Web3 intends to democratise the way creators create content, operations go decentralised and dependency on intermediaries reduces, yet, the tech still looks too good to be true
Like any other use case of blockchain, there is no first movers’ advantage and its potential is only revealed when multiple parties join the chain
While Web3 may become the next best thing in 2022, stakeholders, especially regulators will have to enable the adoption to help with wide-scale uptake
Web3 has become the newest buzzword today — we all have been hearing about it, reading about it and talking about it. A lot of tech gurus are predicting that Web3 is going to be the biggest theme in 2022.
Since the tech is spreading far and wide, many more associated terms such as NFTs, mixed reality, trustless, open platform and metaverse are becoming increasingly popular. But what exactly is Web3?
Understanding The Nitty-Gritty Of Web3
Based on the conversations that I have had with many industry experts and Web3 enthusiasts, like most emerging technologies, all individual’s answers were varied. Most of us see it from one perspective or have ideas formed based on the use cases — this tells us that there’s a gap in decoding its capabilities.
But simply put, Web3 is a new iteration of the World Wide Web where the internet is based on blockchain technology, which is supposed to be decentralised and unregulated.
Let’s trace back to Web1, which was the linear form of the internet with limited space for interaction. The static web was mostly readable and considerably slow to access.
Opposed to that then came Web2, the internet as we know it today. Web2 is basically the introduction of social media, where anyone can create content. The platforms are owned by a few corporations and thus, the control is centralised with them.
We all can post our content by abiding by the rules set up by these large corporations but there is also a cost to it. Either we pay those corporations to post our content or we allow them to monetise our personal data.
The Web2 ecosystem also involves regulators and government bodies who provide overall guidelines and oversee the activities of these large corporations. These rules vary from country to country.
Web3, on the other hand, promises to give equal power to all content creators. It promises that anyone can create and post content, without having to pay large corporations or be guided by the Government or regulators.
In the language of blockchain, each content creator is a node, and they can upload the content and give access to whoever they want to, without having to pay any intermediary. It’s also more secure because it uses blockchain as the underlying technology.
The tech will allow participants to interact publicly or privately without any trusted third party and neither users nor suppliers need any authorization from a governing body for participating. This also takes away absolute power over users from large corporations. For instance, through Web2, Twitter can censor any account or tweet, but in Web3, this would not be possible.
A Too Good To Be True Phenomenon?
According to many industry gurus, Web3 is far from being a reality today. An example of this, can be seen through Elon Musk’s tweet from December 2021 – “Has anyone seen Web3? I can’t find it”.
Web 3.0 mainly focuses on connecting data in a decentralised way, instead of having it stored in centralised repositories. Besides, in the Web3 world, computers will be able to interpret information as intelligently as humans. Machines and humans will be able to connect more seamlessly with data amongst themselves.
Compared to web 2, Web3 is far more powerful in terms of its ability to process information. Ultimately, Web3 will enable a significantly smarter and better user experience. For example, the financial services industry, including banking, will be significantly impacted by Web3. Banks will be able to serve their customers better, with much less human intervention and in a much more personalised manner.
Few believe that given the power of blockchain, we may not need the banks as intermediaries to ensure trust. Blockchain technology will ensure trust with the power of computing being with each party. But this may not even be the end state because even though blockchain technology ensures security, it will be very difficult to change the mindset of individuals to such an extent.
An effective open banking system and a banking world with more and more usage of self-executing smart contracts can be envisioned.
Challenges Of Implementation
Blockchain is a very powerful technology and many have been talking about its potential for almost a decade now. However, it still remains in its infancy and has its challenges. Thus, for Web3 to succeed, some of the problems the industry need to be overcome are:
- Slow transactions processing: For Bitcoin-based blockchain, the processing speed is generally around 4.6 transactions per second, which falls short of the requirement that something as potentially huge as Web3 would require.
- Extremely energy-intensive and complex: It is said that the Bitcoin blockchain consumes about the same amount of energy as the whole of Finland. Plus, interacting with Web3 applications will require extra steps, software and education. This can be a hurdle to adoption. It’s much more complex compared to Web2, whose simplicity was the main reason behind its extreme popularity.
- Legal irregularities: One of the primary challenges of any use case of blockchain is the delay in government or regulatory bodies deciding the basic guidance and giving the high-level guidelines. While Bitcoin is a decade long use case, many countries, including India, are yet to have proper guidance around it. And till the time that happens, we won’t find Web3.
It will be another use case with a lot of POCs being done by various parties, but no one actually investing in taking it live. Like any other use case of blockchain, there is no first movers’ advantage. It is only when multiple parties join the chain, that the true value of blockchain can potentially be exploited, and not before that.
While we look forward to Web3 becoming the next best thing in 2022, the ecosystem, including regulators will have to enable the adoption to help with wide-scale uptake.
