The term web3 has caught on in the past year and has been touted to be a “better” version of the internet as we know it today. Whereas web1.0 began as a static version that allowed users to consume information in a ‘read-only’ format, web2.0 allows users to become more active participants in the ecosystem as they can create, contribute and distribute content on global networks. web3.0, on the other hand, has a vision being a decentralized version of the web. What does this truly mean, and what are the implications of web3 for individuals and organizations? Our writer, Rasyida Paddy, spoke with the trainer of our web3 class from our Digital Trends program, Gosha Dolgun, Founder and Creative Director of The Thirty7, to find out more.
Understanding web3
Web3 is still evolving and being defined, but at its core, web3 is being used to describe a new approach to the world wide web. While most of the features and capabilities of web3 are already present in the current web2.0, web3 leverages blockchain-based technology and is built upon the concepts of decentralization, openness, and greater user utility. According to Gosha, “decentralization” in web3 simply refers to the ability for peer to peer networks to be created, allowing users to interact with each other without needing a central system or authority.
For example, in the current version of the web, computers use HTTP in the form of a unique uniform resource locator (URL) to find information, often stored in a specific location, on a single server, typically owned by a big tech company. The web2.0 version of the internet is dominated by companies that offer services in exchange for your personal data. With blockchain-based web3, as information would be found based on its content, that specific content could be stored in multiple locations simultaneously and can therefore be decentralized.
The pros and cons of decentralization in web3
According to Ethereum, “Centralization has helped onboard billions of people to the World Wide Web and created the stable, robust infrastructure on which it lives. At the same time, a handful of centralized entities have a stronghold on large swathes of the World Wide Web, unilaterally deciding what should and should not be allowed.”
The appeal of web3, therefore, is very much in its ability to give users more control in the information being shared, which, in theory, further democratizes the web and gives users the freedom of choice in terms of the information they share and consume. “However, the idea that markets and communities are self-governed and are coined as the Wild West is concerning for some,” added Gosha.
While the debate around centralization versus decentralization continues to surround the benefits of web3, Gosha argues that as the technology matures, everyone stands to benefit from it. “Consumers will have a more selective experience and have more control over what products they see on the market. Business owners and producers would be better connected to their end consumer and therefore be incentivized to make better products.”
Web3 use cases
Cryptocurrency, non-fungible tokens (NFT’s) and the concept of the metaverse are some examples of the terms that have transpired in discussions around web3 use cases. “To name a few projects from each example: Ethereum, Bored Ape Yacht Club and The Sandbox,” added Gosha.
One of the most cited web3 use cases is the development of smart contracts. According to web development platform company Moralis, web3 contracts are self-executing agreements that employ code to eliminate the need for third parties or professionals to implement such agreements. These digital contracts enable many functions, including buying, selling, and trading assets. By using blockchain technology, web3 contracts create a digital ledger to securely store information, and can be automatically executed and updated as conditions change, making them more efficient.
Web3 is also showing promising use cases in the area of marketing. Driven by AI and machine learning, it has the potential of delivering better insights to marketers, resulting in greater personalization and highly targeted advertising to consumers.
A number of consumer brands have already started experimenting with NFTs to drive loyalty programs. With NFTs, customers can receive rewards that are completely unique, personalized and have no expiry date. From cosmetics brand Estée Lauder to coffee giant Starbucks with its Starbucks Odyssey program, brands are experimenting with NFTs to offer customers something “exclusive”, giving them a greater sense of ownership over their rewards that may drive a sense of loyalty for the brands.
“Overall, web3 technology is still far from its final form. However, the collective vision is that users can leverage blockchain tech and cryptography to achieve full control over their security and web experience. The user can dictate what value they extract and what data they provide, and how to monetize their experience,” explained Gosha.
Vision versus reality
How far are we today from a vision of a truly decentralized internet? Gosha argued that, ”Initially, it might seem like we are on the verge of a new era of decentralization. However, I would argue we are far from true decentralization. It starts with solving the ‘crypto trilemma’ and continues with making the innovative tech applicable for mainstream adoption.”
As with any emerging technology or ecosystem, web3 still has some way to go before it reaches maturity. “Many leading web3 projects have not been given the same opportunity as those championed or invested in by the known tech giants. The leaders of web3 continue to be plagued by financial troubles and overpromising to their audience. Allowing them to create in a web3 format without making them conform to web2 standards will expand our horizons of what a new internet could feature,” added Gosha.
For web3 to truly take off, it will require a stable ecosystem with established collaboration models between governments, businesses and developers.
However, Gosha explained that the main problem still lies in the overall skepticism and disbelief in the business models of web3 projects. “Governments classify most projects as risks and therefore fail to provide the right ecosystem for those projects to grow. I don’t think there is one specific solution to this problem, or that there should be a solution to come from the government. What’s best for web3 might be to find a way to grow without the support of the governments,” concluded Gosha.
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