Is Web3, the Internet of Value, the 3rd Digital Revolution?
STORY INLINE POST
The concept of Web 3.0 – or Web3 – sounds increasingly strong but it remains largely unknown to the general public. However, it is important to understand its disruptive potential and the reasons why it is considered the potential "3rd Digital Revolution.”
Why a Revolution and not an Evolution? Because Blockchain is the backbone of Web3, and it redefines the data structures in the backend of the web; therefore, it changes the rules. The internet we use today predominantly builds on the idea that data is centrally stored and managed on servers of trusted institutions. Blockchain reinvents the way data is stored and managed because it is stored in multiple copies of a P2P network that checks the information, turning the network into a secure and traceable environment. Therefore, for the first time, Web3 will allow true P2P transactions without intermediaries. This is indeed the paradigm shift of the new digital age: decentralization. And decentralization means disintermediation. Web3 has the potential to be a game changer.
According to the New York Times, investors have already bet more than $27 billion on Web3 to be the "future of the internet." However, it is necessary to better understand the dimension of its promised disruption and how far or close we are to it.
Sequencing Web3’s DNA: Evolution and Legacy
The Industrial Revolution is already in its fourth evolution after almost 200 years (Steam, Electricity, Computing and Cyber-physical). Meanwhile, the internet, which is only 40 years old (yes, it is a millennial), already is beginning its third evolution. Without a doubt, its dominant chromosomes are both speed and global scalability.
Regarding its evolution, using an analogy from the movies, if Web 1.0 represented the black-and-white movie era, Web 2.0 would be the age of color/basic, while Web3 would be immersive experiences in 3D
•Web 1.0 (1990s), the age of the Informative Internet: people connecting to the web. The information era (email, websites), which is characterized by more reading, poor interaction between users and websites and all activity centralized on the servers’ owners.
•Web 2.0 (2010s), the age of the Social Internet: People connecting to people.It changed everything that Web 1.0 stood for. This is the era of social networks, Google, Facebook and Amazon. For the first time, users were allowed to interact freely with each other, encouraging high participation, greater collaboration, and real-time information sharing through platforms and social media.
One of the most notorious legacies of this second evolution is having positioned data as the new oil. The big companies, especially techs, have been able to convert big data analytics, the cloud and algorithms into a true economy of digital behavior. On the other side of the same legacy coin, we find the fake news and the concentration of power in large companies for owning the data of their users. Remember, nothing is free on the internet: “If it’s free, you’re the product,” because the price you pay for any “free” service is your personal data and habits.
This data concentration in the hands of tech behemoths, who had money and connection, soon started showing its evil side. The trend now is to bring back the power of data to end users. It seems that decentralization is what is needed. Blockchain could be the means and Web3 is the aim.
Web3 (2020s): The Internet of Value
While Web2 was a front-end revolution, Web3 is a back-end revolution: it has the potential to revolutionize agreements and value exchange on the internet. In simple terms, the Internet of Value refers to an online space in which individuals can instantly transfer value between each other, eliminating all third-party costs, delivering a faster and more personalized user experience. In theory, anything that holds monetary or social value can be transferred between parties, including currency, property shares and even a vote in an election.
The Promised Land?
As Web 2.0 gives way to Web3, entire industries could be transformed. It is estimated that this disintermediation promise will mainly affect at least 11 industries, in this order: Technology, Banking and Finance, Logistics and Supply Chains, Real Estate, e-Commerce, Voting and Governance, Insurance, Advertising, Entertainment, Data Storage and Healthcare.
Some of its promises are:
• Consumers regaining control of their data: Returning data ownership to customers has the potential to destabilize the tech industry (among others), since many tech giants would lose access to the data that has given them an advantage over their competitors.
• Moving money and digital assets more conveniently and cheaply: promises us a world where value can be transferred reliably and instantly, without intermediaries.
• Improving the lack of access to financial instruments across the globe: The internet is projected to surpass bank coverage globally with 1.7 billion adults still underbanked and 4.1 billion of the world population connected to the internet. Access to the Internet of Value could mean access to finance for all internet users in a simpler way.
• Uninterrupted services: Decentralization could mean that all data will be stored on multiple, distributed nodes and, therefore, users wouldn’t need to worry about suspension of a particular account or service disruptions.
The supposed 3rd Digital Revolution train is moving faster than ever before, but it is still in its early stage. It still raises more questions than answers. However, there is only one certainty: Web 2.0 and Web3 will coexist for, probably, a long time.
Actually, there are already several examples of real Web3 applications that are working successfully, especially in the financial sector (DeFi). These include:
- MetaMask (token wallet and token exchange, with 21 million monthly active users a 38x increase from 2020 interacting with a universe of approximately 3,700 unique Web3 applications)
- Uniswap (cryptocurrency exchange with +1.5 million of users)
- And in other sectors: Augur, Everledger, Sapien, Steemit, Diaspora
Many aspects still need to be solved, such as ownership concerns, regulatory complexity, more sophisticated technology and specialized talent.
Another critical success factor is the demand and the ease of adoption by the general public. Up to now, it could be seen as more of a push market than a pull market but its growth is undeniable. To be a real 3rd Internet Revolution, it requires mass adoption. The key is trust and that takes time.
However, there's no doubt that it could shake up numerous industries and marketplaces in the long term, in a way not yet known, generating opportunities for new businesses for those who know how to embrace them, if the issues cited above are resolved.
We have exciting challenges ahead. In the meantime, it is crucial to read the signs of the future well. In any case, current businesses need to be prepared for any digital jump and not fall asleep in the comfort zone. Mind the gap.