don’t know that crypto is not a regulated product.
“There is clearly a gold rush … leading to speculative investments,” David Chaum, an American computer scientist and digital cash pioneer, told CNBC via email.
Chaum is best known for inventing an undetectable electronic cash system called e-cash in the 1980s.
“For as long as I can remember there has been a general skepticism about ‘crypto’ and digital currency – long before Bitcoin,” said Chaum. He believes that people’s distrust of crypto will wane today as the market matures.
Several large companies, including Tesla, PayPal, and Meta, have made the leap into cryptocurrency recently.
Such moves have helped push the price of Bitcoin and other major cryptocurrencies higher this year, with investors banking on their potential to gain mainstream adoption.
But if Kickstarter and Discord’s attempts to get into the market show anything, then that goal is far from becoming a reality.