Web 3.0 Is Coming, and Crypto Will Be Essential to It
Incentivizing individuals to participate in Web3 protocols empowers society. The issue is how much of the internet backbone can be realistically decentralized. The largest trend is likely to be a focus on usability.
Source: Adobe/Maksim Kabakou
First, it was decentralized finance (DeFi), then it was non-fungible tokens (NFTs), and now it seems as though the Next Big Thing in crypto might be Web 3.0. While somewhat vague, this term refers to making the Internet more ‘intelligent’ in various ways, from using AI to proactively respond to user queries to using decentralization to unlock novel functions and experiences.
And given that decentralization is likely to be one of the core properties of Web 3.0, this means that cryptoassets and blockchain will also play a similarly pivotal role. In fact, industry players speaking with Cryptonews.com suggest that crypto will be central to Web 3.0, with cryptoassets serving to create a new system of incentivization and coordination for decentralized internet services.
In particular, crypto might help foster a new Web 3.0 ecosystem characterized by distributed work protocols, decentralized infrastructure and user-owned creator platforms, among other nascent trends. Of course, the industry will need to focus on improving and simplifying user experiences before they can expect to attract a significant level of adoption.
How important will crypto be to Web 3.0?
Originally (i.e. before crypto), Web 3.0 was regarded as a stage in the Internet’s evolution that would be defined by the ‘Semantic Web.’ As pioneer Tim Berners-Lee and others conceived it, this would witness computers and machines “capable of analyzing all the data on the Web.”
However, while this definition still remains to an extent, time has moved on, and now most people working on Web 3.0 technology associate it with decentralization. As such, cryptocurrency and blockchain play a significant, if not indispensable role.
“Crypto and blockchain are a necessity for Web 3.0; they enable the three key characteristics of Web3 — decentralization, permisonlessness and trustlessnes,” said a spokesperson for the DFINITY Foundation, which oversees the development of the Internet Computer (ICP), the USD 9.2bn platform that aims to challenge the monopoly of big tech.
Adam Soffer, the product lead at the decentralized video-distribution platform Livepeer (LPT), agrees with this assessment, arguing that cryptocurrencies and blockchain are at the heart of Web 3.0.
“They are what allow developers to embed economic rules and incentives in open source software and create token-coordinated networks. Incentivizing individuals to participate in Web3 protocols empowers developers and society to tackle problems that require large scale coordination,” he told Cryptonews.com.
Not everyone in the industry agrees that crypto will be essential to Web 3.0, but they nonetheless all concur that it will be highly important. According to Trade the Chain senior research analyst Nick Mancini, there’s likely to be a division between the public and private sectors and their utilization of cryptocurrencies.
“Cryptocurrencies, as we see them today, are likely to largely be for public and open source utilities, which is where the market will head for anything built around a community or consensus aspect. For private companies with no need for cryptocurrencies, they will probably build private systems that interact with public systems, but have no need for internal economies or full consensus-driven models,” he told Cryptonews.com.
Likewise, Frank Mong, Chief Operating Officer of Helium (HNT), the developer of decentralized wireless infrastructure, doesn’t necessarily agree that crypto will be indispensable to Web 3.0, but he does suggest that blockchain and cryptocurrencies would add a unique incentive for people to behave differently from how they do using the Internet as it is now.
“If the incentive was to keep things private and keep things encrypted all the time and the more you did that the more crypto rewards you earn, then the current behavior of collecting private information and reselling it for rewards would stop,” he told Cryptonews.com.
While Mong acknowledges that blockchain can provide a decentralized way to onramp to the internet, he also reminds of an important issue.
“I think the issue is how much of the internet backbone can be realistically decentralized. If the core is still owned by a few large entities, then those entities can still censor or create barriers to independence and privacy,” he added.
Examples of Web 3.0
In terms of the platforms currently offering examples of decentralized Web 3.0 technology, there are unsurprisingly differing views as to which are the most notable.
For Adam Soffer, projects falling under the category of “distributed work protocol” are among the most interesting. This includes Filecoin (FIL), which “is a decentralized, open-source storage network that allows developers to build new ways of storing data in their apps, as well as empowering individuals to move away from centralized storage services that monetize data and don’t guarantee privacy.”
It also includes the Graph (GRT), which enables users to extract data from blockchains about blockchains. “It allows anyone to build and publish open APIs, or subgraphs, that can be interrogated for a huge range of information on crypto trends,” Soffer explained.
Predictably enough, Soffer also includes Livepeer among his favorites, a platform which provides distributed infrastructure for key services such as video transcoding at a fraction of the cost charged by central providers. “These are provided by node operators (known as ‘orchestrators’ in the Livepeer community) who compete on the grounds of service quality, price, and location,” he said.
Arguably one of the most prominent examples of Web 3.0 is the Internet Computer, which is aiming to offer a decentralized version of the Internet and of various web-based services and sites.
And according to the DFINITY Foundation’s spokesperson, there are a number of platforms already operating on Internet Computer which highlight the potential of Web 3.0. This includes DSCVR (a decentralized version of Reddit that’s owned by its more than 12,000 users), OpenChat (a real-time messaging app with 19,000 users), and also Distrikt (a community-owned professional network that lets users vote on upgrades and will never sell their data).
Observing the sector from the outside, Nick Mancini holds that the most promising Web 3.0 sub-areas include decentralized exchanges, media, art and storage.
“Decentralized exchanges like Uniswap and Sushiswap are changing how we trade tokens, Steemit is changing how we communicate, OpenSea is changing how we buy and sell digital art, and Filecoin, Storj (STORJ), and Sia (SC) are leading the charge on decentralized file storage. These are just a few examples of the companies tackling innovation in three worlds ripe for disruption,” he said.
Looking to the future, Frank Mong says that “decentralized infrastructure” will be the biggest and most important trend for crypto-related Web 3.0. This may not be entirely surprising, given that Helium is a public blockchain aimed at incentivizing the development of a decentralized wireless network.
“I believe this has to happen for true Web 3.0. We are working on it,” he said.
While Adam Soffer expects NFT- and DeFi-related platforms to receive the most attention in the short-term, he also expects other areas to gain prominence in the medium-term.
“In the near future I see [decentralized autonomous organizations], distributed work protocols, and decentralized/user-owned creator platforms such as Audius.co and Glass.xyz (which are themselves powered by distributed work protocols) trending in a big way,” he said.
In addition to this, the DFINITY Foundation expects decentralized social networks to become big, particularly in response to the privacy invasion, platform risk and censorship synonymous with legacy networks such as Facebook.
“Gaming will also become very popular on blockchain. Gaming is the perfect use case for NFTs,” its spokesperson added.
However, one important trend for the near future, according to Nick Mancini, will be usability, which will be paramount if all the other trends — infrastructure, work protocols, social networks, gaming platforms, creator platforms — are to reach a critical mass.
He said, “The largest trend is likely to be a focus on usability. To achieve mass adoption, projects need user experiences that are so simple 'your grandparents could use it.'”