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Web3 And The Future Of The Internet: Possibilities and Challenges

Published on 
May 4, 2023
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"Is web3 the future or is it just another tech buzzword?"

That is the question.

Last December 2021, well in the thick of the bull run, Twitter ex-founder and Block, Inc. CEO Jack Dorsey threw some shade into the burgeoning web3 movement, splitting opinions between venture capitalists, tech leaders, and web3 crusaders.

Dorsey had some sobering reflections about web3 at the height of the revelry. He tweeted:

"You don’t own “web3.”

The VCs and their LPs do. It will never escape their incentives. It’s ultimately a centralized entity with a different label.

Know what you’re getting into…"

Proponents shilled the benefits, myriad opportunities, and novel forms of real value creation powered by web3. Skeptics chalked it down to just being another piece of tech jargon in a laundry list of many before it that came and failed.

As we enter 2023 – in the thick of the worst crypto winter the industry has faced in a long time – it's clear that there is still some confusion about web3 and its potential to revolutionize industries across the board.

How does the future of the internet – or the era of web3 – look like in 2023?

As we will see, the internet is yet on the verge of another radical metamorphosis, and it's vital to remember that we're still in its earliest stages – but the future remains bright. In fact, it might just look better now that the speculators and degenerates have been largely washed out.

What is Web3? A Quick Rundown

The internet as we know it today is concentrated and highly centralized in the hands of a few corporate conglomerates and tech giants. From web1 (the early web) to web2 (the internet as we know it today), these entities have long dominated the World Wide Web.

None of the data you put on any of the social platforms you use are actually yours.

Everything piece of detail on the major search engines that you use, the websites you use, the ubiquitous apps on your mobile device...all of that belongs to some centralized entity somewhere. It's almost as though you were ordered to be happy owning nothing on Facebook, Twitter, TikTok, and Instagram, to name just a few.

Web3 – the semantic web – emerged as a reaction to these monolithic entities and organizations that (mis)handle and monetize people's content and data. They act as the central scrutinizers of everything that passes through their servers. Everything.

This comes in the form of app store fees (Apple's 30% commission comes to mind), platform fees, or transaction fees. On social platforms, user behaviors, activities, and tendencies are recorded, compiled, signed, sealed, and delivered to the highest bidder – the advertisers.

Web3 is a movement that seeks to transform the internet from one owned by all-encompassing centralized, faceless institutions to a democratic, decentralized, open platform that devolves data ownership back to the people rather than corporations.

The principle behind web3 is that open-source technologies such as distributed ledgers/blockchains, smart contracts, non-custodial crypto wallets, decentralized autonomous organizations (DAOs), non-fungible tokens (NFTs), decentralized social networks, and zero-knowledge proofs (ZK-proofs) empower individuals to create content and online spaces they fully own.

Too much power is consolidated in the hands of the intermediaries or middlemen that provide "free" services in return for your data. You are the product. These seemingly benevolent companies wield extremely disproportionate influence with clear and present ramifications on industry and society – while keeping a substantial amount of value among directors, C-level executives, shareholders, and founders.

Web3 democratizes this power and in theory gives the power back to the end user, allowing them to control and own their digital assets and content they create in a decentralized internet – and it does this through its infrastructure of blockchain technology.

What Challenges Does Web3 Face In 2023?

We can't deny the fact that web3 isn't without its skeptics and critics.

The events of 2022 – the subsequent hangover from the 2021 bull run, to the collapse of Terra Luna, and then to the ignominious end of FTX and Sam Bankman-Fried do lend credence to the criticism.

Unbridled freedom does come at a price, and the complete and total lack of oversight isn't conducive for major corporations to delve fully into it. After all, who do you turn to when there's a crisis on a decentralized network?

Entering 2023, "web3" may feel like an overused buzzword that's had its day in the sun. The same can be said about the actual lack of decentralization for some of web3's biggest protocols.

The presence of grifters, degenerates, and speculators in the scene adding zero value and maximum toxicity haven't exactly helped the industry shake off its critics. Moreover, the 2022 scandals may have caused irreparable damage to the web3 dream – reducing its unbridled value as just another marketing buzzword. Can web3 overcome this perception in 2023? Only time will tell.

The challenges are real, and the builders that remain in web3 will need to address these major sticking points before any semblance of societal buy-in unleashes its true potential.

5 Web3 industry-shaping trends to watch in 2023

2023 may take the industry further and progress towards fulfilling its massive potential and subsequent adoption – or we might see a further rejection of web3 as just giving the same dogs different collars.

It's worth discussing what the future of web3 looks like in the coming year – and here are industry trends that may very well reverse web3's fortunes in 2023.

  • Zero-Knowledge (ZK) proofs. The general idea of ZK-proofs is that they enable users to prove that they know an absolute value to another user without providing any other revealing information. For instance, if you have sufficient funds to avail of a service or buy a product, you don't need to reveal your actual net worth to prove you can buy the asset. The technology behind ZK-proofs enables users, additionally, to sign in to web3 apps or services without collecting any data from them. ZK-proofs can be a game-changing trend in 2023 that leads to security and privacy on web3.
  • Digital asset custody. The monumental collapse of the world's second-largest crypto exchange, FTX – and the subsequent inability of clients to withdraw their funds from the platform – was a clarion call for crypto enthusiasts to be more wary of how they take custody of their digital assets. Not your keys, not your coins. 2023 may see a continued increase in decentralized digital asset custody solutions for high-net worth and institutional investors. More and more established companies have begun providing custodial services and key storage following the highest standards of compliance.
  • Web3 gaming. The advent of blockchain gaming featuring web3 UI/UX is another trend to watch, as is the continued maturation of the play-to-earn (P2E) gaming industry. Blockchain gaming economies will harden and gain better, more equitable tokenomics and game mechanics, despite their relative lack of popularity and confusion about how incentives are paid out. As yet, gamers are more interested in gameplay than the underlying technologies behind them. There's no question that the most prominent blockchain games need an overhaul and reintroduction in the coming year – but with the gaming sector growing year-on-year, this is bound to happen.
  • Virtual and augmented reality. Despite the lack of traction thus far, trillions of dollars are pouring into the nascent metaverse sector – and every complementary market supporting its growth, such as virtual reality, augmented reality, video streaming, and chipsets. These technologies will be at the forefront of digital transformation for major brands entering web3 in the coming years as marketing and customer services pivot their marketing strategy toward augmented and virtual reality. Make no mistake about it – humans will be inhabiting physical and virtual worlds simultaneously.
  • The resurgence of NFTs. The 2022 crash obliterated NFT values and mindshare due to hyper-financialization, speculation, and lack of utility. Utility will be the name of the game in the non-fungible token sector – gone are the days of dropping a random PFP project with no extra added value or community engagement and expecting to run off with the spoils. Utility-focused NFT use cases in industries such as ticketing, education, credentialing, medical records, and certificates. NFTs are far from dead in 2023 – the recent ups and downs are simply to be expected as a maturing technology whose potential we've only just begun to scratch.

The final word: Will web3 become the new standard?

The true believers of web3 will tell you that the new paradigm built on decentralized networks will fully supersede web2 for good.

But experts agree that the best-case scenario for web3 is that its core technology will work to complement web2.

Meaning to say, web3-based startups and businesses will thrive in the next decade.

However, knocking off tech giants like Facebook, Apple, Google, or Twitter off their respective perches anytime soon, or at all – no one is in a clear and definite position to say which "team" will win.

Though one thing is clear as we step into 2023: the companies we associate with web2, as well as established global brands and corporations, will continue to incorporate web3 concepts into their product and service offerings to remain on the island of relevancy than firmly shackled within the walled gardens of major corporations and big tech companies.

Perhaps we should view the evolution of web3 as building novel systems of social consensus rather than a race to become the best decentralized network with the best technology. It's not a question of who has the best tech in the industry, but rather whose social consensus system receives the most buy-in – that is, whose technology is used the most will become the new standard.

Ultimately, the transition toward web3 will not happen overnight. Neither is it going to be easy. But the builders who are committed to creating innovative infrastructure and decentralized applications on the new information superhighway are still here and still building – and the broader business world is taking note as they implement web3 ideas entering 2023. Governments are also acknowledging the industry and technology as they create regulations and implement web3 technology into their plans.

The crypto market downturn may have taken the bloom off the rose, but amid the gloom and doom lies the hope that web3 will fulfill its unprecedented potential.

But as the song goes, "Once in a while, you get shown the light/in the strangest of places if you look at it right."

And the future of web 3.0, web3, the semantic web – whatever you wish to call it – is looking bright in 2023.

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