Is Web3 Really Decentralized? A Look at Alchemy and BitClout – InApps 2022

Richard MacManus

Richard is senior editor at InApps and writes a weekly column about web and application development trends. Previously he founded ReadWriteWeb in 2003 and built it into one of the world’s most influential technology news and analysis sites. Follow him on Twitter @ricmac.

The debate about whether the blockchain-centric Web3 architecture is valid continues to rage on social media. Meanwhile, did you know that many current “dapps” (distributed applications) are reliant on centralized web infrastructure? That’s right, despite all the highfalutin talk about Web3 being a decentralized version of the web where you get to “own a piece of the internet,” much of the infrastructure is exactly the same as Web 2.0 — servers owned by corporations.

Alchemy is a VC-funded blockchain company that styles itself as “AWS for blockchains.” According to a CoinDesk report at the end of April, “Alchemy powers most of DeFi [decentralized finance] and almost all the big NFT platforms.” Alchemy co-founder and CEO Nikil Viswanathan told TechCrunch around the same time that their goal is to “build a developer platform layer for blockchain.” This platform is primarily focused on the Ethereum blockchain, where most of the dapp action is happening.

Nikil Viswanathan, CEO and co-founder of Alchemy, explaining the difficulties of Web3 development.

While Alchemy provides a variety of different services, its core value is in managing the Ethereum blockchain for you — much like how AWS manages web servers for you. If you’re a dapp developer, using a company like Alchemy — or competitors like Infura and Truffle — means you don’t have to set up a new Ethereum node on your own server. This is a very useful service, because blockchain technology is complex. If you’re a budding dapp developer, why wouldn’t you want to farm the infrastructure work out? Web app developers do this all the time, not only with cloud platforms like AWS, but with serverless solutions on top of those platforms.

What isn’t immediately obvious, though, is that Alchemy is currently reliant on traditional web servers — and other infrastructure that it owns — for some of the services it offers customers. In other words, blockchain developers are running their decentralized apps through (you guessed it) a centralized platform.

A Closer Look at Web3 Decentralization

Since the question is trending I’ll venture my own rough and imperfect definition of web3.

Web1: content distributed to users
Web2: content produced by users and distributed to users
Web3: content produced by users and distributed to users on user controlled platforms

— Arthur B. (@ArthurB) October 3, 2021

The person who wrote the above tweet has it wrong. Web3 platforms like Alchemy are not “user controlled” at all. In fact, it’s the same situation as in Web 2.0, where the company that built the platform ultimately controls it. Alchemy’s platform is controlled by Alchemy, because at least some of its parts are centralized. Put another way, if you build your dapp on top of Alchemy and the platform crashes (like Facebook did last week), then your dapp crashes too.

It’s not clear exactly which parts of Alchemy are centralized. But there are hints out there, if you look hard enough. Last August, in a discussion on Twitter with Ethereum creator Vitalik Buterin, Viswanathan explained that Alchemy’s data validation system relies on a “centralized pipe to decentralized blockchain data.” The alternative, he said, was waiting “years” for “a decentralized pipe.” After speaking with 60 of its customers, continued Viswanathan, “we heard loud and clear that actually this [a centralized pipeline] was what they wanted.”

To be clear, Alchemy does not deny that it is essentially a centralized platform — even though there is no mention of it on its homepage. In an interview with the epicenter podcast, a well known crypto show, Viswanathan had to fend off questions about the dominance Alchemy enjoys in the DeFi and NFT ecosystem. If Alchemy went down, one epicenter host put it to Viswanathan, wouldn’t that also bring down all those DeFi and NFT apps that are built on top of Alchemy?

Viswanathan accepted that this would happen, but he added that building a fully decentralized Alchemy would’ve taken too long. In his words, the company chose to build “the centralized version first, because it’s easier to build and we’re able to provide better tooling and better developer experience on top of it, versus taking two years longer to build a decentralized version.”

So there you have it, from the horse’s mouth: Alchemy is, in its current manifestation, a centralized service.

BitClout and ‘Progressive Decentralization’

Let’s look now at a blockchain service that operates a level above the platform level of Alchemy. BitClout styles itself as “the crypto social network.” It’s built on a blockchain called DeSo, which the company compares more to Bitcoin than Ethereum (the latter is “not designed to scale to handle the storage and indexing requirements of running competitive social media applications,” according to BitClout).

Yet despite all the talk of “decentralizing social media,” once again BitClout is not fully decentralized. In its documentation, BitClout states that “there are still parts of the BitClout project that are centralized or semi-centralized, like identity.bitclout.com and images.bitclout.com, which we plan to phase out over time.” It has come up with a fancy term to describe this: “progressive decentralization.”

Unlike Alchemy, BitClout provides what appears to be a thorough breakdown of what is centralized in its app. It includes verifications (like the Alchemy example above), images and videos, emails and phone numbers (“not stored on-chain for privacy reasons”), profile removals, and identification.

As well as those backend aspects of BitClout that are still centralized, its website bitclout.com is run on servers managed by…BitClout. The creator of BitClout has the handle “diamondhands” and up till very recently, he was anonymous (like Bitcoin’s Satoshi Nakamoto). So nobody even knew who was running the bitclout.com server! However, last month he finally revealed his identity as Nader Al-Naji, a former Google software engineer.

Bitclout.com, a kind of Twitter alternative based on a blockchain.

Back in July, when he was still anonymous, Al-Naji claimed that “in the long run, we want to shut down bitclout.com and give away the frontend to the community.” By that, he means BitClout will allow third-party apps to try and gain traction on its platform so that eventually bitclout.com can be shut down.

Who knows if that promise will be fulfilled — the crypto community is full of grand narratives about future decentralization and freedom from corporations. But that is the core problem in all the Web3 talk about decentralization: it’s all promises and hand-waving about future solutions.

Let’s Tone Down the Web3 Rhetoric

As both Alchemy and BitClout show, their services rely at least as much on traditional centralized web servers as they do on blockchains. There’s nothing wrong with that from a technical perspective — in fact, it’s a good idea to use centralized services, since they’re far more efficient. But it does undercut all the high-minded talk about Web3 decentralization.

As with everything in the blockchain world, the rhetoric doesn’t always match the real-world technology available today.

Photo by kelvin octa from Pexels.