The new web order- Web 3.0 possibilities explained.

TL;DR version of the intro article:

In the previous article, I’ve done a quick recap of internet development, I’ve underlined the impact it has made on the world we live in & I’ve gone over a series of reasons why Web3 perspective matters for our future.

Web3 is a shift in internet culture towards a more democratized Internet. Empowered by new technologies, the Web3 movement has the potential to change the way we perceive and value the Internet as it is today. The following article aims to explain the technical possibilities behind Web3 protocols and their profits for the masses.

• Internet changed everything
• Web1: Read-Only
• Web2: Read-Write
• Web3: Read-Write-Own

Clear as a whistle?

The very foundations of Web3 are transparent, blockchain-based, open-source protocols aiming to restructure the existing digital services and products (or build new ones) so that they serve individual users rather than companies. The idea is to create user-centered solutions, where businesses would act only as providers of services (designed to fit and ruled by consumer needs). The way the user will interact with the underlying technologies would not change that much. Even now we’re starting to observe an increasing number of services allowing users to interact with blockchains via a set of user-friendly applications (especially within the crypto market).

Transparent supply chains

Blockchain can enable more transparent and accurate tracking in the supply chains, no matter the industry. This has a wide range of uses, from tracking the faulty parts back to their manufacturer or knowing the exact origins of a product you’re about to buy in a local grocery shop, to eliminating unfair farming practices in the food supply chains.

No scam interwebs access:

The architecture of the internet isn’t something we think of while ‘surfing’( I’m 32, give me a break) internet. Your internet either works lags or is down. Excluding those residing in freshly built areas with fiber wires running under the whole thing, you probably understand that your internet provider always promises fast connection without saying a word about technical possibilities of the wiring your residual area uses. The same thing applies to wifi possibilities and your computer as a receiver.

New Web3 services can change the policy of limited choice and services not delivered, yet paid for. Community-owned and open internet service providers would challenge internet providers by creating community networks where individuals can use only what they really need as well as operate and get paid to provide internet to members within their community.

Solution: you, as a homeowner or a tenant, could invest in an XYZ company hotspot to enable all of their tenants to join the network and pay the landlord for individual data consumption. To go further into the rabbit hole, an apartment renter could provide internet access (via their own hotspot connected to a larger network) to their neighbors in order to offset their personal internet consumption and so on and so on.

Free the DNS

As you’re reading this, companies like ens.domains or other blockchain networks aim to democratize the existing Domain Name System. Excuse me for over-explaining but the basic function of DNS is mapping an IP address to a readable address like jit.team. Organizations that have total control to enforce IP rights, censor free speech sites like WikiLeaks, and seize domain names without due process. While not all of these instances of censorship are negative, the subjective nature of it all is concerning.

Data Monetization and creator economics:

The process of creating a ‘free’ social media platform (such as Instagram, TikTok, Facebook, etc.) usually goes something like this:

• Company XYZ launches an app
• It aggregates as many users as possible
• It monetizes its user base in all sorts of ways, including selling data about their online behaviors within the app.

To Web2 companies, more data leads to more personalized ads. This leads to more clicks and ultimately more ad revenue. The exploitation and centralization of user data is core to how the web as we know and use it today is engineered to function.

I’ve recently decided to delete my Facebook account, registered back in 2009. Account deletion is preceded by a 30 day waiting/suspension period and a prompt to download your data, which I did. Not being a social media exhibitionist, nor caring a lot about the digital presence, the folder wasn’t too heavy. Some old posts, an index of groups and communities I’ve joined over the years, a couple of photos…It was all the worthless spam I’ve been posting over the years. At this point, whatever had value, already had a backup on my hard drive and its presence in the downloadable folder was insignificant. Although lacking anything valuable to me, my digital footprint has been aggregated and sold to various advertisement vendors. The whole ‘download your data’ thing seems to be a data ownership gimmick providing no utility beyond a backup function.

A handful of other cases. Robinhood generated over $331 million in revenue by selling customer order data in Q1 of 2021. Snapchat loses money every year, but investors understand the company has millions of Gen Z users who generate potentially valuable data. Another example is TikTok- platform has been accused of digital espionage and working for the Chinese government on various occasions.

Solution: Projects such as Ocean Protocol are building solutions that enable anyone to monetize their data on an open data market. Data has become commoditized and turned into an unofficial currency of the big tech companies, and how the value is stored within the internet. New Web3 protocols provide a means for markets where sensitive data can be shared and proprietary data can be accurately priced and sold. Turning data into tangible data assets (tokens) will unlock value, developing a more robust data ecosystem. Another key component of data is storing it across servers, which is predominantly controlled by a few large companies.

Safer data storage:

“Data is stored in centralized servers and accessed by location-based addressing. This makes it easier to distribute, manage, secure the data, and to scale the capacity of both servers and clients. However there are many weaknesses in the realms of security, privacy and efficiency: control of the server translates to control of the data. This means your data can be accessed, altered and removed by any party with control of the server; this could be an entity with legitimate authority over the server or a malicious hacker.”

Kojo Addaquay, Hacker Noon

Every day we use so many services without realizing they are businesses owned by someone. I’m not talking only about the messaging services, video or audio streaming but also about WIFI, Bluetooth and GPS- a few major stakeholders control all the mentioned services. If that’s not enough, they are fully centralized and/or controlled by the tech giants.

Web 3 companies, via their protocols, are building distributed and community-operated alternatives to open wireless networks, location services, or audio and video streaming. Thanks to cutting out the middlemen, these services aim to be much cheaper. It’s worth mentioning that the top streaming providers guarantee data storage for all video content you upload, as well as video transcoding services, to ensure usability to all users.

Solution: Web3 solutions can break down and distribute the decisive power of a single company by unbundling the services that firms provide to users. Various companies are creating platforms where users own the content they’ve produced, and have a say on how the platforms operate. The goal is to enable content creators to publicly store their data and separate it from where it is consumed. Again, more ownership means better data monetization possibilities for the content creators.

Issue: Security and privacy

Web2 applications repeatedly experience data breaches. There are even websites dedicated to keeping up with these breaches and telling you when your data has been compromised.In web2, you don’t have any control over your data or how it is stored. In fact, companies often track and save user data without their users’ consent. All of this data is then owned and controlled by the companies in charge of these platforms. Users who live in countries where they have to worry about the negative consequences of free speech are also at risk. With centralized servers, it is easy for governments to intervene, control, or shut down information sources as they see fit. As banks are also digital and centralized, governments often intervene there as well. They can do whatever they want but what happens the most often is they shut down or limit access to funds during times of political volatility or during investigations against a certain company or individual.Web3 aims to solve many of these handicaps.

Solution: In web3, applications don’t run on a single server or keep their data in a single database. They either run on decentralized networks (blockchains) of many peer-to-peer nodes (servers), or a combination of the two. These apps are often referred to as dapps or simply decentralized apps. To offer a secure and stable decentralized network, developers compete to provide the highest quality services to anyone using their service. As I’ve said many times in this series, you cannot talk about web3 without mentioning cryptocurrencies, which play a big role in many of these protocols. It provides a token (a financial substitute or proof of participation) for anyone who wants to contribute to one of the projects themselves in any way.

“A cryptoeconomic protocol comprises incentives, rules, and interfaces. The agents in these systems self-organize in response to incentives, which are chosen to motivate the behaviors needed for the protocol to function. These behaviors, in turn, are constrained by the rules and interfaces of the protocol.” The graph

A variety of services like computing power, storage, hosting, and other web services, can be provided by these protocols. Consumers pay to use the protocol (like you pay for AWS cloud today) except in web3, the money goes to the network participants with no need of the middle man. A variety of infrastructure protocols have their own utility tokens that take part in controlling how the protocols work.

How Identity Works in Web3…

is a topic for an entire article. If you’re willing to learn more, here you will find a decent explanation. The crypto wallet address is what most of the identities will be tied to when interacting with the web3 applications. Web2 authentication methods based on OAuth traditional login/email password combo, wallet addresses are much more anonymous unless the user decides to tie their own identity to it publicly (you can still track the transactions connected to a certain wallet). Some protocols and tools already allow developers to build self-sovereign identity into their applications to replace traditional authentication methods.

Native payments

Issue: Current digital banking and money transfer systems are over-complicated and still do not allow true international interoperability between users. They also require you to hand over your personal information in order to use them.

Solution: Crypto wallets like MetaMask and TrustWallet enable you to integrate easy, anonymous, and secure international payments and transactions into web3 applications. Networks like Solana offer minimal latency and the transaction costs much cheaper than what we know today. Unlike the current financial system, users do not have to go through the traditional numerous, friction-filled steps to interact with and participate in the network. All they need to do is create or download a wallet, and they can start sending and receiving payments without any gatekeeping.

A new way of building companies

If you decide to build a software company without your own, self-reliant source of funding, there is a good chance it will look something like this:

• You come up with an idea
• You look for money to start
• You find a VC (venture capital), pitch the idea, and give away a percentage of the company if they agree to fund your company

Such a relationship between a founder and the stakeholder immediately introduces a significant conflict of interest. In the long run, misaligned focus points will rule out the user-centered approach and lower the quality of the user experience. On the other hand, in case of an overnight success, it would take a very long time for anyone involved to take any profits, resulting in years of frozen investments with no real return.

Solution: Decentralized Autonomous Organizations, or simply DAOs, offer an alternative way to build a company. During last year’s crypto craze, they were one of the ‘new big things’ gaining popularity and funding from venture capital organizations as well as developers. How do they work?

No matter the size of a wallet, anyone can participate in investing in a project from day one, by buying a particular token. The company announces the release of a certain number of tokens (usually via some sort of a launchpad), gives a percentage to the early builders, allocates another part for public sale, and sets the rest aside for future payment of contributors and funding of the project. Stakeholders can later use their tokens to simply trade and make use of the volatility or vote on changes to the future of the project. People who believe in the project can buy and hold ownership, and people who think the project is headed in the wrong direction can signal this by selling their stake. Because blockchain data is all completely public and open, purchasers have complete transparency over what is happening. This is in contrast to buying equity in private or centralized businesses where many things are often cloaked in secrecy.

Time for a socio-technological upgrade:

Web 2.0 in its structure is fully reliant on infrastructure built and controlled by a few private companies, thus forcing the user to be at the mercy of the tech giants. Web 3.0, as a concept, is another step in the evolution of the internet…although it will be a bumpy road before it becomes a reality.

Web3 needs to take the good from its predecessor and improve upon it through aligning economics and incentives amongst all users. When it comes down to culture and control, decentralized services have a significant advantage over centralized gatekeepers. Web 3.0 proposes an entirely new way to nurture community, empowering users with data portability and interoperability, and re-centering incentives that support self-moderating communities. We all deserve better, and the services, platforms, and products that prioritize transparency and community governance will be the ones to thrive in the next era of the digital economy.

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