Web3 has been hailed as the savior of the internet, a new paradigm, the future of networking, and, a digital revolution. To its proponents, this open internet standard promises to right all the wrongs that are synonymous with web2, from lack of ownership to censorship and opaque data sharing.
Should this vision materialize, web3 will host a vastly different internet to the one we have become accustomed to, but there are some who doubt the tech will take off. Ownership of user-created content, greater privacy, and an end to rampant de-platforming might be easy concepts to sell, but achieving this grand vision is likely to take longer than web3 architects hope.
Establishing Trust in a Trustless Setting
Web3 is built on many of the same cryptographic tools that are synonymous with cryptocurrency including blockchain, tokenization, and distributed storage. “Don’t trust, verify” is the catchphrase of bitcoiners who would rather rely on mathematics to safeguard their wealth than the whims of central bankers and governments. And yet, paradoxically, convincing web users that they can trust such trustless technology is proving to be a greater undertaking than web3 developers might have imagined.
As Dr. Gavin Wood, the founder of Web3 Foundation and Polkadot blockchain network acknowledges, “We may have to go through one or two hype cycles before the most important elements of the technology break through.”
While the tech is ready, the world may not be ready. It took the better part of a decade for Bitcoin to permeate public consciousness and achieve mainstream recognition. Could the same be true of web3, and if so, what does this mean for the industries that stand to benefit the most from the technology?
What Web3 Means for Web2 Incumbents
It would be easy to assume that web3’s primary beneficiaries will be tech companies that are crypto-adjacent, like those utilizing blockchain, tokens, or AI, in some capacity. In reality, the internet standards fostered by web3 have captivated companies across a range of sectors with big brands taking the lead.
Nike, synonymous with sportswear, has been wooed by the promise of the metaverse, the virtual world in which, if the hype is to be believed, we will all soon be socializing and even working. More than seven million visitors have checked into Nikeland, the Roblox-based virtual world that’s been graced by sports stars such as LeBron James. Nike also accompanied such fashion titans as D&G in crafting NFTs that will enable metaverse users to clad their avatars in the hippest attire.
Elsewhere, Facebook has re-branded as Meta as part of its metaverse push, while games studios have been latching onto web3 for other reasons, such as the ability to boost in-game spending through the creation of secondary markets for trading rare items such as skins, loot boxes, and weaponry. When represented as NFTs, these items can be freely traded between players, and have given rise to Play-to-Earn, a gaming vertical that remunerates players for the time they expend on leveling up their character to boost its value.
And then there’s the social media platforms, which face a dilemma when it comes to web3 – do they embrace or eschew it? While many of web3’s core principles appeal to end users, what do web2 platforms stand to gain from a system that threatens to reduce their power to monetize and control the way users interact?
The Social Dilemma
Social media giants have made their money off the hub-and-spoke model that underpins web2. Their monopolistic platforms call all the shots, dictating who can play, the rules of the game, and ownership of the content their users create and curate. As de-platforming and censorship have ramped up, the debate over free speech has intensified, bolstering the case for open internet standards that can break down the walled gardens of Facebook and Twitter.
Free speech is not strictly a tech issue but given that centralized platforms have increasingly amplified what can be said and by whom, it’s natural that web3 architects have developed new solutions to this thorny problem. Elon Musk’s proposed Twitter takeover appears to have floundered, extinguishing the flickering hope that draconian user restrictions could be rolled back and polarizing figures such as Donald Trump reinstated.
Web3 offers more than merely the means to circumvent censorship however. It’s also suited to new business models such as micropayments. These provide an alternative monetization strategy for users tired of being bombarded with adverts and invasive cookies that monitor their every click.
Jeff Baek is the CEO of web3 payments firm PIP and believes micropayments allow anyone from around the world to participate in the global economy asserts, “Today, everyone, regardless where they reside, is connected on social platforms like Twitter already, they just need to be connected monetarily. Current payment systems are siloed, Twitch has its own wall-gardened payment system, YouTube has its own – Web3 allows free flow of money just like the internet did with information.”
Can Crypto Save Social Media?
Cryptocurrency has the potential to facilitate global payments, including micropayments, and to empower social media users who can be rewarded for the content they create. One of the ways to achieve this is through the use of “social tokens” that are awarded to end users such as creators and even entire communities.
According to Sakina Arsiwala, the co-founder of the web3 social network Taki, “The majority of monetization activity is based on one-way transactions, subscriptions or donations with web2, but as with social tokens, we’re able to create dynamic economies where participants can buy/sell, hold, stake, as well as redeem tokens for specific utility tied to the product experience.
“When designed correctly, social tokens put the majority if not all the economics in the hands of end users and therefore provide a better monetization alternative than on web2.”
The alternative Arsiwala speaks of has already been utilized by Brave, whose BAT token rewards ad consumption on its web browser, and is on Taki. But as Arsiwala is keen to stress, the use cases for tokenization aren’t limited to ads, noting interesting areas for feature development include leveraging micro-payments to combat spam DMs and sorting feed or comment threads based on coin activity.
The Future Is Further Away Than It Seems
For all the talk of web3 shaking up fashion, social networking, and everything in between, it remains tantalizingly out of reach. The tools are there but the audience has yet to arrive. Achieving the network effects necessary to achieve critical mass have thus far proven evasive.
Steemit, the first blockchain-based blogging and social media platform, launched in 2016. Despite blazing a trail for today’s web3 imagineers to follow, Steemit is today a footnote in internet history.
Progress might be slow, but web3 proponents remain undaunted. “As the crypto and stablecoin market grows, there will eventually be enough incentives for non-crypto users to enter the web3 ecosystem,” predicts PIP’s Baek, “It will happen slowly, but it will certainly happen.”