Everyone can still rise with the tide of Web3

In 2022, many cryptocurrency skeptics eagerly believed that the collapse of FTX was akin to the Lehman Brothers event for the industry. However, nothing could be further from the truth. While the details leading to the collapse continue to emerge with ongoing court litigation, it seems clear that this disaster was not caused by cryptocurrency.

If anything, the real reasons for the bankruptcy of this centralized exchange were traditional business flaws, including fraud, commingling of funds, and investor deception. This also reminds us of the fundamental value proposition of decentralized finance and the new ecosystem that is steadily being established—Web3.

In the early days of the internet, enthusiasts shared a consensus: this would be a revolutionary new technology. The internet was destined to change the way we communicate, work, and even play. This utopian vision has largely been realized. However, as our dependence on the web has increased, we have also become accustomed to some of its less ideal aspects, from data breaches to election interference; the internet is not the safe haven we imagined. But what if there were a way to start over? What if we could build a new version of the internet that is secure, decentralized, and democratized, where people can monetize their data, produce content, and even the time spent online, rather than being owned by a few tech monopolists?

This is the daydream of Web3, but what does it take to make it a reality?

Global macroeconomic trends are converging toward a turning point. In other words, something must be done. Currently, over-leveraged debt, sharply rising inflation, insecure supply chains, and the concentration of data and economic value generated by global internet users are all unsustainable environments.

The world certainly needs a "great reset," but it must return power to ordinary citizens. Web3 is about creating new sources of value and alternative ways to generate and store that value.

Simply put, Web3 is the third generation of the internet, built on the idea that the internet should be a decentralized network of computers rather than a centralized one. This means fewer single points of failure and fewer central authorities and intermediaries controlling the flow of information or economic value.

This should not be confused with the metaverse, which refers to a parallel world based on virtual reality. Web3 focuses on blockchain technology and the new infrastructure built on it, including digital identities, smart contracts, and decentralized applications (dApps).

Web2.0 is a centralized and non-interoperable network, while Web3.0 is the opposite: decentralized and interoperable. The main goal of Web3 is to establish a new ownership system and even lay the groundwork for a new financial system. This can be achieved through NFTs (non-fungible tokens), which can represent products or services and be bought and sold using cryptocurrency on the blockchain that constitutes the Web3 infrastructure.

According to Grand View Research, the global Web3.0 blockchain market was valued at $1.36 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 44.9% from 2022 to 2030, representing a projected revenue of $33.53 billion by the end of the decade.

So, what is wrong with Web2, or in other words, what problems will Web3 solve? Jaron Lanier coined the term "siren servers" in his book "Who Owns the Future" to describe the centralized data collection that characterizes much of Web2's structure.

Lanier argues that the problem of ordinary internet users being deprived of their rights in the online economy is becoming increasingly severe. By persuading users to provide valuable information in exchange for free services, companies can accumulate vast amounts of data at almost no cost. These companies are referred to as "siren servers," alluding to the sirens of Ulysses. Siren servers do not pay each participant and data contributor but instead concentrate wealth in the hands of a few who control the data centers.

These data centers not only extract value from individuals but also concentrate control over previously competitive industries, such as advertising, in the hands of one or two companies, including Meta (formerly Facebook) and Google, undermining some key democratic search engines, such as free media reliant on advertising revenue.

The potential applications of Web3 thinking go far beyond simply addressing the monopoly issues of Web2. Blockchain and digital assets drive the establishment of community-centered economic incentive mechanisms. This represents a significant shift from previous technological advancements, as developers and content providers will be able to benefit directly from the consumption of their products. In the world of Web3, stakeholders will also be more directly involved in the governance of the underlying products and networks.

Over time, this integration could even extend to traditional industries, where the use of blockchain technology could enable fractional ownership of previously illiquid assets, such as real estate.

However, this revolution will not happen overnight. People may live in a hybrid world of Web2 and Web3 for some time. Many companies currently operating in the Web2 world with just a website or application will gradually begin to migrate their digital identities to Web3.

By definition, cryptocurrency exchanges will be early adopters of Web3 technology. Given that the assets traded on exchanges are essentially Web3 tokens, exchanges can even be seen as gateways for Web2 players to enter the Web3 space.

However, it would be complacent to think that Web3 will only bring solutions without its own problems. As Web3 will drive a whole new economic incentive model, it will inevitably raise new ethical issues and moral hazards.

The lack of centralized oversight or clarity in regulation of Web3 will inevitably raise concerns about privacy and data breaches, copyright infringement of NFTs, ICO scams, and theft.

New problems always arise with the wave of technological advancement, but this should not deter the exploration of how to push development to new heights. The decentralized world of Web3 is coming toward us.