Web3’s Identity Crisis
What is “Web3”? Many definitions have been thrown around. Most tend to include the word “blockchain.” Blockchain is in turn associated with cryptocurrencies and DeFi which are currently besmirching the true power that Web3 has to offer. Investors saying “I don’t invest in Web3” are really saying “I don’t invest in the Internet.” Web3 is inevitable simply by virtue of there having been a Web2. In fact, the unmet user need for Web3 was largely created by its recent predecessor. If all Web3 were was blockchain and cryptocurrencies, I might see their point. These were simply early use cases in the next evolution of the web. We’re just getting started.
The evolution of the World Wide Web
Web1, spawned by Sir Tim Berners Lee’s HTTP (hyper-text transfer protocol), was about browsing; it enabled “read” access. Web2, enabled largely by mobile internet, smartphones, and advancements in client-side technologies like AJAX and CSS, introduced “write access.” We saw social media and network effects redefine the way we live, work, and socialize.
But, Web2 came at a cost, it handed power to data-hungry platform hegemonists while leaving the world’s data naked and exposed, flailing in the wind. After the sun and human aspiration, data is the world’s most abundant resource. Web2 saw the majority of first-world cultures become technological Gelflings in a frightening profit- and dopamine-fueled real-life version of the Dark Crystal meets Idiocracy, while far greater numbers remain unbanked, unidentified, without healthcare, and without a means for improving their lives.
Mass data breaches, low-quality data, and legitimate needs for personal privacy have contributed substantially to an ever-deepening global “trust crisis.” One that costs organizations trillions per year, and prevents large swaths of society from being able to access vital services, or see to their financial, physical, and emotional well-being. It’s a broken model. And if it wasn’t already broken, privacy laws and policies like GDPR and CCPA, enacted in response to this crisis, are delivering the final death blow.
And then came “crypto”
In the meantime, billions of dollars have been poured into cryptocurrencies, DeFi platforms, the metaverse, and other blockchain startups in the past several years. Value was being created seemingly out of thin air, and then quickly poured right back into more innovation. We are just on the precipice of the potential being unlocked by these recent waves of innovation.
The strategy of “take X and put it on the blockchain” that prevailed in the late 2010s fell flat on its face because blockchains tend to make poor databases for most use cases. Blockchains are good for a few things… mainly cryptographically solving the double spend problem, meaning they make it virtually impossible to duplicate digital money. They’re really slow, expensive, privacy-destroying, and impractical for just about anything else. The recent crypto crash, lack of regulation, stablecoins de-pegging, and lender insolvency may be signals that DeFi may not be quite ready for prime time. And yet, the need for innovation around privacy, security, and data ownership is real and palpable. The trust crisis is a stark problem for organizations and individuals everywhere. Here’s the thing…
What if the best thing to come out of blockchain wasn’t blockchain at all?
We just experienced a Cambrian explosion in cryptographic innovation and decentralized protocol design riding on the back of the crypto boom. Cryptographic techniques that had been sitting on university shelves for decades have been dusted off, and new ones developed in the support of these efforts. Zero-knowledge proofs, fully homomorphic encryption (FHE), polymorphic encryption, secure multiparty computation, and multi-key cryptography are some of the core building blocks, also known as cryptographic primitives, that have emerged from the primordial ooze left behind. Like the original fish that crawled out of Earth’s primordial ooze, much of this innovation has been emergent in nature, springing up from a groundswell of ideas and ideals held by disparate groups of people around the world. These primitives enable things like privacy-preserving use and democratized and decentralized ownership of cryptographically verifiable (signed) data.
This collection of cryptographic primitives is where I believe the real value lies. These primitives are generally applicable regardless of database design. On or off of blockchains, they have the power to help give millions access to healthcare, financial services, jobs, resources, income, and property they would be otherwise unable to access. They can help organizations unlock greater value from data while protecting users’ privacy and security and at the same time allowing those users to be owners and beneficiaries of that value. They provide a mathematically verifiable layer of trust and authenticity and enable entirely new business models, new industries, and new opportunities for inclusion for more of the world’s population.
So what is Web3?
Here’s my definition: Web3 is the next iteration of the Internet and represents a shift from centralized ownership to democratized ownership of data. If Web1 was read, and Web2 was read and write, Web3 is read, write, and own. Web3 is, in effect, Web2 eating its own tail. It’s an answer to the great data paradox and offers a promising set of solutions to help solve the global trust crisis.
Solving the global trust crisis
The use cases are staggering. When you can separate data from its owner, make that data cryptographically verifiable, give that owner control over that data, and process that data wherever it lives, without ever having to take custody of or decrypt it, you open up a world of possibilities. In healthcare alone massive efficiency gains stood to be made in clinical trials, optimizing patient care, genetic research, and training AI models. Web3 shows tremendous promise in addressing all of the sustainable development goals set forth by the UN by helping to solve things like income inequality, financial inclusion, and access to healthcare. Privacy-preserving marketing, advertising, data acquisition, and analytics are just starting to enter the market. The social web can now benefit from sustained and exponential network effects and data sources by allowing its users to tap into a shared data store. Users of the social web benefit from cryptographically verifiable data sources, and can now become beneficiaries of the value they create when they generate data and content. There are so many more use cases in supply chain tracking, transportation automation, government, news media, insurance, gaming, IoT, networking, privacy and security, and beyond.
While I admit it’s entirely possible, and dare I say likely, that 70–80% of cryptocurrencies go to zero in the next two years… Web3 isn’t going anywhere. Now’s the time to focus and start building for real use cases.
