For the past 20 years, we have built a multi-trillion dollar ecosystem on "permissioned" websites.

Every web2 website we use to make a purchase or invest money requires us to create an account. We input our names, email addresses, sometimes even social security numbers, and create an identity for ourselves in that product.

Naturally, "permissionless" can be a disorienting concept.

It's also the next great innovation for our lives online.

We generate an "identity" for ourselves on the blockchain

To participate in decentralized applications, you must generate a "wallet".

This "wallet" consists of a public key and private key. The public key is an address which anyone can use to view balances and transactions from of that address, while the private key is the 'password' to which grants permission to move funds out of the address.

Both of these are just random 64 character strings.

This public address (a is all you need to provide to a decentralized application in order to transact with the system.

Your "permissionless" identity is your public key

If you visit a DefI site or and NFT marketplace, you will see a common element - a "connect your wallet" button.

All this does is tell the site your public key, and allows you to identify yourself and through your unique 64 character string, and your balances and transactions.

With a single string you are now able to trade crypto, buy NFTs, and participate in any web3 protocol you want, without ever giving your name or any identifying information.

The advantages of permissionless applications:

• Private: You are completely anonymous on the decentralized web!

• Optimized: your identity is transferrable from application to application, meaning you can give the same address to all applications, without needing a new account.

• Infinite: You can create as many wallets ("identities") as you want, and keep your activities separate from one wallet to another. However, this can also be a downside when leveraged by bad actors.

The perils of permissionless applications:

• More power = more responsibility: you are the only one responsible for your identity. If you lose your "password" or mess up a transaction, nobody can help you!

• The guardrails are off: permissionless means there is no vetting. For example, on Uniswap nothing is stopping you from listing or buying a garbage coin (while on Coinbase, your identity and the trade-able assets are vetted). Its your responsibility to do due diligence when doing transactions.

• Anonymous = less consequences for bad actors: people can do sketchy things which can never be linked to them, depending on how diligent they are.