Matt is a key member of our cryptocurrency team which has embraced Web3 (also known as Web 3.0) for its enhanced transparency, security and efficiency in financial transactions and data management. It also provides improved audit trails and reduced risk of fraud, along with more accurate and real-time financial reporting.

Here are his insights from the summit…

What is Web3 and how does it differ to Web 2.0?

Web 2.0 – our current version of the web – came into being in the early 2000s and is characterised by user-generated content and the growth of social media platforms. It has been the dominant force for the past two decades. Web3 will instead be decentralised via blockchain technology, with access to internet services also provided by individuals, not just companies like Google, Facebook or Apple. Sites and apps won’t be subjected to as much censorship. This new era is not just about connecting people but also their knowledge, enabling peer-to-peer interactions without the need for centralised platforms.

Blockchain technology was used to create Bitcoin and other crypto currencies. Its benefits are that transactions are secure and transparent, and users have more control over their data.

Ethereum

The focus at Pragma was on the practical usage of Ethereum – a decentralised platform that runs smart contracts and is at the forefront of the Web3 movement. The discussions centred around the scalability of Ethereum, which is crucial for its adoption on a global scale. Ethereum could become the backbone of a new, decentralised internet.

However, there is a challenge scaling Ethereum from its current capacity to accommodate a billion users. The network currently supports around 15 transactions per second, which is hardly insufficient for mass adoption!

The goal is to create a blockchain ecosystem that can support the high volume of transactions without sacrificing the principles of decentralisation. The conference presenters believe the solution will involve not only technical adaptations but also a shift in user behaviour and adoption patterns.

Retroactive Public Goods Funding

Making the changes to Ethereum requires innovative funding mechanisms like Retroactive Public Goods Funding (RetroPGF). Cantabrian and Co-founder of Fire Eyes, James Waugh, explains it as follows: 

“RetroPGF is an approach to financing projects that benefit the public, particularly in the realm of open-source software and decentralised ecosystems. The fundamental principle behind RetroPGF is that it's often easier to recognise and reward valuable contributions after they have been made, rather than predicting their future impact.”

In this way, projects that have already delivered value to the community are rewarded retroactively. This not only incentivises the creation of public goods but also ensures that funds are allocated to projects that have already proven their worth. This model contrasts with traditional funding mechanisms, which often rely on speculative value and potential future returns. RetroPGF encourages developers to focus on creating value without the immediate pressure of monetisation, knowing that their contributions could be recognised and rewarded later on.

The process involves several steps, but briefly:

• A project is completed and released to the public. The community then uses and benefits from the project, and its impact becomes apparent over time.
• After a certain period, a funding round is held where funds are distributed to the projects that have had the most significant positive impact.

Non-profit and open-source projects often struggle to secure funding due to the lack of a traditional business model. RetroPGF also addresses that challenge by providing a potential "exit" for public goods projects.

Conclusion

Ethereum is positioned as a key player and Pragma Sydney's focus on Ethereum's usage underscores its potential to revolutionise how we interact with digital services.

Simultaneously, innovative funding models like RetroPGF are essential in supporting the development of the decentralised internet where valuable contributions to the public good are recognised and rewarded. 

The next generation of the internet has started.