How to avoid Web2 mistakes by innovating around Web3
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The Internet has transformed the way we connect, work and play. During the first stage of development on the World Wide Web (Web1), we consumed content and information through simple, static websites. Years later, the web became web2 and was characterized by user-generated content through social media platforms, blogs and networks.
Today, we find ourselves at the periphery of Web3. To achieve this, we experimented with transitions specifically designed to meet the changing needs of users.
And while these transitions were exciting and brought benefits beyond imagination, there were errors and flaws inherent in every step.
Web2 in particular has important lessons to teach us. This phase was dominated by a handful of very large tech companies that were initially led and owned by venture capitalists, then massively fueled by public markets, expansionary monetary policy, lax regulation and privacy concerns.
The future of the Internet is so close we can touch it. But before we allow history to repeat itself with Web3, we need to take a close look and learn from some of Web2’s biggest mistakes.
Zoom to Web2
First, there’s the core business model, which relies on ad revenue as the primary incentive. This model relies on the ownership of personal data in exchange for revenue. For example, Waze built its navigation app not for users, but to capture data on driving habits and then sell the information to advertisers. As a result, ownership of personal and behavioral data is controlled by a few central authorities and privacy is severely compromised.
Another problem is the Big Tech monopoly. Proprietary solutions from companies like Apple, Google, Facebook and others have pushed customers to stay on these vendors’ platforms, in their walled gardens. The risk is shared between the participants, but not the returns. Web2 is driven by the entities that have the most data and can easily monetize the information they hold. Facebook may have been designed as a social networking tool, but today Meta is essentially the world’s leading data powerhouse. Web2 firms are trying to cling to this business model.
And then there’s cybersecurity, where Web2 has had its fair share of flaws. the universal access to applications has created security risks. For example, the fact that private data is controlled by individual companies has led to an increased risk of hacking by bad actors. A major hack could result in the loss of millions of dollars in compromised data. And indeed, there have been many examples of such attacks over the past 10 to 15 years.
Hindsight is 20/20, but could these and other mistakes have been avoided? May be. Think of it this way, Web2’s technology was not where it needed to be at scale for one-on-one relationship and true data ownership. Technology has transformed to adapt to the flow, and vice versa. And we already see a lot of this behavior repeated in Web3.
Where is Web3 going
For example, Web3 enthusiasts and participants are doubling their choice of cryptocurrency between Bitcoin and Ether. These have already earned a reputation as the protocol of choice, and many single-protocol investments, partnerships, and ecosystems are being built with private market funding from venture capitalists and market players.
Also, the user experience bar is too low. Projects are all about speed and capacity, with little focus on actual user experience. Or, they focus on solving a particular problem – such as transaction throughput, smart contracts, etc. – but not on how the problem could be solved with a horizontally integrated approach.
Given the single-protocol approach to crypto, it would be impossible for someone to learn, use, and master every decentralized finance (DeFi) application in every protocol. The large central authorities, for their part, are fighting to maintain their activity.
In one of the most recent developments in crypto, the United States Securities and Exchange Commission (SEC) in February accused BlockFi Lending (BlockFi) of failing to record offers and sales of its lending product. retail crypto. The SEC also accused BlockFi of violating the registration provisions of the Investment Company Act of 1940.
To settle the charges, BlockFi agreed to pay a $50 million fine, cease its unregistered offerings and sales of the loan product, BlockFi Interest Accounts, and attempt to enforce its business under the provisions of the law on investment companies within 60 days. This is the first case of its kind involving crypto lending platforms, according to the SEC.
It’s not too late to fix emerging issues with Web3. Experts believe we are heading towards a centralized and decentralized hybrid world, with multiple protocols needed for long-term success. Web3 has the power to democratize data and assets. More importantly, it can help people maximize their financial return.
Where do we go from here?
Here are some things to consider when trying to troubleshoot these issues:
- A non-custodial multi-asset wallet (which allows users to own and control the private keys to their cryptocurrency) is critical to Web3 adoption.
- The new paradigm is real network ownership. Most big name centralized platforms do not allow users to own their assets. They recreate the IOU system that is in place today on well-known custodian platforms such as Fidelity and Schwab. This “not owning your assets” is a major problem. Many Web3 users don’t realize that they don’t really own their digital assets.
- Network/project ownership gives users a real say in how they are operated. Tools will be needed to facilitate this new form of ownership and return.
- We need a platform and technology to facilitate this, providing a consistent, reliable and multi-protocol spanning user experience.
Fortunately, the technology now exists to reverse the model in Web3, and consumers can truly “own” the data themselves and monetize it however they see fit.
It’s going to take a lot of coordinated work. But when it comes to internet phases, it looks like third time might be the charm.
Tim Tully is the CEO of zelcore.
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