The digital landscape is dominated by corporate giants such as Google and Amazon, whose colossal presence and influence have raised concerns about user privacy, competition, government oversight, and fair play. While governments worldwide are attempting to level the digital playing field through various legislative measures, the task of restoring balance to the digital realm is too large for governments alone. Web3 technologies offer a promising solution to this imbalance, potentially redefining the digital age.
Web1, the original web, was characterized by static content on websites. Web2, which emerged in the mid-2000s, introduced collaborative applications and online communities. While Web2 has brought about global connectivity and economic growth, it has also led to the rise of digital monoliths like Google, who rely heavily on advertising and consequently user data. This has resulted in echo chambers and the amplification of extremism. Furthermore, companies like Apple and Google control access to iOS and Android operating systems, imposing steep entry costs.
Web3 technologies aim to rectify many of these issues. Built on blockchain networks such as Ethereum, artificial intelligence (AI), the Internet of Things (IoT), and extended reality (XR), Web3 is already making waves in the financial sector. The use of tokens, which are digital assets, allows internet users to have an economic stake in their digital presence. Unlike traditional transactions, tokens enable peer-to-peer transactions without the need for intermediaries like banks or large tech companies.
Tokens have already made a significant impact in the business world. Stablecoins, which are backed by US dollars, have grown to over $100 billion, attracting the attention of traditional players. PayPal announced its own stablecoin, PYUSD, in August. Visa now allows merchants to settle in real-time with stablecoins, and J.P. Morgan plans to tokenize deposits for frictionless global transfers.
Web3 also empowers creators by simplifying monetization and tracking of their work. AI could potentially enable creators to receive instant digital royalties if their intellectual property is used to train AI systems. Web3-enabled smart contracts, which are self-executing, eliminate the need for lawyers to enforce contract terms. Creators have already earned $24 billion selling their work as NFTs in Web3, far surpassing the $7 billion in royalties paid by Spotify, a classic Web2 platform, in 2021.
Web3 technologies also promise to decentralize digital infrastructure. Currently, all Web2 applications and services run on cloud networks such as Amazon Web Services, meaning the companies that develop Web2 apps also control and store their data. To truly realize the potential of Web3, control of this underlying digital infrastructure must be wrested away and decentralized across users and multiple companies.
This decentralization will have profound implications. User-owned networks enabled by Web3 are projected to be worth $3.8 trillion by 2028. Projects like Hivemapper, a crowdsourced mapping project that has already mapped 8% of the world’s roads using a high-tech dash cam and AI, exemplify the potential of Web3 technologies. Unlike Web2 companies such as Waze, Hivemapper’s biggest volunteers are also its largest economic stakeholders.
However, Web3 is not without its challenges. The proliferation of tokens has raised concerns about gambling and speculation. Regulatory frameworks around Web3 are still developing and could potentially be co-opted by leaders of older paradigms. Furthermore, despite its potential to democratize digital culture, there is no guarantee that Web3 won’t give rise to a new set of ultra-powerful entities that perpetuate many of the mistakes and inequities of Web2.
Nevertheless, the advent of Web3 signals a new era for the internet — one where peer-to-peer transactions, user privacy, and the ability to opt out of powerful platforms are coded into the very fabric of the web. As we navigate this new frontier, it’s important to remember that technology is a tool, neither inherently good nor bad. Its power must be wielded judiciously by both its creators and users. With the right crypto education platform and a secure digital wallet, users can safely explore and invest in this new digital landscape.