"Long term bullish, short term bearish" is one of those phrases that annoy me quite a bit as an analyst. For one, it does not put a timeline to when moods change and secondly it seems like the intellectually lazy, but correct thing to say as a market participant. However, as Bitcoin rises to a new regional high and market sentiments change with A16z's recent $515 million raise, it has become essential to understand what do we be bullish about? Is it Bitcoin alone, or is there more to the paradigm change. Taking a page from a decade-old essay by Andrew Parker - I am inclined to believe that the next decade of the web will be about the unbundling of Amazon Web Services.
AWS as a business is fascinating. It has powered Dropbox, Netflix and Facebook at different points in time. It accounts for 13% of Amazon's revenue. However, as someone engaged in building the "decentralised" web, their positioning makes me feel a little awkward. We notice it every time a network launches with thousands of nodes on AWS instead of personal computers. The mental model I have been following over the past few weeks is that the next decade will be marked by the unbundling of AWS and that will be the underpinning of the "new internet". Three macro factors will fuel this. The rise in access to network connectivity, drop in the cost of hardware and regional regulators pushing for data privacy. According to the latest Mary Meeker report, half the world's population has access to the internet and initiatives like GDPR are making it increasingly necessary for new technologies that prevent exploitation of personal data by corporate entities without consent.
What would this unbundling look like and how long will it take? Well for starters, most of AWS services are already here in their own variation of Web3.0. Need storage? Filecoin and Sia could help. Golem, SONM and Enigma could help with computing. Projects like Decentraland are slowly engaging with the AR ecosystem, whilst Microsoft DIDs are working on solving for identity. If you pull up AWS' landing page today - the odds are quite high you could map all of them to different blockchain-enabled companies. The difference is, the economy of scale that AWS works at and the efficiency that comes along with it, is drastically higher than what any Web3.0 firm can offer in their capacity today. Add to this, the complexity of pricing in tokens, interacting with multiple ledgers and challenges in maintaining service, and you can see why our notion of Web3.0 has not taken scale yet.
But won't they scale at all? I'd think otherwise. Change happens when individuals seek out alternatives and unit economics improve to a point where it seems like they are leaving money on the table. Take content. Over the last decade, we have gone from advertisements to premium subscriptions to democratic publishing with the launch of Substack and Ghost. As the incentives for individuals to change to Web3.0 based alternatives increase, individuals will naturally shift. The only way to improvise those incentives is to build. And maybe, as entrepreneurs and investors in the ecosystem, that is realistically the only way to be "long term bullish, short term bearish" and be accurate about it. Being equal parts aware of the limitations of Web3.0 today and just as convinced about what this can grow into.