A Look at web3 technology
Web3 is the most recent internet version. It is built on the back of blockchain technology, and unlike traditional web technologies, it doesn’t require centralized servers (like those used by Google and Facebook). It has the potential to transform the online experience in the same way that PCs and smartphones did, but it is not without risk. Before jumping in, companies must weigh the risks and benefits.
Have you ever heard of Bitcoin? Perhaps you felt a tingle of FOMO as the folks who got in early suddenly amassed a small fortune—even if it was not clear what uses the money had. Maybe you just wondered whether your company should be working on a crypto strategy in case it did take off in your industry, even if you did not care one way about it or the other.
Bitcoin experienced several boom-and-bust cycles, but it has survived. Every year or two, its value crashes. Each time it does, skeptics rush to dismiss it as dead, railing that it was always a scam for nerds and crooks and was nothing more than a fringe curiosity pushed by techno-libertarians and people who hate banks. Bitcoin never had a future alongside tech companies.
And, of course, it would come back. But this time, it is not just for nerds. As cryptocurrencies have become more widely adopted, they have made their way to Wall Street. Crypto is just the tip of the spear. The underlying technology, blockchain, is also known as a “decentralized database”—Blockchain is now in use to new ends: for instance, to create ownership records of unique digital objects—or nonfungible tokens.
The market for NFTs has exploded in 2022, with a $41 billion industry seemingly conjured out of thin air. Beeple’s digital artwork has caused a sensation, as an NFT of his artwork sold for $69 million at Christie’s last year. Even more esoteric cousins, such as DAOs, or “decentralized autonomous organizations,” operate like headless corporations: They raise and spend money, but all decisions are voted on by members and executed by encoded rules. One DAO recently raised $47 million in an attempt to buy a rare copy of the U.S. Constitution. Advocates of Defi (or “decentralized finance”) are lobbying Congress and pitching a future without banks.
The collective effort to rewire the internet using blockchain technology is called Web3. The name is a convenient shorthand for a massive project that promises to reinvent how information is stored, shared, and owned. In theory, a blockchain-based web could destroy the monopolies on who controls information, who makes money, and even how networks and corporations work. Advocates believe that Web3 will create new economies, new classes of products and services online; that it will return democracy to the web; and this revolution will define the next era of the internet. Web3 is inevitable.