Jack Dorsey Ignites Battle Over Competing Visions for ‘Web3’

While Web3 is still largely conceptual, it has become a hot topic among tech futurists and a buzzword for startups in cryptocurrency and similar cutting-edge areas. Mr. Dorsey, who has backed many endeavors that embody Web3, this week disavowed involvement in it and suggested that it is already overrun by powerful venture capitalists and the limited partners who back them. That prompted pushback from venture-capital investors and Web3 proponents.

“You don’t own ‘web3.’ The VCs and their LPs do,” Mr. Dorsey tweeted to his six million followers on Monday night. “It will never escape their incentives. It’s ultimately a centralized entity with a different label. Know what you’re getting into…”

Proponents of Web3 see it as a way to escape big technology companies that have historically controlled swaths of the internet and sold users’ data to advertisers. As futurists see it, Web3 wouldn’t be dominated by a handful of giant companies and would provide for a more egalitarian digital infrastructure that is also less susceptible to government controls. Advocates say blockchain and related technologies can be used for everything from running new forms of money to creating alternative social-media platforms where users have more control over the content.

Mr. Dorsey’s voice carries particular weight because he has championed many topics that are seen as foundational to Web3, including blockchain and cryptocurrencies. This month, his fintech firm renamed itself from Square Inc. to Block, citing blockchain as part of the inspiration. He has also emerged as one of the highest-profile backers of bitcoin, the seminal cryptocurrency. “I don’t think there’s anything more important in my lifetime to work on,” Mr. Dorsey said at a bitcoin conference earlier this year.

Bitcoin has also been the subject of questions about centralized ownership. A recent study by the National Bureau of Economic Research showed approximately 0.01% of bitcoin holders control 27% of the 19 million bitcoin in circulation.

Mr. Dorsey’s comments prompted a response from Chris Dixon, a general partner at Andreessen Horowitz, a leading Silicon Valley venture-capital firm that calls itself “a16z” and that has been a major backer of cryptocurrency startups and other Web3 ventures. “In web3, all the code, data, and ownership is open source. Read it and decide for yourself. VCS (including a16z) own very little of it,” wrote Mr. Dixon.

Erik Voorhees, an early bitcoin advocate and founder of a cryptocurrency platform, also swiped back at Mr. Dorsey. “Saying you don’t own web3 because VCs own some of it is like saying you don’t control your Bitcoin because VCs also control some,” Mr. Voorhees tweeted, later adding that he is a fan of Mr. Dorsey.

Other tech executives waded into the debate with varying levels of seriousness.

Aaron Levie, CEO of cloud-company Box Inc., BOX 0.77% raised his own concerns about the vision for Web3 this week. “I’m very pro innovation, but much of the pitch for web3 is pessimistic in nature: it relies on saying we can’t trust platforms, and explaining how broken the web is today when it’s manifestly not,” he tweeted.

Elon Musk, CEO of Tesla Inc., who himself has been an advocate of cryptocurrency, tweeted: “Has anyone seen web3? I can’t find it.” Mr. Dorsey replied: “It’s somewhere between a and z,” seemingly referring to Andreessen Horowitz.

The verbal sparring at times appeared to take on a personal note. Mr. Dorsey tweeted a screenshot Wednesday morning that appeared to show his Twitter account had been blocked by a16z co-founder Marc Andreessen’s account. “I’m officially banned from web3,” Mr. Dorsey’s tweet said.

Write to Meghan Bobrowsky at [email protected]