The Rise of Web3: Drivers and Inhibitors
By Chuy Cepeda
The world wide web has come a long way since its inception, but it's still not perfect. Today's web is centralized, monopolized, and fraught with privacy and security issues. That's where Web3 comes in – a new decentralized web that aims to change the game by enabling secure and transparent digital interactions without the need for intermediaries.
However, as with any new technology, Web3 faces both drivers and inhibitors that can either accelerate or slow down its adoption. Let's take a closer look at some of the key drivers and inhibitors of Web3.
Core value proposition still at theoretical stage: The core value proposition of Web3 is still largely theoretical and hasn't yet been fully realized in real-world use cases. While there are some successful examples of decentralized applications, they are still relatively niche and not yet widely adopted. In order for Web3 to gain mainstream adoption, there needs to be more successful examples of Web3 applications and platforms that can demonstrate the benefits of decentralization in a tangible way.
User experience and new user responsibilities are not easy: One of the biggest challenges of Web3 is its user experience. Unlike Web2 applications, which are designed to be user-friendly and accessible, Web3 applications require users to manage their own digital identities, wallets, and private keys. This can be a daunting task for many users, particularly those who are not tech-savvy. Additionally, the user experience of Web3 applications is still not as seamless as that of Web2 applications, making it more difficult for non-technical users to adopt them.
Inconsistent jurisdictional clarity: The decentralized nature of Web3 makes it difficult to regulate and enforce jurisdictional rules. This lack of clarity and inconsistency can create confusion for users and regulators alike, leading to a reluctance to adopt Web3. This is particularly true for financial or identity applications, which may require compliance with different regulatory regimes in different jurisdictions.
Mainstream use cases bringing bad press: Some of the most prominent use cases of Web3, such as cryptocurrencies and metaverse, have been associated with volatility, speculation, and negative press. For example, the high volatility of cryptocurrencies like Bitcoin and Ethereum has led some to view them as speculative assets rather than legitimate currencies. Similarly, the rise of NFTs and virtual real estate in the metaverse has led to concerns about digital asset bubbles and the impact on real-world resources.
BigTech's dominance to discourage decentralized paradigms: Finally, BigTech companies may resist the shift to Web3 as it challenges their centralized business models. Companies like Google and Facebook have built their empires on centralized data collection and monetization. Decentralization threatens to disrupt these business models, which could lead to resistance.
By addressing these inhibitors, we can work towards the meaningful mainstream adoption of the Web3 that benefits everyone. Regaining digital trust is fundamental, if enough of us lose trust in online services, large parts of the estimated $20.8 trillion global digital economy, and therefore society, may start to break down.
But let's take a look at what's driving the Web3.
Erosion of Privacy / Surveillance Capitalism: One of the key drivers of Web3 is the erosion of privacy and the rise of surveillance capitalism. Over the past few years, there has been growing concern about the amount of personal data that is collected, stored, and monetized by tech companies. This trend is only set to accelerate with the rise of AI, which will only increase the need for more data and further enhance our addiction and dependence on these products (and observe highest rates of depression of our youngest). Web3 offers a more private and decentralized alternative, where users can control their own data and choose who has access to it.
Erosion of Democracy / Government Surveillance: Another driver of Web3 is the erosion of democracy and the rise of government surveillance. Governments around the world are increasingly using technology to monitor and control their citizens, leading to a decline in trust in traditional institutions. Moreover, there is increasing concern about the role of tech companies in shaping public opinion and the impact this has on democracy. Web3 offers a more decentralized alternative, where individuals have greater control over their online interactions and the ability to participate in decentralized decision-making processes.
Erosion of Economies: The current economic systems are riddled with inflation and trust issues, and Web3 provides an opportunity to build a new digital economy that is more transparent, efficient, and equitable. Inflation and currency devaluation have eroded the value of traditional currencies and led to the search for alternative stores of value. Web3 offers a decentralized, trustless alternative to traditional currencies that is not subject to the same inflationary pressures as fiat currencies.
Governments being decreasingly able to meet people’s needs: There is increasing frustration with the slow pace of government bureaucracy and the lack of responsiveness to citizens’ needs. Traditional government services are often slow, bureaucratic, and ineffective; mismatching people's expectations. Web3 offers a decentralized alternative to traditional government services, where citizens can participate in decision-making processes, take control of their own data and help institutions to regain interoperability, efficiency and trust.
Business of Self-Sovereign Identity: Web3's promise of secure and decentralized digital identity can unleash a trillion dollar economy by creating new revenue streams and cost savings, while also addressing the trust deficit in today's online world. The absence of trust online costs our global economy billions of dollars in data verification services, IAM, security, fraud, privacy compliance, risk reduction, identity thefts, up-to-date consumer data, centralized data honeypots, cybercrime, biometric data on cloud... Web3 offers a more secure and decentralized alternative to traditional identity verification processes, where individuals have control over their own data and can choose who has access to it.
The drivers of Web3 are rooted in the erosion of trust and the need for a more decentralized, secure, and private internet. By addressing these drivers, we can help for the Web3 to flourish. This is to reduce bureaucracy, create more secure data environments and allow for a new digital economy that could bring higher incomes for everyone not only for private citizens, but also for governments to have a greater capacity to serve.
In conclusion, Web3 represents a promising future for the internet, but its adoption faces both opportunities and challenges. By addressing the inhibitors and leveraging the drivers, we can collectively work towards creating a more equitable, decentralized, and secure digital world.