Web3 will come back because of AI – interview

In the next 2-5 years, AI will lead to an explosion in new digital experiences and will pave the way for the comeback of Web3, says futurist Aragorn Meulendijks.

We talked with Aragorn a couple of days prior to the bitcoin halving – a much-anticipated event within the crypto community. This event occurs every four years and is expected to take place early on Saturday morning in the US.

The halving is an event programmed into bitcoin’s protocol, which reduces the pace at which new bitcoins will enter the market. This is because miners can mine less new cryptocurrency with the same computational power, potentially leading to an increase in demand and, consequently, higher bitcoin prices.

In the past, bitcoin halving used to correlate with the start of the crypto bull market. Following the last halving, there were many new concepts introduced, like the metaverse and NFTs and the hype surrounding them. This surge in interest led to substantial investments into Web3 startups, with Crunchbase indicating that they raised a combined total of over $26 billion in 2022.

However, interest in these so-called future technologies quickly evaporated, with Web3 funding plummeting by 74 percent to less than $7 billion in 2023, while the global startup market decreased by 38 percent. Then also was the collapse of FTX and other companies, which cast doubt on the crypto space as a whole.

However, despite the negative trends, Meulendijks believes that the story of Web3 is far from over. According to him, AI will pave the way for Web3's comeback, with the new wave of Web3 startups focusing on AI.

Before starting his journey as a futurist, or, as he calls himself, a future-historian, Meulendijks worked in a Web3 startup called YOM, creating a decentralized cloud gaming infrastructure as a Chief marketing officer.

In 2022, he quit his job and started his own company, ItsMrMetaverse, which focuses on creating content around his views of technology, including Web3 and AI. He’s also a co-owner of a consultancy and networking company called Innovation Network.

In the last bull market, there was a lot of hype surrounding Web3. In 2023, investments in these companies plummeted. Some say that Web3 was nothing more than just a buzzword. Do you agree?

I think that the Gartner hype cycle is now broken because it will no longer function. There's a futurist entrepreneur called Peter Hinssen who talks about how there’s a "never normal." We’ve now entered the "never normal," which is an age in human and also technological development where we keep going from one extreme hype cycle to another very fast. And each time brings new technologies.

What we've seen over the last five years is that we have had multiple of these: metaverse, NFTs, and Web3. And then AI came. So, in one sense, I would argue that Web3 basically saw this peak of inflated expectations for Web3, NFTs, and metaverse. And now that came crashing down again.

But, on the other hand, I think that's just not going to end because AI is going to keep bringing new, massive innovations, and its hype cycle will never reach a peak. At the very least, Web3 will come back because, in the very near future, as a result of AI, we will need the kind of digital infrastructure that Web3 offers.

With tools like Open AI's Sora, you’ll be able to generate virtual worlds really quickly. We have AI doing coding. AI can be used in Roblox to quickly build digital worlds. Generative AI is everywhere. AI means that the virtualization of an extended reality is going to go very fast. Once that happens, people will want to have the ability to own assets in a virtual space. And if they want ownership there, they want safety. If they want safety, they will need a persistent identity. And then governments or whatever will need to provide safety there.

Currently, the public space in the digital realm is owned by corporations. That means that you don't have any human rights there. If you are an avatar, you're always on Facebook or LinkedIn or whatever. They kind of decide what you can do – they can just censor you. So, this can no longer happen. This has to be protected.

We could use other technologies to achieve decentralisation. However, the only technology that we have that is close and mature enough to provide this initially is Web3. So that means that, ultimately, Web3 will become super relevant again.

How long will it take to see a Web3 comeback?

So this is tricky to say, but if I were to guess, I would argue that in the next 2 to 5 years, AI will lead to an explosion in new digital experiences, worlds, and interactions.

AI will create not only new worlds but also services. For example, with AI right now, you cannot always say if content is real or not. So you'll see it's impossible to create an AI that can always know if the content is real.

Soon, people will start watermarking human content, and we will start watermarking content that humans make with AI if it's for a specific purpose. The way to do that would then obviously be to put it on a decentralised public ledger online. Then it's immutable, and everybody can see the transparency there. And this is necessary. So within two or three years, we're going to see it.

The projects that will be really big will be the projects that provide the solutions for AI and AI content. After that, the stigma of Web3 and NFTs will be eliminated from previous failed attempts and falsely hyped things like Bored Apes.

Where do the Web3 projects that have received considerable attention in recent years stand today? Have they brought the concept of a decentralised internet closer to reality?

I don't want to mention specific projects, but I think that over 90 percent of all the Web3 startups and companies that became really big in the previous bull run will disappear. Anything that has to do with artificial scarcity, 90% of that will basically disappear because there’s no reason for that.

The whole idea that we need to recreate scarcity in a virtual world to create value is a direct result of capitalist thinking. If I had said this ten years ago, it would have been really frowned upon and instantly marked as a communist or something like that.

But the truth is that we now see worldwide that very distinguished economists are starting to realize that capitalism is an extremely destructive kind of economic system that does not consider many very important factors.

We will create a system where there's abundance for everything because technology will enable that. There's no need to create artificial scarcity within a system like that because nobody will want that. This was the problem with the whole first generation of Web3 projects because they were built on ideas that were 100 years old, using technology for the future, and this is why they will never work ultimately, because they’re incompatible.

Are there any projects right now that are fully decentralized and could be called next-generation?

Any project that has to do with creating abilities to authenticate or certify assets, whether they be virtual or physical, can be successful if it is not focused on necessarily creating scarcity.

In the previous bull run, we saw endless projects saying they would generate 10,000 crypto punks. Nobody cares about that. In the future, it will be – and I hate using this word because it's such a cliché – but it will be about real utility.

For example, there are Web3 projects that allow for the distribution of GPU power. Processing power will be extremely valuable soon, especially with AI and Web3, which also depend on it. Processing power will proliferate worldwide, but optimising the available processing power will still be important and valuable. So, a token like this that can be used to optimise processing power distribution around the world has great potential.

Previous bitcoin halvings were used to correlate with the start of a bull run and the flow of capital to the crypto market. Will the next four years be the same or different?

I think both are true. On the one hand, a halving is a halving. Ultimately, it will always have an impact because we're seeing the influx of new bitcoins reduced by half. Some say that everybody has already calculated the halving, so we won't see a very big direct impact, as we might have seen in the past. But even if it's calculated, that still means it has an impact and influences the system.

Bitcoin will continue to become more valuable. I am very much in Michael Taylor's (bitcoin billionaire) camp that, ultimately, bitcoin will become a massive store of value.

Earlier, you also mentioned that since the last bitcoin halving, we have had many new technologies, like metaverse, NFTs, and Web3. What new technologies will be created next? Are there some emerging trends you are seeing right now?

We're already seeing a trend emerging, which is the creation of artificial intelligence gadgets for different purposes. Recently, I saw an AI necklace. There's a pin that records everything you say. The idea is that AI records everything, and then you can look back later, and it transcribes everything.

This first-generation product needs to offer more features, but we see these kinds of gadgets that bring AI into our lives in more ways. And if that is tied to you, if you own it, then you want your data to be secure. I think that this is a field where these emerging technologies will collide with Web3 and provide that kind of privacy and security.

We will see a new kind of cybersecurity technology rise as a result of AI. And I think they will be combined with Web3 because cybersecurity will be very important if we increasingly make everything digital.

We're going to see the rise of augmented reality, real augmented reality, where you not just wear VR glasses that have artificial intelligence talking to you but also literally augmented glasses that project images into your eyes. This will mean we will have constant access to the digital world and digital information.

We're still spending a lot of time talking to other people, but in the future, you will have a constant connection, and everything you look at and everything you do will be basically kept captioned with information. This is a new way of interacting with technology. It will start to replace or complement our smartphone use. And again, there you want privacy.

Increasingly, we will need privacy and security. This is where new kinds of technologies emerge due to AI and Web3 working together.