Blockchain’s Role In Web 3.0 And How It Will Affect The Way We Do Business
The term “Web3” has as of lately attracted significant attention and is a frequent featured headline. It encompasses a term for the vision of a new and better internet. At its core, Web3 uses distributed ledger technologies (aka blockchains), cryptocurrencies, and Non-Fungible Tokens (NFTs) to allow users to reclaim ownership of their digital properties/assets. But what exactly is web3 and how will it affect the way we do business? In this article we explore the premise of web3 and the potential of technology to put the power back in the hands of individuals rather than corporations.
Most people think of the web as an inherent part of modern life. We rarely contemplate as to how it was invented and the various transformations it has seen through. However, the web we all know today is quite different from what it was originally envisioned to be.
Web 1.0: The “Read-Only” Web
The first iteration of the web occurred between 1990 to 2004. In 1989, Tim-Berners-Lee conceived an idea about creating open protocols that would allow anyone to share information from anywhere in the world. Web1 depended on static websites that were owned by companies, without any interaction from its users, and it is known as the read-only web.
Web 2.0: The “Read-Write” Web
The second iteration of the web started with the introduction of social media platforms around 2004 and continued until today. The evolution had to do with allowing individuals to generate content and interact with other individuals. Unfortunately, it also allowed a small number of companies to control a disproportionate amount of traffic, and value generated on the web, with the advertising-driven revenue model. Moreover, as individuals created content, they found themselves not actually owning the content and having themselves being the “product” on these platforms.
Web 3.0: The “Read-Write-Own” Web
When looking to define the Web 3.0, we must unavoidably look forward. Although many of the elements that make up Web 3.0 are indeed available today, it still has a long way to go to reach its full potential. Web 3.0 or web3 is being built on the foundational pillars of decentralization, openness and user utility. Instead of a Web monopolised by large technology companies, Web3 embraces decentralization and is being built, ran, and owned by its users. Web3 puts power in the hands of individuals rather than corporations. In this phase, users are moving away from centralized platforms such as Facebook, Instagram, TikTok, and Google, towards decentralized and nearly anonymous platforms.
To put it in simple terms, Web3 is an internet that is not filtered by a private company software, it is not hosted on a specific location or database, and allows creators to own, monetize and verify content through decentralized processes.
We break down these definitions and their respective features as follows:
Web1 – Read Only
Web2 – Read & Write
Web3 – Read, Write, Own
No user-to-server communication
Content browsing only
Hyper-linking and bookmarking pages
Improved user interaction over Web 1.0
Web applications introduced
Functions such as online documents, video streaming, etc.
Everything moves online; information and apps are stored on servers
Interactive advertising and pay-per-click
Cloud computing operations
Read and Write Web
Intelligent, web-based functionalities and applications
A fusion of Web technology and Knowledge Representation
Behavioral advertising and engagement
The Internet of Things (IoT)
Read, Write, and Own Web
Blockchain’s role in web3
Web 3.0 encapsulated by blockchain technologies, delivers a potential solution for users to regain their privacy and keep the information on the internet reliable. This is done by rebuilding the infrastructure around storage, exchange of information and monetary value and transactions. The upgrades to the infrastructure will allow for secure peer-to-peer (P2P) interactions and the establishment of true ownership and verification.
Many of the properties seen in blockchains are also present in the evolution of Web3. An internet that is trustless, permissionless, distributed and self-governed can lead us to the original vision of the World Wide Web envisioned by Tim Berners-Lee. A network where you can create and own content without the permission of a central authority. In this version of the web, there is no central controlling authority, no single point of failure and no way to turn it off, a bit like Bitcoin!
And there are a few solid reasons why web3 is going to be built using blockchain technology
Blockchains don’t have a unique point of failure, they have veracity. Veracity refers to the existence of multiple copies (as opposed to a single copy) of the complete historical record of ledger entries which are each verified by consensus.
Consensus allows for censorship resistance through rules that are hard coded in the protocol, automatically ending censorship.
And through these properties, blockchains allow for the management of data in a collective way. Even if data on a single node is corrupted, the rest of the network will notice that and exclude it from what it considers to be the history of the ledger.
And because blockchains are trust-less peer-to-peer networks rather than requiring a specific central organisation, they allow settle agreements without having to trust each other or a third party.
How Web3 will affect the way we do business?
Web3 is already shifting e-commerce in ways that we could not imagine before. Businesses will be affected by web3 in a variety of ways, including security and privacy, innovation, and verification of the veracity of information to their own advantage.
Web3 and Brands
Imagine if you could design your favorite branded sneakers and be able to monetize your design when others order your creative idea or concept from the brand. In this example, one could navigate to their favorite brand’s portal, sign-on with their web3 wallet, and mint an NFT as a brand follower that may be added to their digital identity. The brand might even reward them with points for providing more information about themselves, to provide them with a better service and targeted promotions, as they usually do. But in this case, instead of points on a centralized server, they would receive a specific NFT depending on the loyalty status. This would then allow consumers to interact with the brand’s smart contracts and claim real life benefits like discounts for their products. The smart contracts would automatically check eligibility through a token gate whitelist, or in other words the contract can see on the public ledger that the consumer’s wallet address holds the NFT eligible for the product discount and allow the consumer to buy it using his web3 wallet.
Within this example, another promotion could entail physical limited-edition sneakers that are accompanied by an NFT or allowed to be bought only by the most loyal consumers of the brand. This “high value limited-edition signed by a star athlete (you get the picture)” sneaker also interacts with IoT devices that always track their location and up until they reach you. The NFT would always go with the shoes as proof of authenticity, in case of a secondary sale, as the NFT itself has a subjective value. And the brand could also receive royalties from that secondary sale, as depicted within the code of the smart contract. Loyal brand fans may also want to brag about their limited-edition sneakers on social media platforms, as is the case for NFT brands such as Bored Apes or Crypto Punks. Besides, that same NFT gives them access to unique events worldwide whether it is the brand’s events or another brand partner. And since the brand has already delved into the metaverse, it partnered with a popular online game platform that allows for the NFT sneakers to be worn on avatars within it. This allows for the bridging of physical and virtual worlds and products and ownership in both realms.
Web3 allows for the bridging of physical and virtual worlds and products and ownership in both realms.
Web3 and SEO
Web3’s disruptive potential also threatens centralized search engines. This does not mean that Web3 will remove search engines, but perhaps transform how they work. Currently, decisions on page rankings are based on Google’s own algorithm. With Web3, there is no sole source database, but instead a collective distributed database that is continually updated. SEO rankings will be heavily altered or even lost.
Web3 aims at removing centralized search engines. SEO rankings will be lost or heavily modified.
Web3 and Online Marketing
Since the late 1990s, online marketers have built their businesses on the ability to track online users and then target them with advertisements, and much of this has been done by third-party cookies. The two largest online advertising firms, Google Ads and AdSense advocate that 3rd party cookies are useful to consumers as they create advertisements that are in line with individual interests.
With recent legislation such as CCPA, ePrivacyRegulation and GDPR, state actors look to protect the privacy of website users, creating criminal penalties for those who do not notify web users of the presence of cookies. Moreover, they require operators to inform users of the information being collected and to whom it is shared, with a mechanism to opt out at any time. The deprecation of the third-party cookie is fast approaching, and the industry can see the end of the road when it comes to its ability to buy and sell ads that use individualised targeting. Could NFTs be used as a tool by marketers once third-party cookies are eliminated?
Current online marketing techniques and formats will be rendered ineffective or will considerably change their costs.
With blockchain technologies acting as an anti-fraud tool, the biggest impact for e-commerce that Web3 implementation will bring, is the fact that it is a far more secure environment for any kind of transaction. The immutability of transactions and the security of the protocols used makes it almost impossible to be hacked or manipulated.
In simple terms, a consumer within Web3 using Web3 payment methods (cryptocurrency) will have their money accounted for in real time and without mistakes. And the transaction will be settled also in real time without the permission and cost of intermediaries, as it is peer-to-peer.
Payments will be faster and more secure, and the token economy will be part of the Web3 architecture.
What lies ahead?
This is only the beginning when it comes to the disruption of the next iteration of the web. The combination of AI, Big Data & IoT deployments especially in conjunction with blockchain will push innovation in the years to come.
Tim Berners-Lee, the inventor of the World Wide Web described Web3.0 as the Semantic Web, one in which technologies such as Artificial Intelligence and Machine Learning enable it to act as an interconnected brain that processes information conceptually and contextually.
We believe that the adoption and trust in digital assets such as cryptocurrencies through the creation of standards is a major catalyst in this journey.
Lastly, regulators and technology builders need to further strengthen their collaboration to support economic and technological development in this area, to reap more benefits for free trade and society.
How is your business adapting to changes and the new wave of technological advancements and the opportunities ahead? Having recognised early on the disruption this technology will cause to the way traditional industries go about their business, Grant Thornton Cyprus specialised business unit aids in the implementation of blockchain technology since 2019. If you have questions on the topic of the article, you can contact us for more information. Our team of experts is ready to help you understand the specifics.