Web 3.0




Web 3.0











Web 3.0

by Geoff Keston

Copyright 2023, Faulkner Information Services. All
Rights Reserved.

Docid: 00018050

Publication Date: 2301

Report Type: TUTORIAL

Preview

Some tech industry insiders believe that the Web is on the cusp of a
major change from a centralized model in which a small number of private
companies dominate to one in which users have much more control and
autonomy. This vision of a “Web 3.0” is tied up in the most enthusiastic
predictions about cryptocurrency’s future, and it extends beyond
technology into other aspects of business and culture. But there are more
modest, and thus more actionable, forecasts too. Understanding these
developments is important for businesses across many sectors.

Report Contents:

Executive Summary

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The software and services of the Web are in the hands of a small number
of large social media, cloud, and online payment companies, but there are
predictions of a massive shift away from this model.


Related Faulkner Reports
Cryptocurrency Tutorial
Blockchain Tutorial
Non-Fungible Tokens Tutorial

A good number of observers predict that the Web will become — or already
is becoming — “decentralized.” This vision is based significantly on
cryptocurrency and blockchain, which would replace large financial
institutions as the sources for transactional security. And further,
decentralization is envisioned in the form of mechanisms by which users
would “own” their own data and other digital assets, with the role of
leading social media platforms as the hubs of communication diminishing.
(These ideas are only about the Web — that is, user-facing online software
and services — not about underlying hardware and telecommunications
infrastructure.)

Opinions differ on how likely these changes are to occur. Within
cryptocurrency circles, this shift is believed to be already well
underway. Outside of this ardent group, there is much more skepticism,
especially recently, as views on cryptocurrency have turned more negative.
In particular, skeptics expect cryptocurrency to soon receive more
regulatory oversight, which could undermine the idea that it works by
different rules and is not subject to the ordinary dynamics of the market.

But the debate about the sweeping, and probably hyperbolic, societal
changes expected by some people diverts attention away from smaller, more
likely changes to which organizations would be prudent to pay attention.
For example, the so-called “Great Resignation,” in which many workers in
the United States quit their jobs during the pandemic, may have some
ideological roots in common with Web 3.0. In this respect, the Web 3.0 is
potentially about more than cryptocurrency, and some of its individual
tenets remain worthy of attention.

Description

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The label “Web 3.0” is not an official standard, and there is not a
rigorous and universal definition of the concept. Perhaps the closest
thing to a neutral arbiter of its meaning is the World Economic Forum,
which operates the Web 3.0 Technologies Foundation (W3F). The W3F calls
the envisioned Web 3.0 “a decentralized and fair internet where users
control their own data, identity and destiny.”1 The
foundation’s ideals, tied to this vision of a new model for the Web, are
that:

  • “Users own their own data, not corporations”
  • “Global digital transactions are secure”
  • “Online exchanges of information and value are decentralized”

Definitions of Web 3.0 vary somewhat, but most include versions of the
points above. The Web 3.0 focuses on the role of ordinary users in
controlling their assets and data, and it sees non-monopolistic
alternatives to current cyber services.

The major phases of the Web’s evolution are often categorized by the
labels Web 1.0, Web 2.0, and now Web 3.0. One breakdown of these phases,
published on the Web site of the cryptocurrency (and Bitcoin alternative)
Ethereum, describes the evolution as follows:2

  • 1990 to 2004: The Web 1.0 was “read-only,” composed mainly of
    static pages and featuring minimal interaction.
  • 2004 to the present: The Web 2.0 is “read-write” and defined
    largely by social media companies. Crucial to this definition, sites
    like Facebook and YouTube, while promoting interaction, are near
    monopolies. In particular, these companies profit from the contributions
    of users who receive little if any monetary compensation.
  • Recent years into the future: The advent of Web 3.0 has
    already begun (according to Ethereum and other advocates), and this
    model will dominate as Web 2.0 sites and activities become less common.
    This “Read-Write-Own” model reduces the power of large, commercial
    companies and puts more emphasis on the role of individual users. For
    example, transactions are expected to be made in cryptocurrencies and
    verified by blockchains. Further, traditional IT security
    authentications (how users are given access to services) will be
    performed by “incentives and economic mechanisms” rather than
    third-party methods such as OAuth 2.0.

Current View

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There are two prevailing views about the current state of the Web 3.0.
Proponents of the concept see the transition from Web 2.0 to a
decentralized model as a natural development that is already underway.
They view cryptocurrency and blockchains as proven successes, not as mere
pilot projects.

The other perspective views Web 3.0 skeptically. While perhaps conceding
that some of the concept’s ideas and practice will be used in limited
ways, they doubt that the broad changes — including predictions of massive
societal changes — will occur. Many skeptics see cryptocurrency as a
bubble, and they expect that it will burst soon.

The Case That the Web 3.0 Is Already Here

One argument in support of the idea that now is the time that cyberspace
will move to this new model is that the work of Web 2.0 is done. From this
perspective, the Web 2.0 was the creation of key platforms that enabled
today’s massive online communications and commerce infrastructure. This
creation needed to be centralized, the thinking goes, so that users would
come together on shared platforms and could conveniently use services. But
now that the Web is widely used for a vast range of services, and the
hardware, software, and telecommunications infrastructure is in place, it
may be possible to develop a more equitable model.

The thrust behind Web 3.0 has its roots in concerns about the current
state of the Web. In particular, a small number of companies control
particular domains, for example:

  • YouTube for video sharing
  • Instagram for photo sharing
  • Facebook for general social media
  • PayPal for transactions

One example sometimes put forward to show that the hold of large services
is loosening is Elon Musk’s acquisition of Twitter. Musk has talked about
reducing or eliminating Twitter’s reliance on ad revenue, moving the site
to a subscription model.3 The company has also worked to enable
users to promote their non-fungible tokens (NFTs), another key building
block of Web 3.0.4

The Case That the Web 3.0 Is a Faulty Forecast

In July 2022, the headline of a press release for a Web 3.0-focused
conference read “FTX Founder and CEO Sam Bankman-Fried to Explore Future
of Web3 Alongside 100+ Industry Leaders at SmartCon 2022.” At the time,
Bankman-Fried was in many ways the face of Web 3.0: A young, casually
dressed billionaire who looked and talked differently from other tech
leaders and who spoke about the vision of a new Web. Just a few months
later, FTX collapsed and Bankman-Fried was arrested for his alleged
mismanagement of the cryptocurrency exchange. This widely reported story
led to talk that the problems were not just with FTX but with Web 3.0 more
generally. One analysis said that confidence in Web 3.0 was in the “blast
radius” of FTX’s implosion.5 The author of that analysis,
Axios writer Scott Rosenberg, posited that “[i]f crypto can’t even get the
foundational stuff right, like managing trading and handling customer
assets, there’s little reason to trust it with any other dimension of our
lives.”

In a similar analysis — also published in Axios — Felix Salmon said now
that the magical thinking around cryptocurrency may be diminishing,
ordinary financial regulations may be increasingly applied to it.
“[L]awmakers will have every reason to ignore industry pleas for special
regulatory treatment,” he writes.6 “It might be many years, if
ever, before crypto entrepreneurs have any hope they’ll be treated as
though they’re responsible and law-abiding.”

Outlook

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The vision of the Web 3.0 described by many prognosticators is grandiose,
describing not just a technological change but a societal revolution. Yet
the realities of human psychology and culture are more stable than these
predictions suggest. For example, centralized monopolies occur for many
reasons, as they have for many generations before the Internet. The
dominance of large companies and the relative lack of autonomy of
consumers are not mere software design bugs to be fixed in a next
revision.

Further, the terms “Web 2.0” and “Web 3.0” over-simplify the complex,
diverse evolution of the Web. The various dynamics — users, business,
technology, and so on — will not move in sync as part of a single, easily
labeled shift from one major phase to another. Instead, technologies and
practices will change at different rates, to different extents, and in
different ways. 

Some of the predictions made by well-established observers, not merely by
cryptocurrency true believers, are the following:

  • Consulting group McKinsey & Company expects that regulations are
    the next major obstacle that the Web 3.0 faces, and it sees the outcome
    of this impending confrontation as deeply uncertain.7 There
    are many potential complications because Web 3.0 practices are expanding
    into a wider range of industries, growing beyond their origins primarily
    in financial services.
  • PwC predicts that NFTs will shift from being about speculation — being
    bought and traded on the hopes of quick profits — to being about
    consumer choice and independence, key Web 3.0 values.8 PwC
    views NFTs as enabling users to more easily transfer assets across
    platforms. This user ownership is a central principle of the Web 3.0. In
    this vision, NFTs may become “everywhere and invisible,” PwC says,
    comparing them to underlying Internet protocols.
  • One analysis, by Rebekah Bastian, whose writing focuses on “culture,
    equity and belonging in the workplace,” connects Web 3.0’s future to the
    work changes spurred by COVID.9 In particular, Bastian sees
    the so-called “Great Resignation” as being in part a rejection of the
    Web 2.0 and its dominance by a small number of large companies.

Recommendations

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Focus on Specific, Concrete Developments

The Web 3.0 is often described in terms of broad ideals, not
implementable technology. This level of discussion is sometimes useful for
long-term vision-setting, but it is less helpful for planning, especially
in the nearer term.

Organizations, therefore, would be wise not to think much in terms of the
grand vision of the Web 3.0 but to instead focus on potential developments
that are concretely defined in terms of specific technological or
user-habit changes.

Look Beyond Cryptocurrency

Much of the talk about the Web 3.0 relates to the values and imagined
future of cryptocurrency. This association creates some skepticism about
the Web 3.0 because of controversies and questions looming over that
domain. And the perceived link between the concepts narrows the
conversation about the Web’s potential future. But many other potential
developments will not depend on cryptocurrency, so organizations can more
effectively plan if they remember that the concepts are not necessarily
dependent on each other.

The narrative of the Web 3.0 is not the only potential future for the
online world. Whether this narrative turns out to be accurate or not (or
somewhere in between), other developments will occur that have not been
predicted by our current group of prognosticators.

References

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  • 1 “About Page.” Web3 Foundation. Retrieved January 22,
    2023.
  • 2 “Introduction to Web 3.” Ethereum. January 17, 2023.
  • 3 Rufus Kamau. “Could Elon Musk Make Twitter a Web3.0
    Company?” Forbes. October 27, 2022.
  • 4 Ibid.
  • 5  Scott Rosenberg. “Web3 Is in FTX’s Blast Radius.” Axios.
    November 15, 2022.
  • 6 Felix Salmon. “The Week the Crypto Dream Died.” Axios.
    November 14, 2022.
  • 7 Anutosh Banerjee, Robert Byrne, Ian De Bode, and Matt
    Higginson. “Web3 Beyond the Hype.” McKinsey & Company. September 26,
    2022.
  • 8 “5 Crypto and NFT Trends That Matter Right Now.” PwC.
  • 9 Rebekah Bastian. “2022 Prediction: The Influence Of Web3
    On The Future Of Work.” Forbes. December 22, 2021.

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About the Author

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Geoff Keston is the author of  more than 250
articles that help organizations find opportunities in business trends and
technology. He also works directly with clients to develop communications
strategies that improve processes and customer relationships. Mr. Keston
has worked as a project manager for a major technology consulting and
services company and is a Microsoft Certified Systems Engineer and a
Certified Novell Administrator.

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