Our definition of Web3 will evolve
What is Web3? Although Web3 has not yet been popularized on a large scale, the concept has been circulating for a long time. This is an artificially coined term to categorize a group of software and platforms that run on blockchain technology. But new technology brings not only new terminology, but also new behaviors and a new spirit.
Twitter founder and Square CEO Jack Dorsey has been an outspoken critic of Web3, which he sees as basically a VC-backed scam. But things are not that simple, because he is also a staunch supporter of Bitcoin. He’s working on a project called Web5, which is essentially building software and platforms on top of the bitcoin network.
Web5 is different from what people are currently calling Web3 because it doesn’t emphasize ownership of the Internet like Web3 does, but the two are similar in that they are both interested in decentralization and permission-less.
In his new book, “The Network State,” former Coinbase CTO Balaji Srinivasan devotes a chapter to what he calls “decentralization to re-centralization.” The process of “decentralization to recentralization”. He argues that decentralization favors rebels, while centralization favors incumbents. Decentralization increases volatility while centralization provides stability. Throughout history, decentralization movements, such as the American Revolution and others around the world, have eventually led to centralized states. Therefore, the decentralization currently advocated by Web3 will eventually move toward centralization.
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When we zoom in, Web3 innovations seem to be simplified versions of “things that are more complex and systemic in their current form”. Take the idea of a DAO, for example, where the community relies on code-based algorithms to make organizational decisions. They essentially replaced laws and decisions with codes. Laws have a large amount of gray areas that allow for negotiation and interpretation, codes do not. DAOs introduce distributed voting mechanisms that are necessary for complex public companies. Personally, I think this is one of the most exciting things about Web3, but it will be many years before we find a better way of working than the current corporate structure.
To sum up, we are still in the early stages of the technology, and all the ideas that currently fall under the umbrella of Web3 will continue to evolve.
Web3 Reduce friction
There are two huge obstacles to the mass adoption of Web3: people need to create and protect their private and public keys, and they need to convert fiat currency to cryptocurrency.
Points of friction exist from the start, and many people don’t secure their keys properly. Given this challenge, a growing number of organizations are leaning toward simply bypassing these requirements, allowing users to create a standard username and password to log into the app, allowing them to purchase NFTs.
On the back end, there is a “wallet” with standard public and private keys set for users, and this data is stored on the platform. In some cases, clients don’t even know they have a public key, and they often don’t have access to their private key.
They don’t need private and public keys, but just create a standard username and password. In some cases, they don’t even need to see the public key to interact with NFTs or cryptocurrencies.
YellowHeart allows users to purchase admission tickets in the form of NFTs without the need to set up a key. Kreatr is a Flow-based NFTs marketplace that allows artists to sell their work as NFTs or prints as if it were just an e-commerce site.
This is not unusual in the cryptocurrency space, as all cryptocurrency exchanges such as Coinbase and Binance also only require the creation of a username and password, rather than a “wallet”. However, anytime you want to send cryptocurrency to another platform, you need to know your public key at least.
In addition, more and more organizations allow users to purchase NFT or other encrypted assets directly with credit or debit cards, which allows people to interact with Web3 through a familiar process, but users do not get the full Web3 experience.
While the popularity of NFTs has dropped significantly since the start of the year, I expect people to remain curious and buy NFTs for many different uses.
While this experience is not a true Web3 experience, it is an entry point. From this point on, it will be up to the specific platform to further educate the user, giving the user the ability to transfer assets to a real crypto wallet. This allows people to move at their own pace, reducing friction.
Draftly is another agency exploring this new path. Their platform enables sports fans to purchase collectibles as NFTs. The average sports fan and the average crypto enthusiast are two very different groups, yet NFTs are a natural fit for a community passionate about collectibles.
I expect we will continue to see more of this in the coming years.
Web3 Payment channel
Encrypted payment channels (Payment Rails) may be the most practical application of blockchain technology. Many companies are racing to create payment corridors, using either the Lightning Network on Bitcoin or other low-cost blockchain networks, to conduct everyday transactions for less than the standard credit card fees charged by Visa, Mastercard and others.
But the service isn’t just for credit cards, bank transfers are also possible. Imagine sending money internationally with extremely low fees, or not worrying about the time it takes money to move from one account to another. Usually, there is a time gap when the money is transferred, during which time the money seems to disappear. This use case is still a long way off, as it will require new regulations, a rethink of our entire financial infrastructure, and possibly government-issued digital currencies.
Web3 Market Saturation
Another trend that will continue is the launch of new NFT marketplaces. Individual artists and brands will launch their own marketplaces. It is very easy to create your own marketplace these days, and while there are already some first movers and a strong community, it is still early days and there are still many challenges to be solved.
I expect the NFT market to become as popular as e-commerce sites one day. Now, anyone can set up a website and sell products without any obstacles, and the NFT market will provide the same convenience in the future. However, NFT is a more malleable medium than online shopping. This means that we will see a variety of solutions.
Solana Labs has launched a Web3 phone. Since the announcement, HTC and Polygon have also shared their intent to develop a Web3 phone. The mobile phone race is just beginning, and I don’t think Apple or Google will be directly involved any time soon, but since the Android software is open source, Web3 phones will probably be Android-based for now.
On the flip side of hardware will be other forms of networking technology. Blockchains rely on peer-to-peer networks, most of which are backed by individuals running nodes, and require cryptocurrency miners around the globe because of their more advanced computing power. But if Web3 is to scale to one day replace our current Internet, Web3-native hardware will need to be involved.
Helium, for example, is trying to decentralize internet access through hardware miners that can also broadcast internet signals. While I’m not too familiar with hardware requirements and use cases, Web3 provides a new paradigm of interaction that will definitely have impact beyond code.
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