Jack Dorsey says crypto will replace the dollar

Dorsey, the co-founder and former CEO of Twitter, as well as the founder and CEO of Block, Inc., a financial payments company, has predicted that Bitcoin will replace the US dollar.  Replying to rapper Cardi B on Twitter, who asked “do you think crypto is going to replace the dollar?”, Jack Dorsey replied: “Yes, bitcoin will.”

In December, Dorsey stepped down at Twitter to begin working at his payments company, recently renamed Block, which includes Square and Cash App. Dorsey said he wants to focus on cryptocurrency and philanthropy.

In January 2021, Tesla bought $1.5 billion worth of bitcoin. In September, El Salvador adopted bitcoin as a national currency and began buying bitcoin. All of these helped the bitcoin price soar from around $4,000 per bitcoin in March 2020 to $69,000 in November 2021. The gains made by smaller cryptocurrencies including Ethereum, however, outpaced the bitcoin price rally.

“Just like NFTs, web3 and metaverse platforms are the next natural progression in how we interact, relate, and communicate with each other,” Meta chief executive Mark Zuckerberg said in an interview.

Elon Musk and Jack Dorsey expressed skepticism towards the concept of crypto-based web3.

The term Web3 has been described by Bloomberg as “hazy”, but it revolves around the idea of decentralization, and often incorporates blockchain technologies, such as various cryptocurrencies and non-fungible tokens (NFTs).

Web3 refers to a new iteration of the World Wide Web that incorporates decentralization based on blockchains. It is often contrasted with Web 2.0, where data and content are centralized in a small group of Big Tech giants. The term was coined in 2014 by Ethereum co-founder Gavin Wood, and the idea gained interest in 2021 from cryptocurrency enthusiasts, large technology companies, and venture capital firms.

Web 1.0 and Web 2.0 refer to eras in the history of the World Wide Web as it evolved through various technologies and formats.

Web 1.0 is roughly the period from 1991 to 2004, where most websites were static webpages, and the vast majority of users were consumers, not producers, of content.

Web 2.0 is based around the idea of “the web as platform”, and centers on user-created content uploaded to social-networking services, blogs, and wikis, among other services. Web 2.0 is generally considered to have begun around 2004, and continues until today.

Particular interest towards Web 3.0 spiked towards the end of 2021, largely due to interest from cryptocurrency enthusiasts and investments from high-profile technologists and companies. Executives from venture capital firm Andreessen Horowitz traveled to Washington, D.C. in October 2021 to lobby for the idea as a potential solution to questions about regulation of the web with which policymakers have been grappling.

Bloomberg described Web3 as an idea that “would build financial assets, in the form of tokens, into the inner workings of almost anything you do online”. Some visions are based around the concepts of decentralized autonomous organizations (DAOs). Decentralized finance (DeFi) is another key concept; in it, users exchange currency without bank or government involvement. Self-sovereign identity allows users to identify themselves without relying on an authentication system such as OAuth, in which a trusted party has to be reached in order to assess identity.

“You don’t own ‘web3,’ Jack Dorsey tweeted. “The VCs and their [limited partners] do. It will never escape their incentives. It’s ultimately a centralized entity with a different label. Know what you’re getting into.”

Disclosure: I hold bitcoin and other cryptocurrencies.

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