Business And Technology In Web 3.0: How To Live With It

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Stepan Sergeev   Brand Contributor

Business And Technology In Web 3.0: How To Live With It

What do 5G, DJ Marshmello, NFTs, a Gucci boutique, and artificial intelligence have in common? And what of the fact that the future of the Internet is being formed before our eyes from this complex combination of technologies, concepts, and various interests?

Market Research Future predicts exponential growth for the Web 3.0 market by 2030. For now, it is difficult to express this dynamic in specific numbers simply because industry experts have not yet come to a consensus on exactly which technology and business ideas should be taken into account. However, we can already take a look at the general outline of the third generation of the Internet.

Many publications devoted to the evolution of the Internet in the context of Web 3.0 start off with the story of how hunter-gatherers plowed the African savanna. We won't take the "historian" approach. Instead, we'll give a broad outline of each generation.

Thirty years ago, Web 1.0 was built around sites where users could find the information they needed. The transition to the second generation took place when the process of visiting the Internet became interactive. In addition to reading content, users got the opportunity to fill the Internet with their own content. This huge breakthrough that gave us social media is what is usually called Web 2.0. In fact, we are currently living in it.

Why We Need Web 3.0

As the Internet's capabilities expanded over the past 15 years, some less-than-appealing features have begun to multiply in it. One example is hypercentralization, which has led to the fact that the Internet is essentially controlled by only a few multinational corporations. We can also observe platforms' full control over user data, including personal data. The social media network now knows more about you than your family members do, and a platform like Facebook doesn't hesitate to make money off this knowledge.

Many advertising companies buy and accumulate information about different audiences. The use of this data is by no means limited to targeting us with suitable ad banners. Cambridge Analytica serves as a great proof of this. The growing polarization of communities around the world in recent years is largely due to such technologies.

Hypercentralization is the practice of commercial use of personal data, overarching manipulation of public opinion, and the ability to disable entire segments of the Internet. However, this is not an exhaustive description of the situation in which we find ourselves due to Web 2.0.

Proponents of the transition to third-generation technologies are confident that Web 3.0 will solve these and many other problems while simultaneously turning the Internet into a democratic and user-friendly environment that will be controlled exclusively by the community itself.

Here are a few of the principles that underlie Web 3.0:

  • The complete decentralization of information storage and transmission systems based on blockchain technologies
  • The absence of a single control center due to the introduction of consensus via Byzantine fault tolerance

  • Building the Internet based on the principles of a "semantic web", which makes it understandable and transparent for artificial intelligence-based (AI) systems
  • Widespread adoption of AI and machine learning technologies
  • Net neutrality
  • Bottom-up design, i.e., open and completely transparent development of code under the public's control 

How Decentralization Can Help Us

Decentralizing the Internet, i.e., turning it into a peer-to-peer network, will allow users to interact with each other directly, bypassing a 'central node' that would require authorization and could collect sensitive data. In fact, the idea here is about creating a structure in which censorship is technologically impossible, and there is also no 'switch' that would allow any individual or organization to prevent the network as a whole or in individual segments from operating.

Important properties of blockchain-based decentralization are the anonymity and complete transparency of all operations. Users of existing blockchain platforms have already come to appreciate these qualities.

Information storage will be more reliable in distributed peer-to-peer networks since such a system implies the simultaneous existence of several copies of data physically located in different places. This will entail fundamental changes to search algorithms. At the same time, the privacy of information will be enhanced because it will be encrypted and distributed.

A New User Experience

Web 3.0 doesn't come alone. The influence of the third-generation Internet on the user experience must also be evaluated in the context of other technologies that are developing dynamically at the moment; to wit, 5G communication networks, which will provide total coverage to populated areas with a signal powered by a previously unattainable bandwidth. 5G networks will help ensure that Web 3.0 functions correctly and without delays.

Another important milestone will be the widespread use of AI-based systems. Ideally, the "semantic web" focused on the machine understanding of information won't give you dozens of results pages for a search query but rather the most accurate link to the necessary information. At the same time, this will help AI learn based on the entire amount of available information instead of filtered data sets.

The absence of a single control center, however, does not mean that the Internet will be filled with prohibited, unethical, or false information. It means that the entire Web 3.0 audience can decide to delete such data via a simple vote, as opposed to the decision being made by an individual structure that has reserved itself the right to divide data into 'good' and 'bad' data.

Finally, in Web 3.0, it will be much more difficult to create a 'fake identity' since each user (or rather, their identifier) will have an immutable activity history stored in a distributed ledger.

The Economy of the New World

If we speak about which sphere of human activity is more prepared than others for the complete dissemination of Web 3.0, this would be the economy, as strange as it may seem. The digital assets that have been developing over the past 10 years — and which have come a long way from Bitcoin to NFTs — perfectly fit the declared principles of the third-generation Internet.

Cryptocurrencies are inherently decentralized. They are anonymous and do not require trust between the participants in transactions. Numerous blockchains are already solving a variety of economic problems. Decentralized finance (DeFi) platforms make it possible to receive loans or lend funds and to earn by supporting exchanges' liquidity. What's more, all calculations are performed automatically based on transparent smart contracts. The market of blockchain-based decentralized applications (DApps) is also developing. The DApps are thus far simple but clearly moving towards Web 3.0.

Non-fungible tokens (NFTs) are essentially ready to become the underpinning of the copyright of the future, where the creator of any content will receive their royalty without any intermediaries simply from the audience showing interest in the author's creation. And all this will be of great use to us when we enter the uncharted territory of metaverses.

The Road to the Metaverse

In its December report, Goldman Sachs recognized the metaverse as an important part of the now emerging Web 3.0. According to the investment bank, the metaverse will become the main source of the virtual and immersive user experience, a place for creating online communities, and the environs of the creative economy.

Virtual spaces are becoming more popular around the world, as is the adoption of this type of media content consumption. After all, what is the value of DJ Marshmello's Fortnite concert alone, an event attended by 11 million players and watched by 27 million YouTube users?

The Roblox platform is also doing great, welcoming 49.5 million users every day, a number that is expected to grow to 78 million by 2024. The game's economy is based on the sale of virtual items, including digital avatars: 20% of users change them daily, which is already attracting mainstream businesses. The Gucci brand fairly recently opened a virtual boutique on the platform, giving visitors the opportunity to 'try on' a whole collection of skins on their characters.

Meta (an organization deemed extremist and banned on the territory of the Russian Federation), Sony, Sandbox, Cryptovoxels, Decentraland, and many other organizations are making serious efforts to build metauniverses. The latter, by the way, looks like one of the most promising since it was originally conceived as a decentralized project.

Why is this important? The aforementioned Goldman Sachs report points out one of the main problems with today's experimental virtual spaces: almost all of them are "walled gardens". They are isolated from each other and in competition for the audience's fixated attention. Here, that very same Decentraland, where one can already go and don a branded NFT cap from the Binance cryptocurrency exchange or an NFT jacket from Coca-Cola, looks fundamentally more similar to what the as yet disparate metauniverses should come to be like.

 

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Stepan Sergeev   Contributor