What Exactly Is “Web3 Infrastructure”?

The first in a series of plain-language explainers of key terms in the crypto space.

One of my convictions about blockchain/web3/crypto/whatever you want to call it is that it is very poorly explained. There is a small coterie of people who really understand it deeply, and speak about it at a high level. And then there is a vast swath of people who are very smart but who nevertheless don’t understand it deeply –– they simply haven’t been interested enough in it yet –– and the small coterie are talking past them at a mile a minute.

Early in this newsletter’s history (i.e. now), I want to err on the side of inclusivity, on writing for that vast swath of people who, again, are very smart, but may benefit from getting caught up on some basic concepts. These may be people who are very good at investing and vetting companies, but they may not know the ins and outs of cryptography, computer science, and so on. They may not know a Satoshi from a Vitalik. They may conflate “crypto” with “cryptocurrency” (these are not the same thing).

So once every few weeks, I plan to write to explain in plain English a concept from the crypto space that maybe is only half-understood by many, or even (and no shame in this) not understood at all. Eventually and over time, I plan to accrue maybe ten or a dozen of these explainers, and they can be linked back to in future (more advanced) posts, sort of like a Wiki. This way, once I feel confident that I’ve explained all the key concepts in crypto in digestible plain English, I’ll feel more comfortable writing about more complex topics for a general audience, knowing I can always link back to a source I trust (namely, me) for the basics.

Explainer 1, then: What we talk about when we talk about “Web3 infrastructure.”

And look, this may not sound like the sexiest topic –– but I promise you, it kind of is.

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I wrote about this a little bit in a recent post, about why the smart money in 2003 was in a “digital video infrastructure” company called Akamai.

But much more broadly –– what exactly do we mean when we talk about digital infrastructure? What did it mean historically, and what might it mean today? Let’s go on a tour of infrastructure’s history, and spell out what “infrastructure” means in a web3/crypto context.

Physical infrastructure: a quick refresher

Before we go digital, it’s actually worth starting with the “duh” side of the spectrum and spelling out some features of physical infrastructure: roads, highways, power lines, pipes, and the like. One dictionary definition goes this way: “the basic physical and organizational structures and facilities (e.g. buildings, roads, power supplies) needed for the operation of a society or enterprise.”

Merriam-Webster also offers this, and I’ll bold some choice bits and then comment on them: “Infra- means ‘below,’ so the infrastructure is the ‘underlying structure’ of a country and its economy, the fixed installations that it needs in order to function. These include roads, bridges, dams, the water and sewer systems, railways and subways, airports, and harbors. These are generally government-built and publicly owned.”

So I see four key ideas implicit in the above:

1. Infrastructure “sits under” other things

2. These are “fixed installations”; they become permanent or semi-permanent

3. Infrastructure allows other things to function

4. They are built and maintained by a lot of people, and are thus capital-intensive

I find it helpful to hold those features in mind as we speak about digital infrastructure, both in the construction of the Internet as we know it, and in the construction of the blockchain-driven web3 I believe is coming.

Digital infrastructure: what supports the web as we know it

A lot of physical infrastructure is out where the eye can see it. But a lot of the infrastructure underlying the World Wide Web as we know it is hidden from plain view, which makes it a smidge more abstract to non-technical folks. We of course have a sense that fiberoptic tables and “server farms” (whatever, exactly, those are), have to do with the matter, but since we so rarely think about these things or see them, it’s worth speaking about them a bit.

In terms of technology, as infrastructure, the internet is plumbing (computers, servers, load balancers, relays, massive underwater cables, fiber optic cable, insulation, network routers, and so on.) 

But additionally, on top of that infrastructure of “hardware,” there has come to be a layer of software infrastructure: core bits of software that enable other bits of software to function. 

This may be difficult to grok immediately, since the term “infrastructure” evokes heavy things like bridges, tunnels, etc. But remember: basically, infrastructure just means any sort of capital-intensive, collectivized project –– the net effect of which is that other things can be built on top of it.

One example of “Web 1” infrastructure would be the TCP/IP and HTTP protocols (something I plan to make the subject of another post). Over time, something that feels like an “app” built on earlier infrastructure may basically come to be infrastructural itself. One could argue that Facebook, for instance, began as an app, but became more like infrastructure over time. (This wasn’t accidental: this is often the strategy for a modern tech company. Once you can get to massive scale, your next move becomes to verticalize your stack to lower operating costs. Not only do you lower your operating expense over time as an enterprise by going deeper into the stack –– as Amazon did by creating Amazon Web Services, for example –– but then you can turn around and offer that infrastructure as a service to others.)

Other types of non-physical infrastructure we live with today include things like (arguably) open-source software licenses, MIT licenses, GPL licenses: things that standard licensing terms in order to lower transaction costs in and around open-source innovation. As mentioned previously, software made by the company Akamai essentially provided infrastructure that helped encode, decode, and compress video content, which helped bring us apps like YouTube.

Web3 infrastructure: what will support the next web

So what will “infrastructure” look like in a Web3 context?

Basically, similar in concept to Web 2.0 and Web 1’s infrastructure: lines of code, models, licenses, agreements. Foundational bits of software that “pave the way” for other bits of software.

It comes down to the idea that there are different teams of technologists that are all excited about the possibility of decentralizing the internet using blockchain technology. But –– crucially –– different teams of people have different visions for how Web3 is likely to unfold. All the decisions they make around how their foundational software is built, are made with these different visions in mind.  

It’s not the place of this newsletter to get too technical, but it’s worth giving an overview at a high level of the different directions these “Layer 1’s” might go. There are basically three prevailing models for a blockchain network. One is the “EVM” model; EVM stands for Ethereum Virtual Machine, but other Layer 1’s, like Cardano, also use this model. Other networks (like Dfinity) may take a “subnet” approach, while others (like Polkadot) take a “substrate” approach. Different people believe in prioritizing different things; Dfinity, for instance, highly prioritizes the ability to store data directly on the blockchain.

Essentially –– and this will be the subject of another post soon –– we are in a moment something like the “Protocol Wars.” Just because Web3 people agree that blockchain technology and a decentralized internet are good, doesn’t mean they agree on all the finer details!

These details have to be hammered out in the same way that TCP/IP had to eventually win out over competing protocols. And in the same way that debates about infrastructure –– do we place a bridge here or there? And do we make it suspension or cable-stayed? –– have played out for ages.

The takeaway here? The term “infrastructure” may not be the sexiest of terms, but it’s where all the action is now in the Web3 space. And hopefully now, when I speak about “instructure” in a future post, you’ll know that I’m not talking about bridges and tunnels, but essentially the fundamental bits of software (and the way they are structured) that will enable Web3 to flourish.