Marc Andreessen famously attributes the proliferation of internet advertising today to browser’s lack of built-in payment support from the beginning. He calls it the original sin of the internet. The downstream from advertising, he argues, is everything people are anxious and worked up about today: privacy, user data collection, misalignment of the incentives, etc. The assumption is that if crypto were around in the early internet, it would be much easier to incorporate financial transactions into the browser and the landscape of the internet economy could look vastly different compared to what we’ve seen today.

In general, advertisement has a negative connotation in the Web3 community. It represents a “legacy” business model from the web2 era that web3 is set out to disrupt. Sovereign individuals in the next stage of the internet evolution are supposed to not only take back the control of money but personal data as well. With the help of blockchain technologies, new waves of web3 applications will finally be able to deliver on products that align incentives, respect privacy, promote economic fairness with superior user experience. Isn’t that great?

The reality is that a class of existing web3 projects struggle to find sustainable business models. Many projects (especially some of the X2Earn ones) rely on Ponzi tokenomics where earnings of the participants come from the funds collected from the new investors. When no new speculative capital flows into the system, the party stops and the project goes into a death spiral. Web3 projects, like any projects, need external sources of revenue to maintain a sustainable token economy.

Advertising should be appreciated more despite many of its real issues. Some of the internet’s most important “common goods” are funded directly or indirectly by advertising: search engines, social networks, browsers, public town halls (e.g. twitter), etc. One thing in common about these services is that their usage is typically non-transactional: “pay per use” model introduces friction and negatively impacts their user experience. Subscription model fixes some of the issues, but as Vitalik pointed out, advertising is in some cases a superior model: it massively improves accessibility to a large portion of the population who are unable or unwilling to pay by providing free (in money terms) products . It accomplishes near-perfect price discrimination where the price of users’ attention is usually proportional to their income. Without advertising or similar mechanisms, it is unclear if the Web3 version of the “common goods” such as social network could reach a similar level of mass adoption as its Web2 predecessors.

Advertising played a crucial role in Web2 also because people’s attention is one of the rare mechanisms that naturally bridges the online/offline world. Another example of such bridges is Bitcoin’s PoW algorithm: an onchain hash that meets the difficulty target mathematically demonstrates the burning of a certain amount of energy offchain. This allows Bitcoin to programmatically control participants’ behavior and establish a vibrant ecosystem (both on and off chain) around it. Similarly, leveraging people’s attention allows a class of online services such as search engines and social networks to trigger both online and offline economic activities in a relatively easy and scalable way, which is crucial for generating revenues. That is why I believe even without its original sin, advertising would still have been one of the most important business models on the internet. It existed in the age of newspapers and it will continue to exist in the era of Web3.

How advertising would play out in Web3 is a question worth exploring. The airdropped tokens and NFTs are certainly a form of advertising since it demands attention and incentives certain measurable behaviors. Crypto wallets and DID has the potential to expand ads from pure impressions to rich and interoperable objects. Self custody of identity and personal data in combination with well designed tokenomic systems and crypto primitives such as zero knowledge proofs might offer new ideas as to how advertising could be done in a fairer and more private way. The design and tradeoff space is massive, hopefully a better form of advertising can come out of the Web3 movement that addresses most of the current issues while preserving its enormous benefits.

Advertising in Web3 also has the potential to make a new positive impact to the world. For example, the financial component of Web3 is a great tool to incentivize human behavior that in accumulation has long term benefits with short term sacrifices. That includes health, environmental protection, fundamental research, etc. With the right tokenomics design, Web3 projects can incentivize such behaviors and build a community around it while leveraging Web3 version of the advertising as the mechanism to keep the tokenomics sustainable. A coherent community with a common goal might also be a valuable target for like-minded merchants. Advertising helped us fund many “common goods” in the past, it could continue to help us fund new types of “common goods” in the future with new tools and technologies.

In summary, advertising should not be disdained by the Web3 community, it is just a tool that can be improved and leveraged to the benefit of Web3!