Does Web 3.0 create value?
This is a question many have considered. At this point, there is no clear answer. Instead, what gets discussed is the idea of redistributing value. This comes from the idea of the "ownership economy". We see how, when people have stake, the value is transferred from centralized entities to the token holders.
So far, this is all agreeable.
However it does not answer the question of whether Web 3.0 generates value.
This is what we will attempt to do in this article.
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Redistribution Is Not The Biggest Asset Of Web 3.0
Redistribution will not attract the next billion users. Products achieve mass adoption due to the fact they meet a need in individual's lives better than what exists. It is not achieve because of ideology. The idea that millions are going to join simply because something is decentralized is a non-starter.
It will not happen.
People started to use the Internet for shopping, bingeing on television shows keeping up with friends, watching people fall down and watching cat videos in spite of the fact it was billed as the "Information Superhighway" and a tool for free expression.
People did not care.
Web 3.0 will only excel if it creates value for users. The Internet generated tens of trillions of dollars in value, maybe more when we consider the non-monetary aspect of the utility provided.
If Web 3.0 is going to succeed, it has to do the same thing.
What Made The Internet Transformative?
To gain insight, we have to consider what the breakthrough was for the Internet.
Contrary to popular belief, it was not social media, cat pics, or email. Instead, it was a protocol, specifically TCP/IP.
Why is this?
Simply, it make the storage and transfer of data near zero. We can store terabytes of information for a nominal cost. Prior to digitization, the transfer of data was controlled by the telecommunication companies. These where the gatekeepers responsible for the installation of expensive circuits to allow for the distribution of bandwidth.
The Internet changed this by, over time, making data transfer dirt cheap.
We also saw the skyrocketing in the rise of data created. Again, this has become nominal in cost. What makes data expensive is a new breed of gatekeepers.
Nevertheless, the unbundling from the old Telcos was a major step forward. We see an important concept, the removal of friction in the system.
That does not mean utopia was reached. We now see another layer of friction in the form of the handful of applications that control the Internet.
It is a reality that stems from the client-server architecture that the Internet defaults to.
Web 3.0 - Unbundling The Applications
When we look at public blockchains, the concept is contained simply in what they are.
Here is a way of viewing a blockchain:
- an open, global, peer-to-peer communications network with an open, consensus database
The Internet does not have a database. It is in this regard that it is "stateless". A blockchain, on the other hand, does.
This now brings us to the formation of this entire spectrum, Satoshi Nakamoto.
What was his biggest contribution? It wasn't a new form of money. What gets overlooked is the fact that the Bitcoin network solved the consensus problem in a decentralized manner. No centralized entity is required for people to trust the network or what takes place on it. Bad actors simply cannot manipulate the system, thereby having their action thwarted when it is not part of consensus.
It is something that will go down in history as completely revolutionary.
As shown, Web 2.0 is able to restrict the flow of information, just like the telecommunications companies did when they controlled the physical infrastructure. The elimination of this allowed for tremendous value generation as data was able to flow without the previous friction.
Therefore, the value creation from Web 3.0 will come from the avoiding of gatekeepers who restrict the flow of information. This equates to another layer of friction removed from the system, allowing for cheaper information and producing larger network effects.
Web 3.0 Value
There is a reason for so much focus upon data.
It appears few in the world of Web 3.0 seems to understand this. People want to build social networks without really having any products or services to do so. If we look back at the earlier days of the Internet, it was not the ability to express oneself freely that changed the course of society.
Instead, it was the development of applications that provided benefit to the users. While most want to focus upon users (or customers), few are dedicating time to services.
The benefits of an open system of databases cannot be overstated. It provides a host of possibilities that few can imagine. The ability, for example, to build applications on top on other applications without permission offers the possibility for value beyond anything we see now.
Most are familiar with data sovereignty but an equally important concept is data composability. We can also tie in data persistence, or the consistency among all applications.
Here is where enormous amount of value will be generated.
This cannot come from Web 2.0 anymore than the future of the Internet was going to come from the telecommunications companies. Unfortunately, another layer was added that produces friction. We know it as Facebook, Google, PayPal, X, or Amazon.
Web 3.0 has a long way to go in replacing these entities. Mass adoption is not going to happen simply because a decentralized option is available. Most people do not care about that.
It is when the value of data is enhanced through the public blockchains which could allocate resources in a more efficient manner.
We ultimately are looking at something that is an order of magnitude more valuable than what the Internet provided so far.
When people realize this, things will change completely. The only question is who will glum onto it first. Will we see a repeat with venture capital firms and centralized entities moving in to take over?
This is something for the entire Web 3.0 community to decide.