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technology May 30, 2022

Web 3: Miracle or Mirage?

The next era of the internet has been announced. According to its enthusiasts, it offers a decentralized alternative to the current concentration of power in the hands of a few Big Tech players. But, alongside the early adopters, the idea also has its skeptics.

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The original internet — then the World Wide Web, now Web 1.0 — was a simple place, comparatively speaking. Introduced in 1990 by Tim Brenners-Lee, the first version of the internet consisted of its three core technologies: HTML, URL, and HTTP. Early web pages hosted on browsers like Mosaic and Netscape were static and reliant on servers, but quickly evolved to offer more services and connections.

Investopia identifies Web 2.0 as “a paradigm shift in how the internet is used. Over the past 15 to 20 years, the bland webpages of Web 1.0 have been completely replaced by Web 2.0’s interactivity, social connectivity, and user-generated content.” Internet users have grown accustomed to the exponential advancements facilitated by Web 2.0, such as mobile internet and mobile apps, social media platforms and digital content creators, online gaming, fintech, and cryptocurrencies. But Web 2.0, like Web 1.0 before it, is largely controlled by a small number of powerful players. A 2019 study by Sandvine found 43% of internet traffic volume comes from Google, Amazon, Netflix, Meta (Facebook), Microsoft, and Apple. The Harvard Business Review (HBR) offers some additional statistics:

  • Google occupies over 90% of internet search volume in Europe, India, and Brazil
  • 50% of global digital ad spend is on Meta and Alphabet (Google)
  • In the U.S., Amazon reaps 40% of total online spend
  • 84% of companies identify Microsoft as a “top-three vendor”

HBR concludes, “Collectively, the Big Five earned income of about $197 billion on revenue of more than $1 trillion in 2020, while their market cap rose to $7.5 trillion by year’s end.” As these staggering figures imply, Web 2.0 has become an oligopoly — but with 5 billion global internet users reliant on the integral services the Big Five provide, viable disrupters are hard to come by.

So, what do you do if you can’t compete with the apex predators? You try a different approach. You evolve. And in this particular case, evolution means a new iteration of the internet.

What is Web 3.0?

The Web3 Foundation — a funding operation for the next phase of the internet — defines Web 3.0 (or Web3) as “a decentralized and fair internet where users control their own data, identity and destiny.”

Investopia goes on to identify four key features of Web 3.0:

  • Decentralized — “In Web 2.0, computers use HTTP in the form of unique web addresses to find information, which is stored at a fixed location, generally on a single server. With Web 3.0, because information would be found based on its content, it could be stored in multiple locations simultaneously and hence be decentralized.”
  • Trustless and permissionless — Neither reliant on a trusted intermediary platform or a set of rules determined by a central provider, Web 3.0 applications will operate on blockchains or other decentralized peer-to-peer networks.
  • Incorporates AI and machine learning — Intelligent technology will allow for even more relevant internet search results and insights.
  • Connectivity and ubiquity — Web 3.0 can be “accessed by multiple applications and with an increasing number of everyday devices connected to the web,” allowing for greater connection and reach than ever before.

Web 3.0 examples

Web 3.0 is more than a decentralized dream; innovative developers have already begun experimenting with Web 3.0 applications. Forbes identifies several current use cases of Web 3.0 in action, including:

Web 3.0 applications in content production and marketing

Web 3.0 is poised to have a far reaching impact on the internet ecosystem, but is especially intriguing for content creators and marketers. In fact, the Content Marketing Institute (CMI) believes Web 3.0 “has more kinship with content marketing than traditional brand and direct marketing and advertising.” Why? Because Web 3.0, like good content marketing, relies on building trust and creating community. “In Web 3.0, the consumer (not the brand or marketer) controls the connection, which allows the relationship to extend across all the platforms they use.” CMI cites several content marketing innovations powered by the advent of Web 3.0, including “decentralized media networks” as a way to wrestle back control from the social media monoliths, and blockchain powered tokens (smart contacts) to create more personalized and trustworthy customer experiences that “empower consumers to help shape their experience and enable marketers to do that without surveillance-style efforts.”

Forbes identifies two additional examples of how Web 3.0 might transform content creation.

Social tokens” provide content creators with a digital asset that can be used in at least “two self-reinforcing ways: to build and reward their fan community and to compensate themselves for their creative work.” For fans, the appeal of social tokens is exclusivity and scarcity; only a limited number of tokens exist, increasing their demand and value until the token becomes a form of currency. For creators, social tokens offer a new opportunity to monetize their content. “They make the fan relationship a two-way street,” says Forbes, “Stars can modulate their interaction with fans, and fans can put a price on their devotion.”

Creator NFTs, like social tokens, also offer consumers exclusive digital assets or experiences — and make sure creators receive proper payment for their content. But unlike social tokens which can be accrued and accrue in value, creator NFTs are typically a single asset with a value determined by popularity; the more popular an NFT, the more valuable. However, popularity often hinges on the scope of an asset’s distribution. With NFT smart contracts “creators are able to take a cut as their content is resold on secondary markets.”

Will Web 3.0 become a reality?

There are some prominent skeptics of Web 3.0. Early internet pioneer Tim O’Reilly places it in the context of the repeated decentralization and re-centralization cycles the Web has always undergone. Modern tech titans Elon Musk and Jack Dorsey cite concerns over the mainstream utility and scalability of Web 3.0. As the World Economic Forum puts it, “While several Web3 dapps exist, there is no broad Web3 infrastructure like the current internet. Significant widespread development, consolidation and accessibility efforts are needed before the Web3 vision is realized, if at all.”

But despite these concerns, the market for the decentralized offerings promised by Web 3.0 is heating up. Among the more rosy outlooks is Prophecy Market Insights' forecast that the global Web 3.0 market will experience a compound annual growth rate of 45.20% between 2020 and 2030. That would certainly be a game-changer. We shall have to wait and see.

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