Recent geopolitical events have polarized the world. Partisanship and ideological divisions have further Balkanized the Internet, whose gatekeepers have trampled on millions’ right to access financial services. Nations are gradually waking up to the reality of having neutral protocols and national stacks.
Hailed as the next generation of the Internet, Web3 will be sanction-resistant and free of data silos. Gavin Wood, co-founder of Ethereum and creator of Polkadot and Kusama, coined the term Web3 in 2004. Five years later, the Bitcoin (BTC) white paper was released in 2009, further cementing the need for decentralization. Is the decentralization narrative here to stay? Let’s find out why Web3 is gaining ground today.
Related: Decentralization vs. centralization: where is the future? experts answer
Web3: Role of decentralization in the innovation economy
Web3 can offer global digital tracks to support innovation and independence. The reputation for dominating big tech has fueled discussions around Web3. Big Tech’s dominance of the internet and its control over personal data has fueled the war cry for its decentralization. a16z, a renowned Silicon Valley venture capital firm, has published its policy paper How to Build a Better Internet: 10 Principles for World Leaders Shaping the Future of Web3. It states that data ownership and monetization will lead to newer business models in the Web3 era and advocates the following:
“The world deserves technology that can open up opportunities for millions on the fringes of the innovation economy and empower people to take control of their digital lives.”
The basic premise of the internet focused on connecting people. The Internet has evolved over the past 30 years, and how we interact with it has changed as well. Despite the changes, the era of online communities can be roughly divided into three periods.
“Privacy is necessary for an open society in the electronic age,” said Eric Hughes, an American mathematician and founder of the cypherpunk movement, emphasizing the importance of privacy and how it is more pronounced in a decentralized version of the internet. The current state of the internet, Web2, reeks of big tech monopoly; Facebook, Amazon, Apple and Google own and rule the internet today.
Related: Why decentralization is not Web3’s ultimate goal
Web3 advocates have urged that the future of the Internet should be built on the core principles of decentralization, self-determination, data ownership and censorship resistance. At the core of Web3 is the philosophy of a decentralized internet infrastructure designed to ensure individual privacy.
Web3 has yet to reach its full potential. At this point, the idea of individuals exercising full ownership of their data and privacy seems quite dystopian, with adoption being petty and limited to crypto-savvy individuals. There is a need to address friction at the entry level in the Web3 space.
Web3 introduction
The lofty ideals of property in a truly decentralized economy can only be realized if we create supporting tools and complementary infrastructures compatible with Web2 and Web3. Web3 adoption is still in its infancy, although some Web2 companies have gradually started migrating to Web3 and moving toward decentralization. User-friendly supporting services and infrastructure must be built to ensure seamless user onboarding in the Web3 era. Much remains to be done.
Related: The Metaverse will change the paradigm of content creation
The idea of portable digital identities and ownership on the internet belies user-friendly Web3 wallets for everyone, including non-native crypto audiences. Credential management associated with custody of digital assets is the missing link preventing Web3 adoption. A composite wallet that allows users to assert their identity across physical and digital realms, store digital assets like NFTs tokens, ensure payments, staking and more are the need of the hour. Current players’ on-ramp (fiat to crypto) and off-ramp (crypto to fiat) services are far from satisfactory, which needs to be addressed from a user experience perspective to enable mass adoption.
Web3 and property economics
Web3 will bring about a paradigm shift in the way people use technology in online communities. Value creation and distribution will no longer be at the mercy of centralized actors, and decentralized groups will enable new forms of ownership and co-creation.
Gaming, a $200 billion industry in 2021, is the way forward to engage users in the Web3 ecosystem. Emerging gambling markets like India have more than 450 million players. Emerging markets have lower per capita incomes, giving gamers tremendous opportunities to generate income through blockchain-based play-to-earn games.
Web3 games, which are the first to go financial, are expected to continue to grow in the longer term. Web3 is at the center of the discourse centered on the creator and property economics. JPMorgan’s recent Opportunities in the Metaverse report highlights the importance of a single-wallet user experience in web3 and meta-commerce. The report states that a single wallet should contain:
- Web2 traditional financial payment rails, digital currencies and digital assets.
- Web3 crypto, NFTs and digital assets.
- Verifiable digital identity credentials, know-your-customer and anti-money laundering compliance keys, and reputation points.
- Multiple aliases to protect privacy and enable digital freedom.
Related: DAOs are the foundation of Web3, the creator economy, and the future of work
Tools and services built on privacy and self-determination are essential to unlock the full potential of Web3 and capitalize on trillion-dollar opportunities in the metaverse. An improved user experience is critical to mainstream adoption.
This article was co-authored by Sharat Chandra and Shiv Aggarwal.
This article does not contain any investment advice or recommendation. Every investment and trading move involves risk and readers should do their own research when making a decision.
The views, thoughts, and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Sharat Chandra is a keynote speaker, educator, and blockchain and emerging tech evangelist. He leads research and strategy at EarthId, an award-winning distributed identity management platform.
Shiv Aggarwal is the founder and CEO of EarthId, an award-winning platform for decentralized identity management. Shiv is currently leading EarthId to enable smooth adoption of Web3-based ecosystems. He is a thought leader in the field of blockchain and digital identity and has presented various keynotes at international conferences. Shiv also leads the Government Blockchain Association in EMEA.