A survey conducted by Harvard Business Review via LinkedIn found that nearly 70% of people don't know what Web3 is. If you’re part of that 70%, don't fret. After reading this article you will be able to grasp the concept and how it’s dramatically changing the online landscape as we know it.
The Evolution of the Internet
The earliest version of the internet. Remember the days of loud dialup and agonisingly long load times for a bit of text and a couple of images? Often referred to as the ‘read only’ web, consisting of static web pages with no user interactivity or advertisements.
The internet the majority of us use today. The advent of Web2 allowed us the ability to not only access, but also send information back to the server to get a more robust and personalised user experience. Its focus shifted towards social networking, online shopping and cloud computing.
Web3 builds on Web2 by bringing greater power to the end user. Web3 is the first time that the consumer is also the builder, where profits and ownership rights are redistributed to those who participate in, and add value to, the community and product. Web3 facilitates improved privacy through encrypted wallets, transparent data through decentralisation, and voting power to network users in the absence of centralised governing bodies. i.e you’re not a product, you’re an owner.
The Web3 Mentality
The Web3 mentality is all about flattening the hierarchical structures typical in Web2 companies. Instead of all profits being funnelled to centralised servers, Web3:
- deploys flatter, democratised structures
- incentivises users to contribute to growth
- provides participants real vote on decisions
This opens up a plethora of new opportunities.
The ‘by the people, for the people’ mentality inherent within Web3 allows us the opportunity to learn from previous lessons and create an ecosystem that has equality and engagement at its core. Leaders in the space such as FEWOCiOUS, Andrew Wang, David Bianchi, Inna Modja and Nadya Tolokonnikova are building NFT projects that focus on promoting equal opportunity and making the world a better place.
The Innovator’s Dinner by FEWOCiOUS NFT
With no restrictive authoritative power and an increased awareness and care for the future, Web3 builders have the flexibility to redefine the way people are treated and represented. We have been presented with an opportunity to create communities we are proud of, with diversity and equality at the heart.
Key features of Web3
Web3 runs on what is referred to as ‘permissionless’ blockchains, utilising open-source software (software with source code that anyone can inspect and modify). This means there is no centralised control (like a government) to moderate. Meaning, users don’t need to trust, or even know anything about each other to conduct business.
Compared to Web2, where business interface, Web3 users and businesses interact with each other online via a central controlling node that governs data and permits all transactions (think Facebook, Amazon, Shopify, eBay, Government). Web3 applications (DApps) distribute and store data in multiple locations, without a centralised node, and can conduct business transactions without an intermediary's permission.
You may notice most Web2 links start with ‘https’. This means information is located from a single point or server. In contrast, decentralisation in Web3 allows for information to be stored in multiple locations, preventing potential for censored control. Web3 is internet (or data) owned by the builders and users, harmonised through tokens. Translated: Every inch of your data is no longer being squeezed by companies for profit. Centralised networks will become redundant as users switch to Web3, where their data is now a commodity that can be sold or remain anonymous.
AI is training computers to make human-like decisions, which will play an instrumental role in eliminating human intervention for a number of menial tasks in Web3. This will revolutionise the ability to increase human creative capacity and focus on making people's lives better.
Examples of Web3 in business today
Now that you have a better understanding of Web3 technology, you might be wondering, how are businesses going to implement this tech?
Despite the fact that full utilisation of Web3 technology is estimated to be 5-10 years away, early stage applications have already begun giving significant competitive advantages to businesses, musicians and artists.
Data ownership through decentralisation is one of the key features of Web3, and has the potential to greatly benefit businesses. Social media giants such as Meta (Facebook), Instagram and Tik Tok have autocratic control over their data and how we communicate with each other. Web3 shifts this dynamic and gives control of data back to the end user, reducing data misuse and improving privacy.
APPICS, a blockchain company based out of Switzerland, is leveraging the power of Web3, by creating a decentralised social media application that rewards creators with cryptocurrency for the content and engagement they create. Because it is decentralised, users’ data cannot be stored in a central node, unlike with Facebook or Instagram, which improves security.
Musicians and content creators are benefiting from Web3 technology through innovative music sharing protocols. Streaming platforms such as Spotify, while boosting creators, can also drain their bottomline. Revenues are highly dispersed away from creators, with music labels such as Sony receiving 67% of revenues from Spotify for having an ownership stake. Spotify also reclaims a significant portion of streaming revenue, leaving creators with just cents to the dollar for each play.
This is where Audius (AUDIO) comes in. Audius is a blockchain-based decentralised music streaming platform harnessing Web3 technology to give creators more control over their music. Audius allows artists to connect directly to their fans, giving them control over their monetisation streams. Creators receive 90% of the revenue from their music in AUDIO, the native cryptocurrency token on the Audius platform. Users can also purchase AUDIO tokens to gain governance power in votes for future network updates.
STEPN is an Australian Web3 lifestyle app with social and gaming elements that allows players to earn money by walking, jogging, and running. Players can also lease or sell their NFT sneakers on the in-app marketplace.
STEPN promotes daily activity through game-fi elements. It is the first project to effectively create a ‘move2earn’ concept. In fact, STEPN finished 4th out of 500+ projects at the Solana Ignition Hackathon 2021.
Its mission is to inspire millions of people to live a healthier lifestyle, while at the same time connecting people to the world of Web3. Through Nori Marketplace, a portion of profits will be used to buy Carbon Removal Credits to combat climate change.
Arguments against Web3
As with any new emerging technology or innovation, there are masses of teething problems, scammers and sceptics to deal with. The decentralised nature of Web3 is both its strongest and weakest point. This is because as humans in the 21st century, we are used to a centralised point of contact we can rely on for information, protection and, well, when we forget our passwords.
In the world of Web3, there is no centralised point of contact, meaning there is no one to call if you forget your seed phrase or need to chat to someone if you have a question. Many see this as a worthwhile tradeoff, but it’s not for everyone, especially those who aren’t willing to put in some time to learn how to navigate the space safely.
Another disadvantage is the number of scams and scammers present within the space. Opensea recently said that over 80% of projects that were released via their platform were flagged as either fraudulent or a scam. This is wild - and not ok! The issue will eventually be solved as governments and protective bodies catch up, but while this tech is so new, it will be threatened by those trying to take advantage of those newer users.
We are the first to admit that sustainability is a real problem within the Web3 space. The energy required to create a single Ethereum based NFT equates to approximately 50kg of CO2 emissions. To put that into perspective, that's the equivalent of watching YouTube for 400 days. This is an absurd amount of energy output, especially considering that many NFT projects release between 8000-10000 units per season.
That being said, the space is proactively trying to reduce its footprint. Ethereum, the blockchain with the highest volume of NFTs, is working on an update that will move it from a proof-of-work (PoW) consensus mechanism to proof-of-stake (PoS), which is thought to be more secure than PoW and uses drastically less energy.
Other solutions include using alternate blockchains such as Solana and Polygon that already implement a PoS mechanism. The disadvantage is that there is less traffic on these blockchains, resulting in less attention and less likelihood of selling out a project.
Some NFT projects such as Stumpy Tree Frens are choosing to go carbon neutral, or even carbon negative, strategically partnering with organisations such as One Tree Planted. Sustainability is an extremely important factor to consider when formulating your own NFT strategies or choosing projects to invest in. We will soon be releasing an article that takes goes deeper on this subject, as it is of vital importance to us.
The Round Up
Well, there you have it. The good, the bad, and the utility. Web3 in its nascence offers significant opportunity to builders, innovators and users. If you’re interested in entering this emerging space and want to learn how community building and wealth redistribution could have a real impact for the not so distant future, we encourage you to jump in and learn as much as you can. We have more resources in our blog including What’s an NFT?, Top 25 NFT Twitter Accounts You Should Follow and Top 10 Types of NFTs if you’re interested in going deeper.
As always, let us know what else in Web3 you’d like to see us cover.