Web3 – The Present and the Future
The following is an extract from Disruptive Technologies.
Coined by Gavin Wood in 2014, Web 3.0 (or Web3 from here on out), Web3 is an umbrella term for a new chapter of the internet that has suffered – and to some extent is still suffering – from an early case of bad PR and buzzword-itis. The term has evolved to engender fear and excitement in equal measure thanks to booms, crashes and breaches.
The latter is a large part of the issue – a lot of Web3 projects sound like pyramid or Ponzi schemes. Without significant and clear taxation, regulation and oversight, it was inevitable that nefarious forces would zoom into the technology as early adopters. The other issue is that Web3 isn’t currently decentralized, from multiple perspectives.
Putting the early issues to one side, as both governments and organizations are looking at these issues, Web3 offers, proponents say, a chance to take back some control from the big companies. The reason is simple: the data is stored everywhere, i.e. decentralized and without an owner. The idea that people will own their data is intriguing, for large companies as much as it is for the individual.
How are people using Web3 today?
The heaviest utilization is finance, as is the case with most emerging technologies; it is, after all, the underpinning of most current value systems out there. People are using cryptocurrencies and their respective services (DAPs) for payment, lending, borrowing, crowdfunding, swaps, trading, insurance and portfolio investments. Pretty much everything you’d expect with anything that has currency in its name. NFTs are probably the most well-known aspect of Web3 due to their meteoric rise and subsequent crash, which generates continual interest and media coverage.
Decentralized autonomous organizations (DAOs) are the next biggest element of Web3 because of for their disruptive potential. DAOs remove the need for hierarchies, which creates advantages and disadvantages. Along with no senior management, there’s no middle management either. Instead, the DAO works on collective decision making across the organization using a series of predetermined rules and systems. The benefits of DAOs sound, as you might expect from something claiming transparency, decentralization, accessibility and security, almost utopian. However, despite some issues with fraud and bad actors, DAOs for the most part seem to work until greed or nefarious users come into play.
The third area where Web3 is expanding includes Metaverse environments, albeit embryonically. Currently, there are around 40–60 million headsets in the world. While this is a large number, the majority of headsets are in the western hemisphere and the market is still early despite decades of innovation. The markets – and headsets themselves – differ greatly. From cost to comfort, access to content and entry costs, virtual reality remains a big opportunity that has a lot of issues for mass adoption.
How will people use Web3 in the future?
The short answer is that it is too early to tell. Web3 is very much in its formative years and there are strong forces acting on the space to control it, build it and curtail it. Depending on how these forces act – and the VC money flows – Web3 will be a power to be reckoned with. Twitter and Reddit have already begun to experiment with Web3 and more is expected from other platforms and companies as elements like tokens and play-to-earn are explored and exploited.
The key will be to focus on users and create new models that don’t just mirror or cloak old ones. The point of Web3 is to build a fairer and less controlled internet. If the old platforms from Web2 try to control Web3, there could be lasting damage done to the trajectory of growth and desired outcomes. Currently, Web3 is reliant on a middleman of sorts – the very antithesis of what is meant to be happening. Decentralized applications (dApps) rely on centralized support and services from companies such as Alchemy, Infura and Quicknode. Time will tell how fast – or how possible – it is to disconnect from the services that Web3 seeks to make obsolete.
What’s the future for Web3?
The internet we have today is flawed. After innocent enough beginnings, power structures have been cemented that are difficult, if not impossible, to break. Companies have been allowed to become hugely powerful and, in some cases, dangerous to human life, economic stability and political democracy. Web3 offers a new way of thinking that is both idealistic and needed, but also appealing and not without issue.
Today, the web makes money via advertising, subscriptions and freemium models. Web3 offers new models and results that platforms today simply do not. A blockchain-based internet would put forward new solutions that offer creators and users methods to monetize activity and input – a stark departure from where we are today. The economy of Web3 will be tips, stakes and mining.
How will the two combine? Spotify could allow users to purchase shares in a new artist and set rules such as when the artist breaks different markets the users share a small number of streaming royalties or merchandise sold (even co-created). Meta might allow users to monetize specific aspects of their profile to earn cryptocurrency. A move like this could help Meta’s efforts in creating a workable digital currency that they own, although they have been unsuccessful with early projects like ‘Libra’, which was later renamed ‘Diem’. Mastercard has revealed plans to let its 2.9 billion users buy NFTs with their debit/credit cards – no crypto needed. The future is being written (and rewritten) right now when it comes to financing and how people transact in future worlds.
In Web3, everything can be a product or investment opportunity that is democratically governed in a way that Web2 platforms currently aren’t, begging the question, just how decentralized is Web3? Currently, not hugely. The top 9 per cent of NFTs on the Ethereum blockchain account for 80 per cent of the market, valued at over $10 billion – a statistic that sounds eerily similar to how the US is currently set up, with 10 per cent owning 70 per cent of the country’s wealth. If Web3 is looking to solve big problems of ownership, control and market manipulation, there’s plenty to fix. Cryptocurrency could be said to continue the greatest wealth inequality anywhere in the world. Many areas of Web3 are currently being designed, developed and pushed by parties with vested interests.
If Web3 is to be equal, everyone needs to be able to access it in the same way. Due to broadband issues and lack of headsets, this is unlikely. The mobile metaverse experience is a workable halfway house, but true equality means full access and full experience.
Of course, this is a highly idealistic version of Web3, sketched mostly by people who have a financial stake in making it happen. The reality could be vastly different. Some founders and early movers argue that Web3 should be governed in a way that Web2 companies are not, in an effort to avoid monopolies and controlling behaviours. The reality right now is that the web is struggling to make money unless you are the major players, Meta, Google and the like. Web3 offers a new vision where there is more privacy, fewer trackers and personal data is just that, personal. As with any technology that promises the opposite of what is happening, it’s important to retain perspective on who is pushing for the change, and the motivations behind both.