Trillion-dollar digital behemoths like Google and Amazon tower over us. They’re too big to fail. They’re also too big to care – about user privacy, competition, government regulations or fair play.
Governments are trying to restore some of this digital balance. In the US, Google faces an antitrust trial. In Canada, Facebook and Google are fighting a new law compelling them to give media companies more of the profit extracted from readers and viewers. In the European Union, the Digital Markets Act demands fair treatment of user data. But governments can’t fix this alone.
Even the World Wide Web’s founder, Sir Tim Berners Lee, says technology giants are corrupting his vision of the Web. Our privacy is relentlessly undermined. Social media hurts our kids. Screenwriters, artists, musicians and actors lose control of their work. The web is polarizing and spreads disinformation.
But new technologies — collectively known as Web3 — could put the digital age back on course.
The original web – Web1 — was largely static content that existed on websites. Then, Web2 emerged in the mid-2000s, with collaborative apps and online communities.
Web2 brought global connectivity and economic gain, while empowering underrepresented voices. But these benefits came at a cost. Google and its lot rely on advertising, so they suck in as much user data as possible. While valuable for personalizing content, recommendation engines encourage echo chambers, while amplifying extremism. Apple and Google also control access to iOS and Android operating systems, and charge steep admission costs.
Web3 offers to fix many of the Internet’s shortcomings. Web3’s core technologies involve blockchain networks like Ethereum, artificial intelligence (AI), the Internet of Things (IoT) and extended reality (XR).
Finance is a key area where the promise of Web3 is already being realized. The digitization of assets through software known as “tokens” provides Internet users with an economic stake in their digital existences. Via tokens, individuals can transact peer-to-peer without intermediaries, like a big tech company or a bank. Tokens are containers for value, just as websites are containers for information – catalysts for enormous change.
Tokens are already big business – most notably stablecoins, which are backed by US dollars. After growing to more than $100 billion, traditional players are taking notice of the stablecoin market. PayPal, for instance, announced its own stablecoin, PYUSD, in August. Citigroup shared plans this week to tokenize all institutional customer assets. Visa enables merchants to settle in real-time with stablecoins, and even J.P. Morgan plans to tokenize deposits so they can be moved around the world without friction.
Web3 also simplifies how creators monetize and track their work while helping culture-makers get paid more fairly. Indeed, artificial intelligence could actually help creators thrive. If their intellectual property is used to train AI, they could receive royalties instantly and digitally. In Web3 we do not need lawyers to enforce terms of contracts because Web3-enabled smart contracts are self-executing. Already, creators have earned $24 billion selling their work as NFTs in Web3. To put that in context, Spotify — a classic Web2 platform – paid artists $7 billion in royalties in 2021.
In Web3, creators can also make money from the resale of their work without relying on third-parties to keep track of their IP. At least 300 creator-led Web3 projects have captured at least $1 million in these secondary royalties. An artist-centric model places more power in the hands of the creators and their patrons and less in the hands of big-tech platforms.
Then there’s the realm of digital infrastructure. For the moment, all Web2 applications and services run on cloud networks such as Amazon Web Services. In other words, the companies that develop Web2 apps also control and store their data. For now, at least, most Web3 applications still rely on that very same infrastructure – an admitted achilles heel. To fulfill Web3’s true promise — from the computing needs of AI to virtual environments and blockchain platforms — we must wrest control of this underlying digital infrastructure. Core functions such as internet connectivity, storage and spatial data must be decentralized across users and multiple companies.
The impact of this evolution will be enormous. User-owned networks enabled by Web3 will be worth $3.8 trillion by 2028. Consider Hivemapper, a crowdsourced mapping project that has already mapped 5 million kilometers, or 8% of the world’s roads, using a high-tech dash cam — along with a dash of AI. It’s a tidy example of technological convergence. Unlike Web2 companies such as Waze, Hivemapper’s biggest volunteers are also its largest economic stake-holders. Through platforms such as Hivemapper, Web3 turns internet users into internet owners.
The solutions to many problems of the digital age are human. Because technology can only get us so far. Web3 is by no means a panacea and — like its predecessors — has its share limitations. The proliferation of tokens has raised concerns about gambling and speculation. The regulations around Web3 are still porous and unclear and leaders of older paradigms may try to co-opt them (AI, for instance, remains in a regulatory limbo almost everywhere). And despite its potential to democratize digital culture, there is no guarantee Web3 won’t create a new crop of ultra-powerful entities who perpetuate many of the mistakes and inequities of Web2.
Ultimately technology has no moral agency. It is not inherently good or bad — and its power must be equally wielded by both those who create and use it. The Web is entering a brave new era — where the freedom to transact peer-to-peer, preserve user privacy, and opt out of powerful platforms will finally be enshrined in code.
Alex Tapscott’s book WEB3: Charting The Internet’s Next Economic and Cultural Frontier, was released this week by HarperCollins.
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