The origins of the web go back to the ARPA (Advanced Research Project Agency) of the US Department of Defense. But some people from the pacifist and anti-Vietnam War hippies like Stewart Brand were also involved, who, however, wanted to establish a decentralized structure, a free exchange of information and a countercultural ethos with their anti-authoritarian ideals. According to whistleblowers, the Internet is increasingly becoming a perfected surveillance apparatus and a censored version that endangers true democracy. Web3 can help here, but there are reasons why governments do not want a decentralized and liberal Internet. Don’t miss them!
Loss of control – the looming nightmare scenario for states
The revolution that Web3 promises goes hand in hand with the rising popularity of cryptocurrencies such as Bitcoin, Ethereum and many others. In a decentralized world, these digital assets are not only a practical currency, but also a fundamental component that enables the system to function efficiently and transparently. However, this is where the dilemma for governments begins.
Traditionally, states have complete control over their currencies. This allows them to control monetary policy, regulate inflation and deflation, and even enforce economic sanctions against other countries and potentially enrich themselves. This would challenge the monopoly of the powerful central banks.
Cryptocurrencies put this balance of power at risk. In a decentralized network there is no central bank that controls the money supply or sets interest rates. This is done by complex algorithms and smart contracts, which often use their own currency system.
This means that central bankers cannot ensure economic stability, with excessive monetary policy and the associated delay tending to cause even greater financial crises and wealth inequality, which Web3 could prevent. A Crypto winter, on the other hand, could destabilize the economy if there is a significant increase in market capitalization as well as a stock market crash.
Faulty smart contracts also represent a potential risk. Because they can unchangeable or easily vulnerable to hackers be. So it might be counterintuitive for governments to convert an entire system to this.
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Impossibility of Censorship – The gray area between freedom and control
In the modern world, the Internet has often been celebrated as a platform for free expression and information sharing. But in an increasing number of countries around the world, this ideal is more illusion than reality.
Governments use a variety of methods to control the flow of information, whether through censorship of websites, social media, or even their own complete versions of the Internet. Web3 has the potential to tip this power imbalance.
Decentralized networks in Web3 enable To spread information safely and unstoppably. These networks are typically resistant to censorship because there is no central authority that can control the flow of information.
For whistleblowers, activists and anyone fighting against oppressive systems, this could be a game-changer. However, this ability to resist censorship poses a significant problem for legitimate governments as well. Imagine how It would be difficult to track illegal activity or curb misinformation if everyone could act anonymously and uncontrollably. This could threaten not only national security, but also public order.
Even with things like that Spreading malware, organizing cyber attacks or illegally obtaining and disseminating information, decentralized networks are a potential battlefield. Such scenarios could pose significant national security risks and serve as a basis for government regulations or even bans.
For example, could Cybercriminals, terrorists or even hostile states use the anonymity of Web3 networksto orchestrate illegal activities. In such an ecosystem, for law enforcement agencies it is a immense challenge to identify the perpetrators and prosecute them legally.
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Tax Concerns – The Treasury Nightmare
The Web3 ecosystem and cryptocurrencies in particular offer a wide range of opportunities for transactions that are independent of traditional financial infrastructure. While this is attractive for individuals, it presents challenges for governments, particularly in the area of taxation. The Decentralized nature of transactions makes tracking and monitoring difficult, creating a potential haven for tax avoidance and money laundering.
In traditional financial systems, banks and other financial institutions may be required to assist in tax collection. In the Web3 universe, however, work is still underway to ensure that certain services work as intermediaries. There are Transactions are often pseudonymous and without a clear attribution to a physical person or institution. This can in some cases make it almost impossible for tax authorities to collect the relevant taxes efficiently. However, there is already advanced software that compares the data with IP addresses and other data in order to trace it.
Various countries have already taken steps to scrutinize crypto transactions more closely. Some require crypto exchanges to provide detailed transaction histories. But even such measures can only address part of the problem Many transactions take place via decentralized platforms that are beyond any control.
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Web3 and Governance – The dilemma of governance in the digital age
While Web3 promises a decentralized architecture and increased user controlthe question arises, how enthusiastic state organizations, NGOs, oligopolies and plutocrats are with this new structure. Web3, on the other hand, moves into an area that enables fundamentally more democratic governance. But how much room would there be in such a world for selfish interests like corruption?
In traditional systems, governance is a complex interplay of legal frameworks, institutions, ideally democratic control and other hidden influences, which become apparent when you think about how many facts that are essential to the population are hidden in many countries.
Ideally, decentralized autonomous organizations (DAOs) could enable new forms of collective decision-making that supplement state institutions or even enable a form of direct democracy, which is massively opposed by most politicians.
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Legal gray areas – The legal quagmire of decentralization
The legal aspects of decentralization represent another area where governments face enormous challenges. In a decentralized system, as is sometimes the case in democracies, it is often unclear who is responsible for certain actions. This can be an advantage when it comes to individual freedom, but it also makes it more difficult to enforce existing laws and regulations.
For example, if smart contracts are executed on a decentralized platform, Who is responsible if something goes wrong? In the traditional world this would be clearly defined by treaties, jurisdictions and existing laws. In Web3 the legal system would have to have one Variety of novel and complex questions deal with issues arising from decentralization. In the USA, developers, operators and token holders should now be held responsible for DeFi services.
Another dilemma is the question of jurisdiction. Since decentralized networks generally have no physical presence and operate across national borders, the question arises as to which legal framework they fall under. This could make it extremely difficult to enforce laws and regulations.
But also that Data protection can play a role. Most countries have regulations regarding personal data. So These must be destroyed by the owner at the request of the author. Blockchains tend to be known for their immutability. Solutions must therefore be provided that allow users to delete their data.
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About the author: Simon Feldhusen came into contact with the stock market for the first time 17 years ago and has been intensively involved in the topics of trading, cryptoassets, stocks, P2P, corporate financing, finance and entrepreneurship on a daily basis for more than 8 years. He has also been working as a copywriter and ghostwriter in the financial sector for several years. During this time he has acquired a diversified knowledge through various training courses on the financial markets and following daily news. Since then, not a day goes by without him dealing with the markets. He publishes, among others, for Finanz.net, ETF-Nachrichten.de, Coincierge.de and P2E News.com.