Web3: Hype or happening?

By
Stephanie Warren, Content Director in Washington D.C.
Date:
30 August 2022
Photograph:

Is bitcoins fall a harbinger for web3? Or is there more to web3 than meets the eye?

How we got here: The evolution of the web

“Stay connected from coast to coast”


On a hot summer day in Dulles, Virginia in June of 1999, I walked through the doors of America Online to start my new job as a Program Manager in the Relationship Marketing department. These were the halcyon days of the early web, when simply being able to communicate via a computer with friends and strangers was mesmerizing.

There is a lot of talk about how the early web - some label this web1 - was the information economy. But in 1999 at AOL, it was about being connected. The big products were AOL Mail and AOL Instant Messenger. Many will say that AOL wasn’t the web - and they’re right.  But it was how people accessed it, and for most, that was the same thing.

Across the country that same June in a garage in Stanford was a small business named Google. Their interest in how backlinks could determine the importance of a site led them to focus on how to disseminate information better. They saw the information economy and its potential.

Meanwhile, at AOL, search just wasn’t sexy enough. The push was AOL Anywhere.

In 2002 - three years after I started - the big product launch was the AOL Mobile Communicator. It was basically a jacked-up Blackberry 950 with email & Instant Messenger on the go - part of the AOL Anywhere strategy. Again - for the C-suite at AOL in 2000 - it wasn’t about the information as much as the connection. 

“Stay connected from coast to coast!” the bright yellow box shouted.

AOL wanted a connection from coast to coast. Google wanted to make the connection richer, and more relevant. And more profitable.

Thus the information economy was born.  Google helped connect people to the sites that they wanted.  And in the process, they changed the way websites were architected and built.  They changed the way we use the web.  They made it functional. They made it relevant.

But that June very few people outside of that garage could have imagined that Google would be the dominant force on the web that it is today. Sometimes only the lucky ones can see the forest amongst the trees. 

Web2: Bring on the apps!

The rise of the Platform Economy

Once Google gave the Internet a purpose, the next big shift was the need for things to do. Thus was born the application. In 2008, there were about zero Google apps.  Currently, there are >3M.

These platforms and their applications changed the experience for all of us. Anyone was now able to participate in this new economy through companies such as Amazon, Etsy, Facebook, Google, and Uber. Sign up and start selling. Find anything you want in seconds.  Niche markets sprang up.  Everything is within reach!

But it came at a price.

For as much as critics loved to hate AOL’s closed system (lovingly referred to internally as “The Client”), there was only one password. That’s it.  Maybe you had a Yahoo account also - two passwords.  No longer.  The average person today has 100 passwords.

And that’s not the biggest problem with Web2. The bigger issue is that our data is all over the place. Netflix, Facebook, Apple, Google - and dozens upon dozens of others - have all your data. Most people don’t even know who has what, or how much, or what is done with it. And for many, it doesn’t matter until it does: one data breach and your identity can be compromised, potentially never fully restored.  

Low understanding. No control. The average person now really just relies on trust when using the web. They trust everyone they partner with is really on their side, so they click through the terms, sign up, and hope they can remember the password.

"If it was really dangerous, someone would do something, right?"


Introducing Your New Internet!

Web3 is a movement that promises “more.” But more what?

For most of us, Web3 equals Bitcoin and the metaverse. So let’s start there. Fundamental to the value add for both of these use cases is one very simple principle: a shared ledger.

That’s it.  That’s Web3. A shared ledger where everyone can see all the transactions - blocks - connected by a chain. The blockchain.

Imagine this: You are the organizer of a yearly raft trip with 20 friends from college. It’s the best week of your year, but getting it organized takes three-four times as much energy. You decide you will form a collective group - anyone who wants to go on the trip - to better track expenses, what everyone liked from last year, how much food was left over, etc.

You then create a Super Spreadsheetwith Fancy Macros whereby all 21 in this new network you call The ReMemberers will pay $500 to gain access. Once in, any transaction you make will be captured in a cell in the ledger. Let’s call them blocks. Each member has $500 in ReMemberers Crypto-currency (ReMems) to spend as they wish. 

Now you are no longer the coordinator, in the middle, arranging everything, wasting your time. Each ReMemberer can work Peer-to-Peer (P2P) with the others to decide what hotel to stay in, how much coffee to buy, etc. And it’s all documented for everyone to see. No more feeling swindled because someone brought Folgers but expensed Starbucks. Every transaction is recorded on the ledger and stored so all can see - and verify.

But as may have you feared, merely having the ledger doesn’t solve all the problems. The ReMemberers are having trouble agreeing. They feel you MUST help.  So the collective agrees to pay your $500 share, annually, if you still plan the trip, arrange the hotel, the food plans, etc.

You think to yourself, “This is really great.”  You now have a system whereby you are not chasing people down for their money. You are being compensated, but not at an exorbitant amount. At the amount the community agreed. For you, it’s a good value. Everyone else got a voice, and everyone felt heard. All transactions are clear for all to see, should anyone have any questions. AND the trip will be amazing.

That ^^ is Web3. 

Decentralized. Owned by builders and users. Funded with the money everyone invested (ReMems).

But let’s keep this analogy going. It’s now a few years later. One of the ReMemberers announces he has a buddy who has a full 4D rendering of the Gauley River in West Virginia. It’s compatible with 80% of the gang’s METAZOOM Equipment, and it will allow anyone who wants to learn how to whitewater raft in a safe environment. He feels it could really help those who have never been whitewater rafting get a feel for it so they can decide for themselves. 

PLUS, if we buy today we can also get the Bear Safety School package in case we accidentally hike upon a bear. All this for the low price of $5000!

Think digital Boy Scout, digital badges. That’s the metaverse. Will we all be living in Sims 3 or Animal crossing?  Absolutely not…all of us. Yet your identity will be unique, encrypted, and anonymous - unless you wish otherwise. Think of it like this: Web1 was “read-only”, Web2 is “read & write”, and now Web3 is “read-write-own,” giving users full ownership over their content, data, and assets via blockchains.

For higher education, this has incredible upside. Your authenticated self can go to med school, train virtually on 100% realistic-looking 3D patients, and have these credentials available to verify. Anyone can see how many hours of surgery you have - both actual and virtual. That’s the transparency of the blockchain.

Where DO we go from here?

The dash to the Ownership Economy

Less trust, more truth

At Somo, we are already seeing disruption from finance to art to collectibles to rewards to gaming. Blockchain technology is emerging. And fast. Those who try to predict the future, like Chris Dixon from A16Z, see many parallels between now and the mid-1990s when Web1 was in its infancy. In Q2’22 alone, VC’s closed over $14B in new ventures.

Innovation is seldom linear. It is generally a multi-step process.  And the first steps are usually not the ones you remember. 

Web3 is a new movement, another dawn of the Internet. Just like Web2, we can expect tons of exciting things in this era and again, the challenges businesses are going to face will be immense. As business leaders start to understand how they embrace the subjects that encompass Web3, being customer-relevant will remain a priority, however building greater resilience around security, data management and privacy will need a focus.

- Carl Uminski, Co-founder and CEO at Somo.

Gavin Wood, the man who coined the term Web3 and leads a Web3 think-tank, is definitely a visionary with a very particular view of what’s coming next. Or, one might say, what SHOULD come next. In his view, Web3 is more than just a new architecture for the web, it is a leveling of the playing field, a way to right the wrongs of Web2. His hope is that it will change the model for how work is done the world over. He sees blockchain as a new social construct, with no one with arbitrary power within the system. Gavin believes that this is much more than a new feature set, a mere reskinning of what we currently have. But even he has doubts about whether this can be fully realized. And his doubts echo others who question whether you can ever have true decentralization.

We need to understand the node infrastructure of the network; is it really peer-to-peer or is it actually run from one data center by a company that manufactures and sells hardware and is required to be consulted before a new node can come online?

- Gavin Wood

Thus the debate continues. Is Web3 a new social construct? Is blockchain all or nothing? Where will the first use case that delivers true value to the user come from?

It would be foolish to believe that in five years there will be a radical shift to this de-centralized, de-FANG’ed world where everyone can figure out how to create de-collab IP and make money from NFTs while they fly fish in their basement.

But I also think it would be foolish not to realize where we are in the cycle, and realize that the next big thing truly is right over the horizon. My bet is it continues to move toward decentralization as that seems to me to be the best way to regain control. However I also know that until this can be experienced, it’s a rather circular argument. And as my focus at Somo is on what users want, and how we can make their experiences match their expectations, I try to follow the intent. And I see opportunities for blockchain to solve a lot of problems.

Why you will care

If you could go back to 1995, what would you be thinking about?

It’s crazy now to look back at my experience at AOL in their heyday. But even then, their strategy didn’t make sense to me. I was on a project promoting AOLTV, again, part of the AOL Anywhere strategy.  After a three-hour brainstorm, the ONLY benefit I saw was that you didn’t need a monitor to use AOL. But it was clunky as heck, and overall a terrible experience. Why? Because there wasn’t anything to do! AOL’s biggest problem was it didn’t have any content that was “ready for prime time.” And if you’re going to overtake someone’s television content, it better at least be compelling. It wasn’t. Sending email on your television just wasn’t much fun afterall.

Was this concept ever tested? Probably - I am not sure. But if it was, it wasn’t thoroughly tested. No one liked it.  

There is, however, much to like with the new technology that web3 and blockchain represent. We are stress-testing ideas and concepts for the future, trying to find out what will bring the most value. That is my belief - the next big leap will be something that really delivers value for the user.

For the automotive industry, the provenance of a car seems to fit rather well with the general ledger concept. One would know detailed records for the entire lifetime of the car. How? Because it isn’t relying on all of the databases at Jiffy Lube, Matt’s Body Shop, and the dealership to be in concert. Blockchain assumes nothing; everything is captured in the chain. Every transaction, everything done to the car, is captured in the ledger for all to see. Including the price, the time, and the parts.  

Everything. 

So if you go to buy a car and you see the ledger has never had an oil change - red flag.  And sure, you can probably still buy a car “off-ledger.” But would you want to?  

For energy companies, trade transactions can be recorded and settled almost instantly, with no need for an intermediary. Because they share the ledger, there is little or no need for reconciliation. There's only one system and one entry for the transaction, which is shared by all parties.

And then there’s FinTech. Some fear crypto has peaked. Bitcoin’s drop has people spooked. But blockchain will continue to be a disruptor in finance because it makes so much sense. Blockchain allows transparency in the process. It requires little trust because we can verify transactions for ourselves. It gives you control over your data. The promise of decentralized technology is that there is no need for a centralized authority to own the process, the data, or the network. You own it.

This holds true for your identity as well. Inherent in the very concept of web3 is the idea of ubiquity. In Web3, authentication is a one-time event. Web3 really only happens if you carry your ID token with you everywhere. This has so many use cases, from owning your Electronic Health Record to having all your accomplishments and degrees verifiable by employers. Your identity is secure and travels with you. You own that, too.

So maybe Gavin’s vision is really more of a Web4 or Web5, in 30 or 40 years. But sometime in the future, it’s not foolish to imagine someone waking up, authenticating on their Home Base Portal via facial recognition, and being able to do pretty much whatever they want that day without ever having to enter a password. That day will come, I am almost certain of it. But who controls that?  That is still an open question.  Web3 says you do.

And here’s the thing: Web3 is happening.  It’s happening right now. It might not feel like it, and today the World Wide Web looks pretty much like it always has, only shinier. Yet the winds of change are blowing - hard say some - and one day soon it won’t look the same. It will be much more 3D, interactive, and there will be fewer reasons to give away your data, and more incentives not to. 

Maybe this happens overnight, maybe it takes 20 years. But the ones who say crypto is a toy for cyber geeks miss the point. Web3 is not about buying digital risk assets to hit it big. It’s about creating the Internet we all want, a place where we feel like we have a say in it. Web3 is happening because there is a need for it. It is a response to everything that the Internet gave us, and all that it took away.

Web3. It’s really happening.