Web3 & Healthcare
Web3 is a version of the Internet organized around individuals rather than centralized companies. It is based on open-source software and built by an open community of contributors. Web3 initiatives use blockchain-based tokens to allow an aligned digital community to share in a platform’s ownership, access, and governance. Web3 represents a step forward in coordinating communities around the most significant opportunities to improve how we deliver and pay for healthcare.
In Web2, You Work for the Platform
The Internet is exceptional at providing access to information, but the flow of information was never meant to be so centralized. Web1 was primarily developed using open protocols, so there were no centralization or trust issues during the early days. SMTP and HTTP were credibly neutral. Those primitives could not censor, control, or abuse the trust of any users. Trust became an issue in Web2 as centralized companies began leveraging user data for advertising and other revenue-generating purposes. The Web2 business model is to own the code, own user data, and create value from that data for shareholders of the company.
When we give Web2 platforms our data, we trust them to provide a service without abusing our data or changing the rules. Unfortunately, that trust is often broken. We give social media platforms personal data in exchange for the ability to connect with friends. We agree to be tracked by apps in exchange for location-based services. We hand over our genome to genetic testing tools to receive reports on health and ancestry.
In the Web2 business model, we are the product, and our data drives the bottom line of the world’s largest companies. In other words, we all work for Amazon, Google, Apple, Facebook, and other large tech companies. These companies are accountable to shareholders who expect never-ending growth. That growth comes through more data extraction and more control. As we’ve become more dependent on our phones and apps, we’ve ceded more of our data and our lives to Web2 companies. Over time, one by one, we’ve had our trust violated and our hearts broken by the Web2 companies we once loved.
Web2 platforms break the hearts of entrepreneurs, too. Developers building on Web2 platforms utilize purpose-built APIs to create new companies that leverage the Web2 user bases and ecosystem. But doing so creates significant risks that these platforms will change the rules, as Twitter did in 2012.i As these platforms thrive, they find new ways to monetize data to increase profit for their shareholders. As profits go up, the desire to amass and control user data rises with it. Centralized platforms don’t think twice about changing the rules for short-term shareholder benefit.
Web2’s business model challenges are becoming more apparent. As Web2 platforms compete against their users, their behaviors drive our thirst for something different… something that makes the Internet the way it is supposed to be.
As a result, many of the most innovative developers and venture capital teams in the world are investing in Web3, with more than $27 billion has been invested in crypto and related blockchain projects this year. That’s more than the last ten years combined.[i] Last week, large brands such as Pepsi, Reddit, Visa, Kickstarter, WhatsApp, and other major brands have all announced Web3 initiatives.
In Web3, The Platform Works for You
Web2’s business model extracts data and maximizes revenue per user. Web3’s business model gives the users ownership of their data and puts the community first. In Web2, Uber is a highly centralized platform that extracts, monetizes, and controls the data of riders and drivers. But in Web3, the next Uber will be owned by riders and drivers. Content creators will own the next social networks, and artists will own the new music streaming services. The next 23&Me will be owned by patients.
In Web3, consumers own the platforms and are rewarded for their work. This new model is great for creators who now have sovereignty over their information and its value. Web2 treated users as units of production; Web3 promises community ownership and community involvement through open-source code that dictates network governance and value generation.
Web3 will ultimately outperform Web2 because the Web3 ownership business model is simply better. In Web3, users are aligned with the platform and its value creation. Users are rewarded for their data or other work in service of the community. Users are valued over CEOs of big companies.[1] When users become owners of the platform, it has the potential for incredible network effects. And because the organization is decentralized, the workforce and its ideas are unbound.
Let’s Be Real
Web3 is like an infant performing in a Broadway show. There’s a lot of theatre, unpredictability, and bad decision-making. Builders in the space, like parents, tend to forget all the crying and focus on the moments of joy and hope for the future.
As Web3 grows, there will be many debates between skeptics and mavens about using new tools and introducing new rules for organizing communities. Today’s Web3 innovators are unsure when and how hard to pull the levers of decentralization.
The technology side of Web3 is getting easier, but the non-technical concerns (e.g., governance of decentralized networks) are complex. The early adopter communities in gaming and DeFi are experiencing this now. This week, leading gaming company Ubisoft rolled back its announcement to introduce in-game NFTs[ii] (changing the rules on gamers is hard). And DeFi darling SushiSwap’s community is in turmoil[iii] because of the challenges of a flat, leaderless organization (decentralized can’t mean structureless).
Many forces will fight to maintain the status quo. But in this case, the forces pushing back on Web3 may be fighting a losing battle. This is the beginning of a social movement. Any forces who try to hold back Web3 are pushing against ideas of consumer sovereignty of their data and creator ownership of their work. I find it hard to make a robust and sustainable argument against that kind of innovation, especially in America.
Why is Hashed Health focusing on Web3?
Hashed Health’s purpose is to empower the health of individuals and communities through innovation. A leading value of Hashed Health is “radical collaboration.” Web3 is the enabler of our purpose and core values through bottom-up innovation. Its radically collaborative community-building is essential to unlocking the immense opportunities in healthcare.
Of all industries, healthcare could benefit most from these concepts of decentralization, community ownership, credible neutrality, digital transformation, and token incentives. Healthcare needs information and secure data infrastructure that puts the power back in the hands of people.
Knowing what we know, we have a duty to explore this new design space. We see Web3 as a way to organize communities around significant opportunities in healthcare and to innovate in the commerce / care relationship. We are already experimenting with novel ways for groups to collaborate, share resources, and organize in virtual networks.
Hashed recently announced that we would be creating five new startups over the next two years.[iv] We aim to accelerate the development and adoption of Web3 solutions for healthcare and life sciences. Developing expertise in DAOs[v], NFTs[vi], DeFi[vii], and the metaverse[viii] are important components of our strategy.
We are excited to share more details on our 2022 initiatives in the coming weeks and months.
Further Reading on Web3
· Tim Ferris podcast with Chris Dixon (a16z) and Naval Ravikant on Oct 30, 2021, “The Wonders of Web3” https://youtu.be/DlNDYMNJ5zQ
· Why Web3 Matters https://future.a16z.com/why-web3-matters/
· Highlights from the Dec 9, 2021 congressional hearing where key players from the crypto industry discuss the future of digital assets and their recommendations to lawmakers on how to address policy and regulation. https://youtu.be/ux6CmsrOFeo
· Business Insider “Here’s What to Know About Web3” https://www.businessinsider.com/what-is-web3-internet-blockchain-cryptocurrency-web1-web2-future-2021-12
Additional reading on Web3 and related topics can be found on our Hashed Health’s Resources page at https://hashedhealth.com/blockchain-healthcare-resources/ or follow on Twitter @johngbass or @hashedhealth.
[i] https://www.youtube.com/watch?v=ux6CmsrOFeo
[ii] https://www.forbes.com/sites/paultassi/2021/12/09/ubisoft-touches-a-hot-stove-with-nfts-which-should-be-a-warning-to-other-publishers/
[iii] https://blockworks.co/update-cto-resigns-as-sushiswap-struggles-arca-submits-restructuring-proposal/
[iv] https://www.newswire.com/news/leading-healthcare-and-blockchain-investors-join-hashed-health-effort-21528494
[v] https://future.a16z.com/dao-canon/
[vi] https://future.a16z.com/nft-canon/
[vii] https://www.coinbase.com/learn/crypto-basics/what-is-defi?__cf_chl_captcha_tk__=YESyGr_DWumCfdo7qwAxKCQbjVkKQzwJSfWiXPdDek4-1639418614-0-gaNycGzNCD0
[viii] https://www.nytimes.com/2021/07/10/style/metaverse-virtual-worlds.html
