Web3.0 Study Meeting (1st)

Overview

Date and time: Wednesday, October 5, 2022, from 9:00 to 11:00
Location: Online
Agenda:

Opening
Proceedings
1. Secretariat Explanation
2. Exchange of opinions
Adjournment

Materials

Minutes

Date

Wednesday, October 5, 2022, from 9:00 a.m. to 11:00 p.m.

Location

Online Meetings

Attendees

Members

Jiro Kokuryo (Professor, Faculty of Policy Studies, Keio University)
Masahiko INAMI (Special Assistant to the President of the University of Tokyo, Professor of Physical Informatics, Center for Advanced Science and Technology
ISHII Natsu Shori (Professor, Faculty of International Information Studies, Chuo University)
Joichi Ito (Director and Chief Architect of Digital Garage, Inc., Director General of the Innovation Center of Chiba Institute of Technology)
Yuko Kawai (CEO of Japan Digital Design Co., Ltd.; Executive Director of the Strategic Planning Department of Mitsubishi UFJ Financial Group, Inc.; Executive Director of the Strategic Planning Department of MUFG Bank, Ltd.)
Keiji Tonomura (Attorney, Nagashima, Ohno & Tsunematsu Law Office)
Kazuhiko Tomiyama (Chairman of Management Competition Platform IPPI Group, Inc.)
Taiyō Fujii
Shinichiro Matsuo, Research Professor, Georgetown University
YANAGAWA Noriyuki (Professor, Graduate School of Economics, The University of

Digital Agency (Secretariat)

Minister Kono, Parliamentary Senior Vice-Minister Okushi, Parliamentary Vice-Minister Ozaki, and other members of the

Minutes

Greetings from Minister for Digital Transformation KONO.
Greetings from each member.
The Secretariat explained "[Material 2] Web3.0 Study Group Operation Guidelines (Draft)" and "[Material 3] Secretariat Explanatory Materials."

The following remarks were mainly made by the members in the free discussion.

When discussing what kind of society to aim for, rather than having something fixed and being backcast, how to create a state in which various people can become the main actors of innovation is more essential. If DAO is a state in which governance is conducted from the bottom up in various small group discussions, how to create governance that occurs in a community, and how to encourage us to increase the number of people who can create such a society are much more essential.
The infrastructure of the Internet is evolving, repeating decentralized and centralized forms like breathing, and is currently undergoing its third breath again. On the other hand, young people today are aware of environmental issues, ESG, bottom-up and participatory, and there are various social movements and feelings of those who are oppressed. The philosophy of Generation Z and the desire for a world like this match blockchain and decentralized technology. It is important that there is a social movement and the technology caught in the social movement is happening at the same time. It is also important what the people using web3 are trying to do and how they will evolve.
While looking at what kind of business will actually be conducted by Web3.0 and what each DAO and DeFi service will bring to society, I would like to create a system that can pass on the engineers and technologies that development such services to the next generation.
We are considering three directions.
The first is the distribution of value. In the metaverse, there are new values that can be distributed. For example, it is possible to distribute karate skills through the metaverse. In addition, the distribution of adjustable value, which is actually common, may be the link between the divisions between communities that have been accelerated by information technology.
Second, if Web3.0 can properly handle a mechanism that accelerates innovation, or a new way of intellectual property distribution that includes co-creation through collaboration or secondary use, it can contribute to the acceleration of innovation in the country as a whole.
Finally, what was once thought of as value or ownership may well be redefined by this technology. In a modern age where there is a certain amount of information, for example, if we take a human-centered approach, the concept of value may be how to gather the finite resource of attention.
Human society has been undergoing a kind of spatial expansion for a long time. Perhaps the discussion of Web3.0 is both a problem of spatial expansion in cyberspace and spatial expansion in the sense that real and cyber are connected in VR.
The more essential this is, the more we don't know what will happen, so both good and bad things are bound to happen, but until now, companies that have been able to turn a OODA loop have succeeded in changing. In the past, when something happened, regulation was carried out immediately to block the possibility, but it is expected that good things will increase when a social framework and mechanism that allows OODA loop to turn, and a mechanism in which good things for people and society are selected as a result, are created.
Although young people have the ability to participate in society, there are a certain number of people who do not fit into the society that exists today due to various circumstances. With the help of Web3.0, if the young generation can participate in society without barriers, there will be great potential. With the help of Web3.0, it is desirable that young people in Japan enter the world more and more so that they can fight against foreign people more flatly.
When promoting innovation, it is very important to create new things with the ideas and energy of young people in a world where we don't know what will happen, rather than moving from the top down. This is exactly what is happening in the world of Web3.0, and the most important thing is to prevent it from stopping as much as possible.
In particular, when a major incident occurs, there are some Japanese companies that take a regulation before the rest of the world. This itself is necessary from the perspective of protecting consumers and the weak, but from the perspective of promoting innovation, it is too drastic and inhibits innovation. Even including Japanese companies and startups, there are some that think that if something is gray, they should not do it. So, I think it is necessary to clarify the rules in a sense. It is necessary to consider the mechanism for rule formation, including soft law.
It is very important to attract human resources to Japan in order to promote innovation. In the world of Web3.0, especially the Internet, it is easy for everyone to go to the outside world. In order to value people who promote innovation, I would like to discuss what kind of system and what kind of framework should be used to provide incentives for people to gather.
The pure ideal of Web3.0 as the antithesis of Web2.0 is to connect individuals without centralization. The NFT marketplace is centralized at OpenSea, and there are people like platformers after all. The debate that is often held in the current NFT world, especially in financial sector, is how to make the iPS of existing content holders into NFT. This is not for the benefit of the creator, who is an individual, but for the benefit of the company in the middle. I feel threatened that it is structured in this way and that it will always be a debate. Connecting the real world and the virtual world is also the function of finance. Finance should be a bridge in the sense of connecting the sides of an independent virtual space, or a bridge between reality and virtual. When discussing Web3.0, it is always likely to be a debate between investors and tax system.
It is true that the ecosystem that exists today cannot be supported at the start without investors. However, in a sense, there is an existing world that is happening in reality, such as expansion of virtual space and bridging with the real world, and when it has to evolve every day, technology and breakthroughs will be born from people who are really pursuing the ideal, such as blockchain. Rather than realizing Web3.0 at once, reality will be changed by being inspired by it.
We want to focus not only on investors, but also on the technology that supports them, and the creators who create content. We want to think about how to properly flow money to these people, or how to grow these people. What we want to focus on in the community is not the investors, not the fan base, but the creators, and the technology that supports the system.
With the advent of blockchains and Web3.0, it is a revolution that ordinary people are now talking about zero knowledge proofs, a word that ordinary people do not know. It is an asset that more people can use advanced cryptographic protocols. In addition, the world of blockchains and DAOs basically has not only computer science, but also economics, governance, and different expertise. It is very important that more people can bring difficult things to multi-brand display area, as experts have said at conferences.
The Japanese are good at optimizing rules once they are decided, and are not good at rule-making, but if there is an increase in bottom-up efforts to bring various new ideas to area using DAO, it may be a big turning point for the Japanese to become a rule-maker.
The frontier of history is always created by reckless young people, so they have incidents and accidents. However, in order not to be left out of innovation, it is important to minimize and clarify hard law control, and to create a mechanism in which the parties concerned gather in the remaining wide area and repeat the renewal of soft law and case law parts almost every year, and to make this loop socially acceptable.
We have not yet seen many world-class scientists or papers. In that sense, Web3.0 will be taken up, and Digital Agency, the FSA, METI, and others will be involved. How to create a mechanism to support the increase of such people and their entry into various area is actually the most important thing when making national strategies.
The story of what can happen in the distant future due to the development of technology and how much change can occur that will change the world greatly, and the story of how the actual society and economy will change and how we will have to cope with it are quite different stories. Many people have various images of Web3.0, but it is probably not going to change much right now. If we don't separate what should be dealt with now from the big future, it will be very confusing, so I would like to distinguish between the two.
I think we must be able to withstand major changes, but I think it will be really difficult if we think that what we decide now as regulation and rules will be valid when the future changes greatly. What we decide now is the best response we can make within the next few years or right now, and if the world changes, we will change it rapidly. When we change regulation, rules, tax system, etc., it is realistic how much flexibility we will secure in the future.
If we write it as "smooth law enforcement and consumer protection across borders," we will be bound by the discussion on how to apply existing laws. It seems to be more in line with this discussion to give a perspective on what the social unit realized by Web3.0 is and what it should be in that society. regulation rule formation is one of the strategies in a sense. As a way of rule formation that can achieve international consensus, we should not focus so much on domestic laws. It is better to consider flexibly while incorporating some discussions such as architecture and social infrastructure. I think it is necessary to change the idea a little from the conventional way of legal systems, which is how to do in regulation on a national basis.
On the legal front, the people, the government, and politics are all saying that we should talk about web3, so I think it is important to talk about it in the first place. For example, there are many detailed discussions about taxes, but we have to discuss whether web3 is good for the world in the first place, and if it is good, we have to discuss whether we should support it more at the layer of the people and politics, and then we have to talk about creating a law like this. I think we have to discuss whether it is good for society in the first place, whether the relationship between capital and labor must be changed in the first place, and whether everyone wants new capitalism in the first place, and then we have to take it into account in the specific discussions.
We must be aware of the difference between Global, International, and National. Global and International are completely different, and we must consider the concept of the final report after re-framing how National is involved in this. Global things include mathematics, programs, and the Internet, and each has an order independent of the country. National is the opposite, and each has activities that are shaped by the form of governance of each individual country, including the circumstances and culture of the country, and International mediates between countries with such interests. If it is necessary for Web3.0 to be convenient for the people, the world of Web3.0 must be convenient for National, and how to understand the global program, convince the people of National, and harmonize International is basically the responsibility of regulation authorities, governments, and business people, especially business people. Including agile governance, we must create a system in which people involved in governance always take their time and jump into it.
For example, in a society where the metaverse is the norm, the concept of the individual will change considerably. It is good to discuss the fact that the individual will become a hub of multiple worlds, how to develop interverse human resources, and how to deal with interverse transactions.
The timelines and the points to be sorted out are quite diverse, and each discussion point is quite distant. It is better to grasp the future of Web3.0 and agree to some extent on what should be changed in the first place.
On top of that, we can't move forward unless we can sort out how the system as a philosophy system will be in this direction. If the system as a philosophy system is clear, I think we can draw a certain transition phase to some extent in which we have to change our current laws and systems as steps before entering the world. I hope we can discuss that.
After sorting out this area, what can be done as reform of the current system, regulatory reform, and revision of the law? Realistically, this area is important in the world, and whether tax system will become a miscellaneous income or not, and what exactly the GAFA platform regulation will do, it would be good if we could talk about the current situation.
In any case, various efforts are being made within the government, but it would be good if various policies could be systematized under one way of thinking. In addition, since the discussion of DAO is, in a sense, directly linked to the essence of this discussion, it is thought that a sense of direction of the whole will emerge to some extent while discussing DAO.
Global benchmarks, including the movement of DAOs, are important. Of course, for example, the DAO considered by the State of Wyoming in the United States is different from the DAO that suits Japanese culture and climate. First of all, such overseas benchmarks should be properly conducted, such as what is being discussed by the State of Wyoming based on what assumptions, and what are the efforts of DAOs other than Wyoming. What should be done in order not to become a Galapagos is very important in this study group. Based on the principle of not becoming a Galapagos, and considering the Japanese people, Japanese culture, and Japanese climate, we should consider that Japan's DAO may be customized, and discuss what it is.
I believe that the legal and social significance of the DAO will differ depending on its nature, so it should be clearly divided. In addition, since Japan's resources for consideration are limited, we should discuss the order of priority for the DAO.
I think the fun of the DAO is its speed and flexibility. In relation to the existing system, the existing system itself is a kind of box, and of course, you have to decide the rules legally and put them in the box, but in theory, I think the flexibility of the DAO is quite an important feature, so I would like to prevent it from being lost. When determining how to create or change the rules, I do not mean to change the existing legal system as it is, but I would like to flexibly create the rules and how to join them, such as establishing new rules and temporary special measures.
Any mechanism or rule can or cannot be applied well, and there are restrictions that DAOs can or cannot function well. Attention should be paid to the differences in the characteristics of societies (societies) and communities (communities). Since DAOs are bottom-up, I think it is necessary to consider where DAOs can be joined well with each other or with societies while looking for a place that works well in a community with a certain condition rather than a global society. It is very important to focus on this. For example, it is better to separate where the relationship with an international society or a global society will work well and whether it will be joined. The functions required will change depending on whether it is for a community or a society, so it is good to focus on this because the discussion has not been refined.
Fortunately, this study group has a deadline to submit something by the end of the year. Why don't we make this temporary study group a DAO? It would be quite interesting if the results of the study by the elite Japanese staff to see if it could be a DAO were also announced little by little.
Whether or not to make it a DAO is one of the important points, I think, but it is whether or not to make a DAO here under the current legal system. In order to understand how much can be done and what cannot be done under the current legal system, it is important to think about how we can overcome it with what we call a DAO in a little conceptual manner. It is necessary to sort out the points of what we want to call a DAO and discuss. On that basis, I think the world will not change unless we can show either what kind of great advantages a DAO has, or show specifically that a DAO as a technology can solve the problem even without the current regulation.
When we talk about the future of DAOs, we often talk about the future in which DAOs are used as various units of society. In various activities of Web3.0, the model created by this study group becomes a rule book. I think it is probably effective to translate this into English and bring it to people around you, or to make rules at a conference in which overseas members participate.
When it comes to creating things like nonprofits or social commons, human society has always suffered from the tragedy of the commons. One answer to why DAOs is that we may be able to prevent the tragedy of the commons by incorporating some kind of incentive mechanism. How these activities can work on the commons and the public is one meaning of whether the discussions in our Web3.0 study group will actually be a solution to the tragedy of the commons in government, local governments, or our community.
When I create a DAO, I get caught in various rules. What are the rules in the first place? I think it is very interesting to talk about whether DAO can solve it in a different way with Regulatory Equivalence, and whether there is really such a risk even in DAO. How the country operates DAO, what kind of resources there are, whether they can be converted into money, and whether they can be converted into money can be studied in various ways if the discussion is included in the first place.
The secretariat explained that the next Study Group will be held one week later, on Wednesday, October 12.
The secretariat explained that the meeting materials will be published on the Digital Agency website later, and the minutes of the meeting will be published after the members confirm the content.

End