What All Entrepreneurs Need to Know About Web3

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You can hardly escape the buzz surrounding NFT, cryptocurrency and Web3. Some say that these technologies will revolutionize all aspects of society. Others say this is a dream.

Since most entrepreneurs are not tech-focused, it can be difficult to learn about Web3 and what the future means for your business, especially when it’s still coming into focus.

If you have no idea what Web3 is or why it’s important, you’re not alone. The term was coined by the co-founder of Ethereum and is actually quite vague. But enthusiasts say Web3 is the future of the Internet, and there are two main ways to define it.

Related: Why Web 3.0 Will Dramatically Change the Current State of the Attention Economy

The potential future of Web3

A potential future of Web3 is a blockchain-embedded Internet. Cryptocurrencies and NFTs will be embedded in the platforms we use every day.

Now, blockchain is another hot topic that may raise some question marks for entrepreneurs. To put it simply, a blockchain is a digital ledger. It organizes information into a publicly visible digital chain of “blocks”. This is famously what cryptocurrency is built on. However, it could be used for a wide variety of applications.

The second potential future of Web3 is a bit more controversial and complex. Enthusiasts say Web3 will lead to a completely decentralized Internet owned by users, rather than corporations. Blockchain and its many applications could help deliver that future. But critics say the same has been said about the cryptocurrency itself, and so far it hasn’t succeeded.

Cryptocurrency was created and branded as a way to give individuals power over their own finances. So far, instead of revolutionizing the world of finance, it has become a high-risk speculative investment class without any protection for consumers. Instead of promoting fairness, the world of cryptocurrency and NFTs is plagued with scams and unpredictability.

Since a single Bitcoin costs more than most Americans make in a year, there are definitely questions to be asked about who exactly the cryptocurrency gives power and financial freedom. But keep in mind that even though we’re a few years into the crypto space, it’s still a relatively young industry with plenty of room to grow.

Related: 3 Reasons Why The World Will Never Go Back To Crypto

What does decentralization mean?

According to some Web3 advocates, the Internet is currently owned by a small handful of companies. Consider large corporations like Meta, Amazon, and Google. This is what they call “e-feudalism”. Essentially, they claim that we are all “working digitally” with the virtual properties of Mark Zuckerberg and other tech giants.

Web3 is the solution, they say, that gives power back to its users. Here’s a look at what a hypothetical decentralized social platform might look like: Instead of going through an IPO, the platform would create cryptocurrency tokens, then send them out to early adopters. People would be rewarded for going viral or using the platform with tokens, which could also double as government tokens. Users can use tokens to vote on important platform decisions, from content moderation to other large-scale political issues.

Essentially, instead of a company deciding how a platform works and users living with the impact of their decisions, users will collectively make the rules.

Wait, what happened to Web1 and Web2?

To some, it may seem like we’ve gone straight from zero to three. Fortunately, Web1 and Web2 are much simpler to understand than Web3. This is partly because Web3 is still largely speculative, while the first two have already come to fruition.

Web1 is the first iteration of the Internet when your computer practically screamed at you every time it connected. Think of the slow, static web pages of the 1990s. The Internet of that time was primarily used to digitize and share existing media such as books, magazines, and newspapers. In the late 90s, the blog was born and for Internet savvy people, it was a new opportunity to interact with the masses.

Web1 also ran on an open source protocol. This is an aspect that Web3 evangelists want to return to.

The evolution of Web2 began in the early 2000s when the Internet began to become “read/write” on a larger scale. It had evolved from a place where the average user logged in to browse content to an accessible platform where more users could create, share and store unique information, photos and videos.

With the rise of sites like Facebook (now Meta) and YouTube, this era ushered in transformative technology like e-commerce, social media, and the content creator economy.

Proponents of Web3 essentially want to deliver the complexity of Web2 with the open source, community-governed nature of Web1, using blockchain technology.

Related: Making sense of the noise in Web3

Controversies around Web3

There are many ideological and practical fights surrounding Web3. Some, like Elon Musk, say it’s just a buzzword right now. However, he does not rule out his future.

Critics say incentivizing users to take digital actions with tokens could create a situation where bad actors seek compromise at any price. However, it could be the case that even without tokens, many social media users are already doing so. This may just be a side effect of massive internet usage.

Philosophical questions aside, many have questions about how feasible a decentralized modern internet based on blockchain is. Ethereum, upon which many potential Web3 projects are based, is incredibly inefficient.

It has a high environmental cost and is expensive to operate at scale. This means that for many smaller businesses, it’s simply not feasible to adopt right now.

While many are working to build apps on top of Ethereum to make them work better, some critics question why we’re pouring resources and talent into fixing big problems on such an inefficient foundation.

Also, a key feature of blockchain is that it stores information publicly, so that all users can see it. In some cases, this is a useful innovation; however, in some applications, allowing all network users to see anyone’s complete transaction history would be inconvenient, and could even be dangerous.

Related: From Web 2.0 to Web 3.0: How these entrepreneurs made the switch

What does Web3 mean for your business?

Right now, Web3 is largely hypothetical. This means that no one is exactly wrong or right. We still don’t know what it will be, or if it will be anything.

Some say it will create a fair, community-governed digital future. Others, like former Twitter CEO Jack Dorsey, to say which will only lead to an alternative centralized authority.

There are some malicious actors who use these futuristic buzzwords to harm people. For example, the social accounts of the British Army were recently hacked to promote NFT scam. According to a report by the FTC, Americans have lost more than $1 billion to crypto scammers this year alone.

As a business owner, it’s critical that you have a basic understanding of Web3’s potential so you can make smart decisions to take advantage of technological advances and avoid the pitfalls of being swept away by the hype.

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