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When Kickstarter unveiled its ambition to develop a blockchain-based crowdfunding system, the company characterized the move as a way to push creators closer to their audiences.
“Backers should be able to easily discover and participate more deeply in projects, better control their data, and have more robust tools to assess the trustworthiness and viability of a project,” Kickstarter said in a blog post earlier this month.
The reaction from users was hardly the sort of response Kickstarter had been hoping for.
A tweet by the company announcing the news was met with immediate backlash from Kickstarter customers who threatened to abandon the service, citing concerns with the environmental impact of cryptocurrencies.
Bitcoin and other digital currencies require huge amounts of electricity for processing transactions and minting new units of currency. For its part, Kickstarter said it would use Celo, a “carbon-negative” crypto payments 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 its own platform. The eventual aim is to move its entire website over to the new infrastructure.
Kickstarter’s proposal is all part of a buzzy 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 parent company Meta.
Like the “metaverse” touted by Meta, Microsoft and others, Web3 is still a hazy 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 like a ledger of transactions that’s constantly being updated by multiple computers around the world.
It’s attracted lots of interest — and money — from venture capital firms such as Andreessen Horowitz and big tech names like Twitter and Stripe. Several conversations on Twitter about the trend are from people with NFTs, or non-fungible tokens, as their profile pictures.
Kickstarter isn’t the first to experience backlash over a corporate move into the world of Web3.
Discord, the online chat app, recently teased some features that would let users connect their crypto wallets with their account. The tool, shown in a tweet by CEO Jason Citron, was met with swift backlash.
Some users raised concern over the potential for scams and money laundering in cryptocurrencies and NFTs, while others slammed the vast amount of energy required to process transactions on the blockchain.
“We have no current plans to ship this internal concept,” Citron said in response.
“For now we’re focused on protecting users from spam, scams and fraud. Web3 has lots of good but also lots of problems we need to work through at our scale. More soon.”
What it means
Large companies and investors with deep pockets are raving about Web3. But there’s a disconnect between how tech and finance industry professionals view crypto and the perception of the technology from the general public.
With crypto, the primary use case among consumers continues to be speculative trading. And there is still a huge education gap. According to the U.K.’s Financial Conduct Authority, 69% of people under the age of 40 don’t realize crypto isn’t a regulated product.
“There’s clearly a goldrush…leading to speculative investment,” David Chaum, an American computer scientist and digital cash pioneer, told CNBC by email.
Chaum is best known for inventing a system of untraceable electronic cash in the 1980s called e-cash.
“General skepticism about ‘crypto’ and digital currency has existed for as long as I can remember — long before bitcoin,” Chaum said. He thinks people’s distrust of crypto today will ease once the market matures.
Several major companies, including Tesla, PayPal and Meta, have taken the plunge into crypto lately.
Such moves have helped drive the price of bitcoin and other major cryptocurrencies higher this year, with investors betting on their potential to reach mainstream acceptance.
But if Kickstarter and Discord’s attempts to move into the market show anything, it’s that this goal is still a long way off from becoming a reality.