Why is Web 3.0 important?

In 2021, the Web 3.0 became increasingly talked about. At first it sounded like a marketing catchword, more hype to get us excited. However, listening to the people who are deeply involved in the blockchain and DeFi, the shape of Web 3.0, and its implications, are becoming clearer.

In a way, you could say that Web 3.0 is the revisioning of the inventors of Web 1.0. The Internet was an open-source protocol initially developed by individuals (there are alternative Big Brother narratives) to share information widely and freely. Web 1.0 was intended as the Internet of data.

However, corporations did not understand the implications, and saw it as a massive shopfront, and pumped billions of dollars into building “old school” applications, somewhat like attaching a horse to the front of the newly-invented car. This of course led to the dot.com collapse in the early 21st century.

The disappointing history of Web 2.0

Web 2.0 proudly announced more interactivity on the website, including user-generated content and social media platforms. This grew into blogs with commenting, photo sites populated by users, and virtual “village squares” where people gathered, rediscovered their old school mates, shared what they had for breakfast, and settled into a warm, cosy communal atmosphere. Web 2.0 was touted as the Internet of participation.

Marketers know very well that when people are relaxed and “warmed up,” they are more impressionable—more open to advertising messages and “news” that coincides with their values. After people got attracted to these social media platforms, largely because they were free, commercial interests saw ways to extract value from them. This gave rise to highly-targeted advertising based on known attributes of users, such as their gender, age, location, interests, profession, education, and even socioeconomic levels. The users had freely shared these attributes while building their social profiles, choosing to follow particular interest groups, and possibly even keywords within their posts.

Marketers know very well that when people are relaxed and “warmed up,” they are more impressionable—more open to advertising messages and “news” that coincides with their values.

Remember that Google was, for many years, unmonetised, and often in danger of collapsing while they developed and tested their search alogorithms. The two founding students Larry Page and Sergey Brin had zero income until 2000, when they launched Google Adwords—those little ads at the side (now the top) of the search results page—that cost the advertiser a few cents each time someone clicked the link. These few cents multiplied by millions of clicks every day, made Google a billion-dollar corporation in a few years—until then the fastest-growing company in history.

Google based their ads targeting on keywords. So if you entered “nike shoe shop in Auckland” in the Google search, it would trigger ads that had included that phrase or those words in their setup. This worked amazingly well—it heralded the beginning of “niche marketing,” and the near-end of broadcast advertising, such as radio and tv ads that blasted highly irrelevant commercials to the whole national population at extremely high cost, in the hope of netting a few customers. Now, businesses could connect directly to their customers with tiny advertising budgets, instead of multi-million-dollar media budgets. It was a marketing marvel.

In 2007 Facebook followed suit, using information provided by the users themselves to specifically target them. Would you not respond to an ad that talked about who you were and what you were interested in? Google also found ways to target ads within websites to users according to their previous website-viewing history. This was marketers paradise, and Google and Facebook raked it in—and the users never noticed.

The consumers, who had now become the products of Google and Facebook, weren’t unduly concerned about this symbiotic relationship—until it came to light that “advertisers” could also target users with politically-biased information. The warm fuzzy feeling of being a free member of a community turned to anxiety and anger about being manipulated and exploited—and Google and Facebook were held red-facedly responsible.

The warm fuzzy feeling of being a free member of a community turned to anxiety and anger about being manipulated and exploited…

Humanity had been taken in by its penchant for free stuff, socialising, buying, and showing off; and in the meantime some geek-projects-turned-corporations had grown in sinister power and wealth into tech giants. Web 2.0 had turned sour, had turned into the Internet of exploitation.

What is the Web 3.0 promise?

Bitcoin and the blockchain brought in the practical application of decentralisation. Decentralisation is a long word, and a vague one for many. I think it takes a while to realise its implications, but once it hits you, your view of the world changes.

Ever since the dawn of civilisation, centralisation has been a sustaining and driving force, because it provides stability, trust, protection, support, and leadership. Chiefs, kings, queens, emperors, popes, prime ministers, councils, governments, institutions have provided centralisation throughout civilised history. This has worked reasonably well in maintaining stability and wellbeing, depending on the benevolence of the central people or organisations.

Recent history has seen the proliferation of central bodies, a kind of “division of labour” of governance and financial control. Now we have governments with hundreds of departments, councils, central banks, commercial banks, payment services, medical bodies, insurers, lenders, and many others. They form the bridge of trust for everything that we do or participate in.

The problem is, with this increasing complexity of centralisation, conflicts of interest, transparency, and accountability have become major issues. Not only that, but centralisation has become increasingly expensive for us, the public (now rightly called customers by government departments), and we are increasingly feeling the pinch.

We get the sense that it is uncoordinated and complex centralisation that has led to outrageous economic inequality, commercial interest at the expense of pristine and well-conserved environment, rampant corruption and abuse of power, tragic poor physical and mental health, and other unacceptable results that will be viewed in the future as a total failure of civilisation.

Decentralisation, especially on the blockchain, promises to cut out the middleman and their costs, cut down transaction times, eliminate censorship, improve transparency and thus accountability, and bring power and wealth-generating capacity back to the individual.

Web 3.0 will be part of the grand Decentralisation Project now being developed by thousands of brilliant visionaries, scientists, and software developers. It will be the Internet with websites on the front end as the user interface, and the blockchain on the back end as the engine. This engine will contain “smart contracts,” that is, algorithmic software, that perform all the functions that are now being performed by central bodies. This includes financial, legal, commercial, and governance functions.

In Web 3.0, ownership will be decentralised and individuals can assert their ownership of intellectual property (copyright, patents, publishing rights), physical property (land, cars, any tangible good), money (cryptocurrencies), and personal private data. This will be done through tokenisation, that is, registering something as a token on the blockchain.

A good example of tokenisation is non-fungible tokens (NFTs). An NFT allows anyone to assert ownership of art, music, collectibles, photos, videos, game objects, governance rights, credentials, access passes and event tickets, and whatever else people will think of. Instead of earning a pittance (e.g. $0.00437 per stream on a well-known music platform, or 3% for published authors) for their hard and creative work, creatives can now earn real incomes—and continue to earn substantial lifetime royalties when the NFTs are onsold. NFTs are now being created to raise funds for charities, to save endangered species, and to protect vital rainforests. Our imagination is the limit.

Speaking of imagination, metaverses will bring parallel lifestyles and workstyles, in ways that are creatively unbounded. Whole nations of people have jumped on board—in some developing countries with few “offline” opportunities, people are earning full time incomes in play-to-earn gaming and trading in metaverses. Hopefully, with their new-found wealth, they will re-emerge and participate in rebuilding their societies and environments that have been economically destroyed by corruption and neo-colonial exploitation.

Decentralisation, especially on the blockchain, promises to cut out the middleman and their costs, cut down transaction times, eliminate censorship, improve transparency and thus accountability, and bring power and wealth-generating capacity back to the individual.

Web 3.0 will also bring new ways of governance, whether it is deciding on community projects, council expenditure, or, eventually, nation-state government agendas and priorities. This will be in the form of decentralised autonomous organisations (DAOs), where token holders can vote on the blockchain. This is already taking place on a fast-growing number of DeFi projects. Of course, there will be huge institutional resistance to such changes, and people will need to educate themselves and start taking responsibility as power is devolved to them. Ultimately, I believe there will be a balance of centralisation and leadership, and decentralisation and democratic participation.

DAOs will also offer the opportunity for people to work on various projects while being paid in crypto. They can choose to work wherever they are, when they want, using the skills, knowledge and creativity that are unique to them. There will be no CVs, interviews, gatekeepers, bosses, etc. You just join whatever project resonates with you. DAOs can do away with hierarchical organisations and careers fixed to location, roles, and work times.

Will Web 3.0 give us ultimate freedom as promised by the blockchain? Will it democratise wealth and do away with people needing to work at 9-to-5 jobs that don’t fulfil them, and keep them trapped in the “living from paycheck to paycheck” loop? Will it disempower, and maybe finally dismantle, the institutions and so-called “elites,” and finally bring coordination, efficiency, accountability and benevolence to the financial system and government? Web 3.0, metaverses and DAOs are social experiments that could bring out the best in humanity. Or could they go badly wrong, as in novels such as The Lord of the Flies? Can Greed and Fear still prevail, in spite of the offer of participation and wealth for everyone?

Are we prepared for Web 3.0?

Photo by Randy Fath on Unsplash