The Role of Web3 Projects in Disrupting Tech Companies
Just a few short years ago, the Internet was in its infancy. Web1 saw us gaming on CD-ROMs and asking Jeeves questions. Web2 made the Internet much more participative, through Yahoo, Myspace, and Friendster. Broadband entered the fray, as did YouTube, Skyped, and Hangouts. Now, Web3 will soon disrupt the disruptors of the previous age – and we’re not ready.
Why Isn’t Web3 Bigger Than It Is? (And Why It’s Going to Change)
There has been considerable pushback against the huge corporations that have been collecting personal information without permission or compensation, which is precisely why blockchain technology – putting control of the digital sphere back into the hands of individual users – is so enticing. Web3 will decentralize the Internet and reduce the control of large tech giants like Google or Meta. It’s permissionless, democratic, and private. The problem is that not everyone fully understands what Web3 will do…or what it will do for them. Crypto is perhaps the perfect embodiment of the Web3 ethos, but crashes and instability from industry leaders like Coinbase and the collapse of high-yield currencies like Luna (not to mention a wave of bad press) haven’t done the industry any favors, despite its gradual but steady acceptance into the mainstream financial world. Many people have no idea how to get started with crypto trading, to begin with, and it still remains out of reach for many. However, none of these issues mean that Web3 won’t take over the industry…soon, and with very good reason.
The Internet today is dominated by several large brands, namely Google, Amazon, and Facebook that trade services to users in exchange for their privacy and their creative labor, and to some extent, they limit the competitiveness and vibrancy of our marketplaces through aggressive pricing and acquisition. The steady diet of misinformation fed to huge audiences through Facebook during the pandemic was enough evidence for some that no company should hold that much power over the public.
Web3 does not store data in proprietary servers owned and controlled by a few small companies. Data resides in public blockchains and is distributed across thousands of nodes. Data ownership is put back into the hands of the users, not app providers. While Twitter owns your tweets and TikTok your videos, your creative content can be presented as NFTs or non-fungible tokens under your control and ownership.
While NFTs are mostly associated with overpriced memes, they can represent virtually anything, including music, online activity, achievements, and health information. The line between digital assets and physical assets will blur as ownership and rights over your digital assets become as clear and sacred as owning your physical assets, while the proof of ownership and title of your offline assets will be protected by NFTs.
How Web3 Will Disrupt Tech Companies
Web3 will take years to become the norm, especially considering how inextricably linked our day-to-day activities are to the likes of Google and Facebook. However, we are primed for a significant shift to the new way of being online.
Providing a More Reliable Internet
In 2016, a DDoS attack interrupted the likes of Twitter, Spotify, Reddit, and Netflix. The attack clearly showed how overreliance on central servers makes it much easier for hackers to take them down at once. Blockchain technology relies on a distributed network of computers, each with a copy of the blockchain’s data. While it won’t be impossible to take down the Bitcoin blockchain, for example, it would require seriously deep pockets and significant resources on the hackers’ part.
Lower Transaction Fees
Web3 removes centralized middlemen through peer-to-peer transactions, conducted on a distributed app run on a distributed ledger. Fewer parties have access to data, and transaction fees go down. Organizations like Western Union or equivalents have complex fee structures. They need to cover overheads, including staff, marketing, and physical agents. A company like Ripple, on the other hand, is able to send millions worth of crypto coins with virtually no transaction fees, in record time.
The take rate of Web3 applications is also significantly lower than their Web2 counterparts. Facebook retains all of its ad revenue, Epic keeps all of the revenue spent on in-game items, and YouTube takes nearly half. Crypto gaming platform Axie infinity keeps a 4.25% fee on their in-game transactions, and the Brave browser actually pays 70% of its ad revenue to users.
Removal of Censorship
Certain countries’ governments rigorously control or otherwise monitor their citizens’ Internet usage. Blockchains are by nature resistant to censorship and monitoring, which will allow for greater freedom of speech in countries like China.
Anonymous Single Sign-On
Most websites offer convenient Facebook or Google single sign-on options, which grant access to your personal information until revoked and are often used by companies for marketing purposes. Through the blockchain, anonymous single sign-on allows individuals to use a single username and authentication method across all sites, without relinquishing control over sensitive information. Transactions on the blockchain are transparent and visible but anonymized so that individual wallets can only be identified by an address and not a name or contact details. The entire ad economy will change as consumers push back against intrusive advertising and Web3 companies use alternatives to reach their target market.
Tokenization
Participation that adds value to the community in Web3 is rewarded by tokens (e.g. NFTs). This can include anything from providing services, using a specific app, and posting new social messages. These activities “mint” an NFT representing ownership over the activities or content which can be stored and traded. If a social post is popular, for example, returns go directly to the owner of the post – not the platform it was made on.
Self-governance
Decision-making power is split across an entire network. Decisions are made via consensus, not a single central corporate authority. In some decentralized organizations systems are established to democratize decision-making based on the volume of a user’s investment into the site/dapp. This allows users to vote on the rules that govern a site, which will then be executed through smart contracts.
Web3 Companies That Are Already Disrupting Web2
Web3 may be in its infancy, but there are several companies that are making a direct play against some of the largest tech companies in the world. Steemit, for example, goes toe-to-toe with Facebook by providing a social news service that actually pays users to upvote, post, or comment. Content creators are rewarded based on their popularity. Status is also tackling Facebook Messenger’s model by providing an easy-to-use browser and messaging system that provides greater privacy and secure exchange of digital coins. DTube is a censorship-resistant video platform that is similar to YouTube but runs on the STEEM blockchain. There are no annoying ads – community voting determines which content creators get paid.
But one of the biggest disruptors will be the ability to store information in the cloud. Decentralization through providers like Storj allows companies and users to make use of the underutilized hard drive space from all around the world, paying providers in crypto. Users will pay a fraction of their current storage fees. Storage is provided on demand, speeds are greatly improved, and privacy and security are far superior to the alternatives. Files are distributed in small pieces across many hard drives so that only the rightful owner can access the complete and final copy.
Reinventing the Internet
The idea of an online utopia seems far-fetched, but Web3 applications and platforms are already providing compelling alternatives to the Internet, and generating vast sums of profit (particularly in the crypto space). It’s a compelling proposition. What if the photos you post and witty tweets you write, the posts you like, and the time you spend browsing the web actually earned you some money, instead of lining the pockets of a few tech bros and their investors?
Several tech companies and major banks are already dedicating time and resources to Web3. Perhaps the best way to picture Web3 is not envisioning a world where major platforms have been wiped out by Web3 apps, but where Web3 features are added to the platforms we already know, love and use. Taking down the likes of Google and Facebook isn’t entirely plausible, but if they want to remain relevant, they will play ball and start decentralizing their networks and businesses.
Conclusion
Web3 isn’t a passing fad or looming takeover from another large corporation, but a clear indication that consumers are thinking carefully about their data, privacy, and participation on the Internet. Users are no longer interested in making others rich through their online activities; they want a more democratized and anonymous approach to the digital world. It’s better to disrupt than be disrupted, which is why tech companies should pay close attention to shifting consumer behavior and sentiment.