How Web 3 Changes Philanthropy

Ten years ago, the rebels hadn’t won. There was nary Web 3. No non-fungible tokens (NFTs), nary decentralized concern (DeFi), nary decentralized autonomous organizations (DAOs). No Coinbase, nary Ethereum, nary a16z Crypto.

Now, successful 2022, we person each of these things.

Elon Musk pitches dogecoin connected Twitter. The Miami Heat sprout hoops successful the FTX Arena. Matt Damon shills crypto to millions during the Super Bowl.

Rhys Lindmark is CEO and co-founder astatine Roote, a nonprofit startup workplace tackling problems with systems-level design. He volition contiguous a mentation of this effort connected the "Big Ideas/" signifier astatine CoinDesk's Consensus festival, which runs June 9-12 successful Austin, Texas. Learn more.

Now our feeds are afloat of NFT illustration pictures, determination are tokens worthy $100 cardinal staked crossed dozens of DeFi ecosystems, and DAOs (almost) bargain constitutions and Parisian art. Meanwhile, FTX main Sam Bankman-Fried casually becomes President Joe Biden’s second-largest donor.

Web 3 is the biggest wealthiness instauration lawsuit successful history. The crypto rebels person won.

But we’re lone 10 years in. What volition hap successful 2040? What does this mean for society? What does this mean for philanthropy?

To recognize what volition hap successful 2040, we volition look astatine 3 angles:

Past: Web 3 successful the past of wealthiness instauration events

A decennary ago, crypto billionaires didn’t exist. Now determination are dozens of them, with Twitter-optimized acronyms, specified arsenic "SBF" for Sam Bankman-Fried and "CZ" for Binance CEO Changpeng Zhao.

We’ve seen this before. The aged affluent springiness mode to the caller rich. Emperors similar Ghengis Khan and Caesar used to power each wealth.

Then the Industrial Revolution birthed billionaire lipid magnates similar John D. Rockefeller and alloy magnates similar Andrew Carnegie.

Computers and Web 1 birthed billionaires similar Bill Gates and Michael Dell. Web 2 created the elite of today: Jeff Bezos, Steve Jobs, Mark Zuckerberg, Sergey Brin and Larry Page. And now, Web 3 has created SBF and CZ.

But are these crypto billionaires similar SBF and CZ conscionable a flash successful the pan? Or are they forerunners of an impending question of wealthiness creation?

1. How radical get affluent now

In April 2021, Paul Graham wrote an essay, "How People Get Rich Now." By looking astatine the Forbes apical 100 richest people, Graham shows however wealthiness instauration has shifted implicit the past period from Industrial Tech to Inheritance and present to Digital Tech.

First, Graham shows however wealthiness shifted from Industrial Tech (in 1892) to Inheritance (in 1982).

In 1892, the New York Herald Tribune compiled a database of each the millionaires successful America. How galore had inherited their wealthiness then? Only astir 20%. Instead, economist Hugh Rockoff recovered that "many of the richest ... gained their archetypal borderline from the caller exertion of wide production."

But by 1982, the astir communal root of wealthiness was inheritance. Of the 100 richest people, 60 inherited it from an ancestor. There were 10 du Pont heirs alone.

We tin visualize this connected the elemental graph beneath to amusement however wealthiness became much inherited implicit the people of the 20th century.

This led to the emergence of Investing and Digital Tech. Paul Graham again: By 2020, the fig of heirs had been chopped successful half, accounting for lone 27 of the biggest 100 fortunes.

Of the 73 caller fortunes successful 2020, 30 deduce from Digital Technology, 26 from Industrial Technology and 17 from investing.

What astir crypto, the intersection of Digital Technology and Investing?

Graham didn’t look astatine crypto successful 2021, but by 2022 we present person 2 crypto billionaires successful the apical 100: SBF and CZ.

The graph has a caller subordinate successful town, crypto (in orangish astatine the top).

It whitethorn not look similar much, but seldom bash we find an wholly caller class for however the wealthiest radical make their wealth.

More importantly, is this a trend? Will the graph soon beryllium covered successful orange?

2. How galore crypto billionaires volition determination be?

Serial entrepreneur, capitalist and influential essayist Balaji Srinivasan and Polychain Capital laminitis and CEO Olaf Carlson-Wee estimate that:

That’s a monolithic displacement successful who controls wealth. Does it clasp up? We tin bash immoderate napkin mathematics to find out.

How galore billionaires are there? There were lone 15 billionaires successful 1982, but determination are present 2,668, and we'd expect that fig to emergence to astir 3,300 by 2025.

But however galore crypto billionaires are there?

Given crypto’s volatility and pseudonymous nature, this is simply a hard question to pin down.

For simplicity, let’s usage Forbes’ estimate of 19 crypto billionaires.

So our graph really looks similar this:

Again, this caller crypto blip is beauteous small. Right present lone 1% of billionaires are crypto billionaires (19/2,668).

However, this is thing categorically different. The existent question is: What’s the trendline? Will orangish crypto instrumentality implicit the chart?

More napkin math: As I constitute this, bitcoin (BTC) is astatine $30,000. What happens if, by 2025, BTC goes to $200,000, and the remainder of crypto rises with it? This would springiness you astir 400 BTC billionaires, 200 ether (ETH) billionaires, and 200 different billionaires.

With 800 caller crypto billionaires, we’d get a graph similar this:

This would marque the 800 crypto billionaires astir 20% of the total. With this unsmooth napkin math, I disagree with Srinivasan and Carlson-Wee that $200,000 BTC makes 50% of billionaires crypto billionaires. I deliberation it’s much similar 20%. Still, 20% is simply a immense increase. And $200,000 BTC is not unlikely.

Coming backmost to Graham’s article, we could expect the graph to look thing similar this:

That’s a immense change! The orangish fig goes mode up.

Finally, each of the mathematics supra doesn’t adjacent see the agelong process of wealthiness creation.

BTC mining created thousands of millionaires. The ETH archetypal coin offering (ICO) created thousands more. DeFi created thousands of degen millionaires too.

No substance however you bash the math, Web 3 is simply a immense wealthiness instauration event. How volition the nouveau riche leverage it?

We each cognize the celebrated punctuation (misattributed to Gandhi):

First they disregard you, past they laughter astatine you, past they combat you, past you win.

There’s a mentation of this but for integer exertion successful Web 2 and Web 3:

Another model of exertion adoption is Carlota Perez’s S-Curve. All tech goes from the Installation Period to the Deployment Period.

Web 3 is inactive successful the Installation Period. How is it impacting nine today?

We tin interruption this up into 3 categories:

1. Value creation: The nonstop impacts of Web 3

First, we tin recognize Web 2 impacts by looking astatine tech institution ngo statements:

But successful Web 3, ngo statements are focused connected wealth alternatively of information:

The nonstop impacts of Web 3 volition beryllium a integer economy, unfastened to the full world.

2. Excess capital: Philanthropy and Web 3

Web 2 birthed a acceptable of “traditional” foundations like:

Web 3 is going a spot weirder.

Brian Armstrong is funding $100M for longevity research.

3. #SquadWealth: Collaborative ecosystems successful Web 3

Finally, we tin look astatine the agelong process of wealthiness creation.

In Web 2, this chiefly manifested arsenic AngelList syndicates and angel capitalist networks. Groups of aboriginal employees who exit with tens of millions of dollars put that wealth backmost into tech.

In Web 3, this goes adjacent further. Every circular is simply a assemblage round, with NFT degens and crypto VCs aping successful together. This volition beryllium supercharged with the Web 3-native mentation of syndicates, Syndicate DAO – here's a link to the archetypal 100 investors. Crypto fundraising is assemblage fundraising.

But we besides person a afloat caller signifier of assemblage fundraising that is built connected abundance, impact DAOs. These are collaborative networks that person affirmative externalities built-in.

Gitcoin Grants springiness backmost to the open-source community. KlimaDAO gives backmost to the environment. #DeSci gives backmost to money caller subject research.

I similar to think of these arsenic DAOs that win successful the beingness of different DAOs, that besides win successful the beingness of them. Here’s a map of the interaction DAO abstraction from Gitcoin and FiftyYearsVC.

People springiness backmost to money crypto infrastructure done Gitcoin Grants. And past those grantors are rewarded later with retroactive nationalist goods funding.

In Web 3, we’re seeing the immense impacts of crypto wealthiness done nonstop institution impacts, philanthropic initiatives and caller forms of #SquadWealth.

What volition hap successful 2040?

We tin task these 3 trends into the aboriginal to recognize a decentralized solarpunk nine (#DeSoc).

The ideas beneath are speculative, but should springiness america a unsmooth sketch for wherever we’re headed.

1. Value creation: The nonstop impacts of Web 3

Software is eating the world.

Web 2 started by eating bits past moved to atoms.

Web 3 volition decorativeness eating bits past determination to atoms too.

2. Excess capital: Philanthropy and Web 3

3. #SquadWealth: Collaborative ecosystems successful Web 3

Software is eating the world. Crypto accelerates that process.

By 2040, Web 3 volition beryllium the h2o we aquatics successful – afloat of crypto whales, millionaire minnows and the remainder of america tiny krill.

Let’s marque the h2o (and the land!) nourishing and balanced.