What will the Web 3.0 economy look like?
Although the Internet has existed for less than a century, several historical periods can be distinguished in its development. After the advent of computers in the 1950s, the concepts of global computer networks began to take shape — then these were secret military developments. In 1969, the ARPANET was created by order of the American agency DARPA. Then, in 1984, large civilian networks appeared — on the basis of ARPANET, the NSFNET network was created to transfer information between universities. In the 1980s, personal computers appeared, and thus the era of Web 1.0 began.
Web 1.0 is a term that usually describes the period when the Internet was already a civilian technology and the 2001 dot-com bubble had not happened yet. In those days, communications were slow, website designs were primitive, and the Internet was in the hands of a relatively narrow audience with little impact on economic life.
Everything changed with the advent of the Web 2.0 era in the 2000s, when a mass audience went to the Internet. Web 2.0 is usually associated with Tim O’Reilly’s “What is Web 2.0” article in 2005, but it’s no exaggeration to say that Web 2.0 started with the dot-com bubble in March 2000. But first things first.
From Web 2.0 to Web 3.0
In the late nineties — early 2000s, the Internet became massive and various companies quickly began to adapt their business to new realities. When talking about the hype around blockchain, cryptocurrencies and DeFi in recent years, it is often compared to the dot-com bubble, when many companies wanted to make money by doing business on the Internet. Shares of Internet companies grew very quickly, until the bubble finally burst on March 10, 2000, collapsing the NASDAQ index by one and a half times in one day. Many Internet companies turned out to be shells, but giants such as Amazon, eBay, and Priceline also emerged from the dot-com boom.
Moreover, this has not prevented large companies from continuing to lay economic tracks on the Internet. Along with Web 2.0 came search engines, blogs, social networks, online stores and BigData. In our era, it is difficult to imagine a company that would not be represented on the Internet.
The hype of the Web 3.0 era around blockchain, cryptocurrencies, smart contracts and DeFi is also often compared to the dot-com bubble and indeed many cryptocurrencies and blockchain startups turn out to be empty shells or scams, but the crypto market and DeFi only continue to grow.
However, the main focus of Web 2.0 is centralization and user dependency from platforms. Users leave a lot of personal information in search engines, social networks, blogs, cloud services. The income of a lot of people depends on Youtube, Facebook, Instagram, TikTok, Upwork, Canva, Pixabay, not to mention a variety of payment systems.
Your account or account can be blocked at any time, your content can be demonetized for one or another political reason. It was only in the era of political correctness and sanctions that the mass user really began to understand why he needed decentralization.
Web 3.0 is heading towards decentralization to give users back control. The need to move away from BigTech monopolies and from the traditional monetary system on the Internet is now stronger than ever.
There is another important trend in Web 3.0 — the growing role of AI and machine learning. Now AI is able to analyze BigData, recommend content, generate text, create images, and even mimic users on social networks.
Let us now try to comprehend all these trends from an economic point of view.
Features of the Web 3.0 economy
So far, the transition from Web 2.0 to Web 3.0 has not yet occurred in full. Moreover, in order to predict the development of the digital economy of the future, one must also take into account the political context.
Maintaining a decentralized blockchain-based infrastructure requires a lot of computing power and electricity, which are easier to concentrate just for the state or corporations, and not for individual crypto-anarchists. Large companies will buy up blockchain startups and mining farms. Under environmental pretexts, they will try to introduce consensus algorithms that are less vulnerable to centralization, for example, as is the case with the transition of Ethereum from Proof-of-Work to Proof-of-Stake. Large BigTech companies and traditional financial institutions are in no hurry to give up their power, so in the coming years we will see an intensified conflict between proponents of centralization and decentralization in the network, as well as many hybrid solutions seeking to combine both approaches.
Against the backdrop of increased political friction between economic macro-regions, the need for services that will be resistant to blocking will grow. It will require trading and media platforms that are resistant to censorship, which means that the mass user will sooner or later understand the value of decentralization.
The development of machine learning will also have a strong impact on the labor market. Compare Google Translate 10 years ago and what it is now. Machines will be able to automate various types of routine intellectual work — analytics, translation, creation of texts and images, drafting protocols, trading and even programming. This means that in the Web 3.0 economy, algorithms will do a lot of the work, and people will have to create something really original in order to compete with machines.
Another important trend is the so-called “Internet of things” — things will be marked in one way or another, they will be equipped with technologies for transferring data between objects. There will also be a strong opposition in this field between the supporters of centralization or decentralization. It is convenient when you can track where the car you rented is located, but it is inconvenient when this car is remotely blocked for you due to sanctions.
Barter transactions will become more convenient and in demand amid the crisis of the fiat monetary system. In some places, a fundamentally new type of economic relations will arise, which is not built on a monetary system at all, but on a social rating system, where access to certain benefits is determined by the individual’s behavior. Litigation and disputes between business entities can be partially automated using smart contracts. In general, we will definitely not be bored in the next 5–10 years.
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