It’s great to be back from the holidays — wishing you all a very Happy New Year!
As per usual, I spent some time during my break thinking about what new ideas and trends 2022 will bring to the world of commerce. And I regret to inform you that I think the discourse around innovation in this space will largely centre around Web3 (also known as Web 3.0). I use the word “regret” because if you’re already plugged into the world of tech, you’ll know that this is the only topic we seem to be hearing people talk about lately! And I’m not sure yet if it’s for the better or for the worst. So forgive me for belabouring the point and contributing to the “pamping” of it all. Certainly not my intention 🙂
The term Web3 reflects a collection of ideas that aim to decentralize the World Wide Web through the use of blockchain technology. The ways in which Web3 is currently defined and explained relies heavily on it being contrasted to previous versions of the Internet (which are colloquially known as Web1 and Web2). As stated by prominent tech entrepreneur Moxie Marlinspike, “the general thesis seems to be that Web1 was decentralized, Web2 centralized everything into platforms [by Big Tech], and that Web3 will decentralize everything again. Web3 should give us the richness of Web2, but decentralized.”
But what does decentralization mean exactly, and how does it manifest in Web3 more precisely? Here are some individual concepts that capture the spirit of the idea under a few different contexts (as defined by Wikipedia):
- Cryptocurrencies: Creating and issuing currencies that do not exist in physical form (like paper money), are typically not issued by a central authority, and that use decentralized control.
- Non-fungible tokens (NFTs): Using digital ledgers to provide a public certificate of authenticity or proof of ownership without restricting the sharing or copying of the underlying digital files. The lack of interchangeability (fungibility) distinguishes NFTs from blockchain cryptocurrencies.
- Decentralized autonomous organizations (DAOs): Creating organizations represented by rules encoded as a computer program that are transparent, controlled by the organization members, and not influenced by a central government.
- Decentralized finance (DeFi): Offering users the ability to exchange currencies and financial instruments without relying on intermediaries such as brokerages, exchanges, or banks.
- Self-sovereign identity: Allowing users to gain control of their digital identify and letting them identify themselves without relying on an authentication system such as OAuth, in which a trusted party has to be reached in order to assess identity.
I really like how Olga Kharif of Bloomberg culminates many of these concepts listed above in a recent article to describe Web3 as this “idea that builds financial assets – in the form of tokens – into the inner workings of almost anything you do online. And by doing so, Web3 could supplant corporations with decentralized, internet-based organizations governed by software protocols and the votes of independently authenticated token holders.”
We have the co-founder of Ethereum, Gavin Wood, to thank for originally coming up with the term “Web3”. He wrote a manifesto in September 2018 which touted the necessity and benefits of this new web framework. He also referenced plenty of egalitarian principles to drive his points home. Since that piece was published, more established companies and people are dabbling in cryptocurrencies and blockchain technology, more founders are launching startups in the space, and more venture capital funds are using their money to keep the collective speculation going. Which leads us to the point at which we are today – Web3 mania.
But it’s too early for me to believe in Web3’s ability to remain truly immune from some sort of centralization over time. After all, is true decentralization even systemically possible under a capitalist economic system? I really like how the author of a blog called Dhole Moments explores the answer to this question in a recent post. In it, he fundamentally suggests that centralization is inevitable under capitalism, and that Web3 is representative of fake decentralization by way of certain people’s information and resource advantage in this new medium – which eventually compounds and allows them to have more control over the entire system and the capital flowing within it.
There are also compelling thoughts shared by other experts – who are far more technologically savvy than I – which suggest that the Web3 framework as it’s being built today is technically immune to developing true decentralized characteristics. I won’t try to summarize their arguments here as to not take away from the nuances of the premises that precede them. Instead, I’ll link to their think pieces below and would encourage you to read through them yourself:
- The Web3 Fraud | Nicholas Weaver
- My first impressions of web3 | Moxie Marlinspike
Regardless of your opinions on the potential usefulness of Web3, its ability to represent a truly decentralized version of the web, or its ability to change the world for the better and solve societal problems, one thing is certain – people are excited enough by the possibilities to be talking about it.
Of particular interest to me – naturally – is how this new framework may potentially disrupt the nature of how we buy and sell products, services, and experiences online. Here are two great articles from Fast Company and Wired, respectively, that explore this question in more detail:
- FC: How ‘Web3’ could evolve from a trendy buzzword to a better internet
- W: From E-Commerce to Web 3.0: Let the Bots Do the Shopping
Probably not a bad idea to experiment and dream in this space as a merchant or a brand — to the extent your budget allows. Some of the biggest companies already are — from Nike to LVMH. But the key is to keep an open mind as everything is in a state of flux and subject to change as technical capabilities, consumer sentiments, and the regulatory environment all continue to evolve.
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