Crypto and NFT dominate the headlines, but Smart Money bets on Web3 – The New Stack

Talk abounds today that the promise of Web3 has failed, is failing or will eventually fail.

Opponents point to events like Crypto Monday, which CNBC’s Jim Cramer called June 13, when the world’s two largest cryptocurrencies, bitcoin and ether, plunged in value. Others identify non-fungible tokens (NFTs) as mere fads, failing to deliver on their promise of securing ownership of unique digital assets.

This is foolishness.

Web3 follows the same arc as the internet’s previous iterations: massive capital investment combined with bold attempts to meet intricate technical challenges. As in the Internet’s two previous incarnations, early Web3 companies and products predictably stumble over usability and security issues that illustrate just how new and immature this frontier really is.

These phenomena are expected with Web3 still in its infancy.

People forget the technological challenges that characterize today’s internet in its infancy. Modems in the late 1990s and early 2000s attached to personal and business phone lines caused connection delays that sometimes exceeded a full minute. Latency spanned many seconds while waiting for a search to return results and when navigating to a new web page.

Today, we categorize “Web3 companies” in a flash. But it is important to reflect on past “internet companies” – many of which failed. Nevertheless, some prevailed and now lead their respective industries. The Internet has become so intertwined with daily life that it would be absurd to ask an entrepreneur if his business is an “Internet company.” All companies are internet companies today. All people are internet users.

The concept of a hyperlinked URL or a pop-up thumbnail that could be shared on social media existed only in the minds of technologists. Today, billions of people worldwide use both internet functions daily.

Web3’s current limitations are real. It will take time for the underlying infrastructure to mature. Twenty years from now, modern debates surrounding Web3’s technical viability will be a distant memory. A decentralized internet, democratic access to information, self-sovereign identity combined with trust and interoperability will be commonplace.

This is not to say that all things should be decentralized. Absolutely not. A hospital’s database should and will remain centralized. Best practices require that many datasets be maintained by a central authority to protect national security, privacy and public safety. A mature Web3 world will support a seamless hybrid environment of decentralized and centralized data. It should be and will be both.

Web3: The decentralized circulation system of the new Internet

One way to think about today’s internet is to think of all apps as individuals, data as those people’s blood, and a database as its heart. That database, that heart, is the critical component, the foundation upon which trust is built. With Web3, we don’t build a heart. Instead, we build a network of capillaries, veins and arteries in the form of decentralized databases to share blood. At this embryonic stage, we are still working towards achieving the technological sophistication of a system of decentralized databases.

Web3 forgoes the many free technological platforms internet users now use to maneuver around the internet. People develop from being customers and simple users to active participants and shareholders in the Internet’s protocol management and operation. It is possible because of blockchains, or decentralized networks. A computer network’s nodes enable the sharing of a distributed database that makes up a blockchain. Cryptography connects blocks of data that make up a blockchain. No entity, be it a person or company, controls the data. The collective does. And once data becomes part of the blockchain, it is permanent, visible to everyone.

Power to the people: Individually owned data

Today, third-party apps are brokers of a significant amount of data – acting as a link between companies and individuals. Eventually, however, today’s internet paradigm will reverse. Web3 will put data and the ability to provide access to data in the hands of the individuals who own that data. This will eliminate the need for third parties to control and mediate this data and give individuals autonomy over their personal information.

Companies like California-headquartered Fabric, a marketplace for consumer data, remove the “middleman” from the exchange of advertising data found on today’s Internet. These types of businesses eliminate current primary players in advertising, including Google and Facebook. Consumers choose which data they want to share with advertisers. They control this data.

At a more basic level, Web3 will empower individuals to disclose the relevant data relevant to a given situation. A person seeking to obtain medication at the pharmacy will be able to prove through verified identification that he or she is the person for whom the doctor wrote the prescription without revealing data that is irrelevant to the interaction, such as a social security number. Advances in technology will also eliminate the need for usernames and passwords to prove that a person is a corporate employee to access an organization’s network or everyday software applications such as one’s Netflix account.

This new world will renew multitudes of interactions. For example, verifiable credentials open up new avenues in education. Students can demonstrably acquire the necessary skills through specific training programs, which provide an alternative path to securing credentials needed for a job outside of a four-year institution of higher education. Those graduating with degrees will have digital, verified transcripts they can share when needed — erasing the cost and time of requesting them through one’s alma mater. Both job candidates and employers will benefit from proven ways to match skills with competencies required for a given position. People want to control their own health records, and have the ability to carry these records digitally.

Social challenges can also be overcome. Voting results, for example, will be available immediately, while making electoral fraud impossible due to cryptography. Voter metadata must be maintained to ensure that deceased voter names are removed from voter rolls. Whether people believe election results is another story, but it is possible to ensure manipulation-proof results. The technology is already here.

Beyond the technical know-how, the public and business community will need to see and understand the benefits a Web3 world will offer to secure the capital investment to make this evolving Web3 framework infrastructure a ubiquitous reality. When the value proposition becomes obvious, Web3 will take off.

Feature image via Shutterstock.