Web3... It's time, I think?
In the invention, exploration, and exponential growth of technologies around me, I have always encountered several ‘aha’ moments: the first when I learn that it exists (think about the days when you first heard about Artificial Intelligence); the second when I learn why it’s important; the third when it becomes a buzzword (think how every company became an AI company); and then when the use-cases become apparent, ground-breaking, and inevitable – all at once.
With web3, we are there: it is apparent, ground-breaking, and inevitable (I think – since in this super-fast moving space, nothing is ever certain). Here are my learnings and reflections:
- web3 is to value what the web1 was to information: web3 is not just a store of value, but also enables the democratization of access to value, just as web1 democratized access to information. The game-changer here is that web3 can be a store of tangible value (for example, smart contracts enabling real estate transactions) as well as intangible value (for example music NFTs) and enable monetization of viewership and social media reach more easily and practically.
- Eliminating intermediaries: web3 is an infrastructure, not a transient application. While web1 was about consuming content and web2 features consumer-generated content centralized on platforms like Facebook and Google, web3 is where the internet is decentralized. Big tech is no longer the sole custodian of our data. That data rests on blockchain technology that is controlled and hosted collectively by users (for example crypto banks). Put differently, apps built on blockchain allow users to participate, transact and create without the need for an intermediary as in web2. In the world of millennials, gen-zs, and disenchanted gen-xers, the fact that this is possible makes it necessary.
- Data privacy: Additionally, web3 provides the promise of returning data rights (and digital footprints) back to the user. Far from the centralized servers where a handful of companies have full access to all your data, and then monetize it, web3 promises that your data belongs to you, as does the ultimate right (and ability) to monetize it. This becomes increasingly important as dApps in the financial and healthcare space continue to proliferate on the platform.
- Demographic tipping point: In a few years, the blockchain (est. 2008) will have been around longer than the average new ‘coder’: a 16 year old. This is often cited as the tipping point when companies will no longer be built on web2 infrastructure, but immediately onto web3. I personally expect this to happen sooner, as we are seeing in our growing web3 pipeline of companies. Equivalent to how AI became the quintessential feature for modern-day tech platforms, “built on web3” will be the expectation of tomorrow’s consumers and investors (for example smart contracts’ proliferation).
- Leapfrogging in emerging markets: In many emerging markets, web2 is yet to reach comparable levels of adoption and with the rapid advent of web3, they won’t have to. Just as some countries (particularly in Eastern Europe) jumped ahead to web2 and bypassed web1 becoming centers of excellence for web2, we are already seeing countries in the region transitioning right into blockchain infrastructure. Estonia, for example, never found use for cheque books and landline phones, skipping right to cell phones and digital cards. The transition to web2 was seamless because they were never obstructed by sticky legacy technology. In a similar vein, in some parts of Africa, we are seeing early signs of a leapfrog to web3. In the past two years, Kenya has established itself as one of the world’s leaders in the digital currency space, ranking as the global leader in peer-to-peer digital currency trading volume and in the top five for adoption for two consecutive years. We are seeing similar trends in Uganda, Senegal, Venezuela, to name a few. The value of the global blockchain market is projected to reach $450 billion by 2028. Africa alone is expected to carry a 30% market share, growing from a $1.1 billion market in 2020 to a $135 billion market by 2028.
- Competition validates the market (and multi-chain interoperability): As new chains are created for different purposes and serving different needs, the industry has continued to improve its offerings of speed, efficiency, energy, ability to solve complex problems, and ease of use, from the increase in projects on varying protocols including ethereum, avalanche, hyperledger, quorum (and the list keeps growing). The competing chains illustrate the maturing of the industry, coupled with increased builder demand. The current race to solve for interoperability of chains will be essential for the long-term continued success of web3.
Adoption of web2 was gradual. Adoption of web3, on the other hand, is exponential. This new iteration of the internet is potentially an even more fundamental disruption, recreating entire industries from art to commerce, eliminating intermediaries and allowing people unprecedented control over different areas of their lives. One of these areas is work. Web3 is democratizing access to earning power and opportunities by enabling new, more sustainable, and lucrative ways of generating income. Play-to-earn (earning money through gaming) is rewarding users in amounts significantly larger than a traditional job. For example, in the Philippines, players are making double their base salary from participating in games – an unobtainable amount in the absence of web3.
Ultimately, what web2 has allowed in terms of access to information, web3 will create in terms of value for users. While it is too early to tell what a decentralized future will look like, the use cases are many and exciting. In 2010, we were talking about how software is eating the world. In 2022 and beyond, we hope to be talking about how blockchain is enabling and expanding the possibilities of human and machine interaction far beyond what we imagine today - into a world that democratizes education, value, opportunities for work and participation in a truly global economy.