Da Hongfei: Outlook on the Development of Web 3.0 in China

Author: Da Hongfei, Onchain Technology

Recently, discussions about Web3.0 in China have been increasing, with participants including regulatory agencies, internet companies, the blockchain industry, and the entertainment sector. Various parties have engaged in in-depth discussions regarding the possible forms, development trends, and business models of Web3.0 in China.

In this article, I will outline some ideas regarding the development of Web3.0 in China.

Service/Benefit Binding Based on ID Numbers

During this year's Two Sessions, Premier Li Keqiang mentioned in response to a reporter's question that "an important task for 2022 is to digitize ID cards." The specific technology to be used is unknown, but considering the current usage of resident ID cards in various scenarios and the integration of residents' rights in the government service system, blockchain technology may be applied in the development process of resident ID cards. The coding rules of ID numbers determine their uniqueness, and the ID number serves as the only proof of an individual in the government service system. In recent years, with the improvement of the electronic level of government services, the past reliance on fake ID cards to conduct business has become history.

The pandemic has also accelerated the integration of identity information, medical information, and public service information. Currently, in some regions, "health codes" have begun to integrate information. For example, the epidemic prevention health code in Shanghai—"Suishen Code"—has integrated medical insurance and transportation, and in the future, it may also integrate social security, employment, academic records, and other information, becoming a one-code solution for residents' commonly used government services.

If such an idea can be realized, then the ID code will become an important information integration for ordinary residents in various basic activities in the economic society. Coupled with the high-frequency usage of daily life scenarios, such as e-commerce and logistics, relying solely on traditional centralized storage methods with multiple backups is increasingly unable to meet security needs. Solutions based on blockchain technology for accounting and distributed storage have greater advantages in such environments.

Traces and Identities in the Virtual World

In the current mainstream discussions of Web3.0, there is an emphasis on the ownership of assets by users in virtual spaces, the no-entry-threshold characteristics of decentralized applications, and the open-source nature of projects.

I previously mentioned the concept of "manageable blockchain" in my article "On the Manageability of Blockchain," which can meet regulatory requirements while also realizing the main characteristics of current Web3.0. Moreover, in the context where the DAO (decentralized autonomous organization) mechanism is not yet mature and the application scope of DAO organizational structures is still unexplored, manageable blockchain provides a channel for enterprises organized under the "corporate system" to enter Web3.0, achieving information disclosure and user rights freedom.

In the Web2.0 era, taking the gaming industry as an example, once a game company shuts down a game, users' virtual assets in the game cannot be preserved. With manageable blockchain, game companies can fully deploy games on the blockchain, ensuring that even if the game company can no longer operate in the future, users' assets on the chain will not be affected by the company's bankruptcy, thus protecting user rights.

Manageable blockchain can also avoid some issues that have arisen in the blockchain industry in the past, allowing for timely intervention in potential industry problems and targeted regulation. Especially at this stage, where user data is stored in centralized internet companies, determining the cross-risk of these companies' businesses has always been a challenge for regulators. In recent years, whether in traditional finance or the internet industry, regulatory agencies have emphasized "risk isolation." Although the intention is good, it has also lost some possibilities for new business models to emerge. In blockchain-based Web3.0, the data on the chain is more transparent and public, and user data is not stored within the company, which is convenient for regulation.

From this perspective, Web3.0 should not only embody the important attributes of user rights ownership and anti-monopoly but also possess regulatory-friendly characteristics, thus achieving harmonious coexistence among users, enterprises/organizations, and regulators.

Digital Collectibles as a Link to the Real Economy

In the current crypto-native community, we rarely see projects that connect NFTs (digital collectibles) with the real economy. However, BAYC (Bored Ape Yacht Club) has made a good start: after the merger of Cryptopunks and Meebits, users holding related NFTs can purchase BAYC merchandise, including clothing and hats. This is essentially a form of "membership," where holding a related avatar NFT serves as proof of membership.

Compared to overseas projects that focus more on exploring circulation mechanisms, domestic digital collectible projects are more actively exploring "membership" or "rights": not only can users have rights to purchase certain physical assets, but they can also participate in offline activities, movie screenings, and many different mechanisms, making it relatively richer and more interesting.

From this perspective, the term "digital collectibles" may not be appropriate, as its intrinsic value and the rights it encompasses may exceed our imagination. Practitioners both domestically and internationally have made relevant theoretical innovations:

• Treating tickets as digital collectibles, where subsequent concert/sports memorabilia can only be purchased by those holding ticket digital collectibles, and they may also enjoy membership discounts;
• Turning certain virtual assets in games, such as clothing and weapons, into digital collectibles, where holding these digital collectibles can unlock specific game segments, scenes, etc.;
• Holding digital collectibles of TV shows/movies can allow participation in premieres, fan meet-and-greets, and more activities.

Digital collectibles can also enable precise marketing for enterprises. Whether for the initial issuers of a single series of digital collectibles or new entrepreneurial teams entering the market, they can implement targeted marketing strategies through digital collectibles. For example, users holding a certain type of digital collectible may have very similar preferences in movie watching. New movie distributors of this type can offer relevant benefits to users holding that type of digital collectible, such as giving away movie merchandise, discount vouchers for movie tickets, etc. These measures reduce the marketing costs for distributors and avoid the current strategy of marketing through relatively vague classification methods like "keyword searches."

China's Web3.0 Vision

As early as over a decade ago, discussions about "what is Web3.0" had already begun, with internet giants like Bill Gates providing their visions. Currently, the connotation of Web3.0 and the problems it aims to solve have changed. Even for the same issue, it can have different meanings at different stages of the internet. The varying stages of internet development in different countries may also lead to different problems that need to be addressed in future Web3.0.

With the binding of real identities, virtual world connections, and rights binding based on digital collectibles, China's Web3.0 may look like the following image:

Image from Onchain Technology

Since digital collectibles can empower traditional commerce, virtual identities in Web3.0 can be partially bound to personal ID information. Moreover, blockchain-based Web3.0 can allow users to grant different levels of authorization for different applications, thereby autonomously protecting personal privacy.

The transition from the Web1.0 era to the Web2.0 era not only accelerated the virtualization of the economic society but also resulted in a profound integration with the real economy. In the future, if blockchain-based Web3.0 becomes mainstream, it will still need to retain the characteristic of "serving the real economy."