The Future Challenges of Web3

Intro

Digital innovation based on the development of decentralized technologies (such as blockchain, asset tokenization, and decentralized finance) has, and will increasingly have in the future, direct interconnections with the real world. Web3, or the decentralized Web, aims to revolutionize the Internet by transforming it into an open, secure, and user-centric place. It is rooted in the principles that inspired the creation of Bitcoin: a suite of permissionless and highly interoperable protocols built on Smart Contracts, with open-source software and peer-to-peer architecture.

A radical change compared to what we are accustomed to thinking today, but it is the natural evolution and technological revolution we are destined to reach.

But what steps are necessary to make this technology accessible to everyone? Who are the players that can make a difference?

If we analyze the past, we can affirm with certainty that, whenever new products or services are introduced to the market (whether related to technological evolutions and innovations or not), it necessarily takes time before we can observe mass adoption. The initial periods are even characterized by public skepticism and bewilderment, because the vision that enabled the creation of these new products or services is not easy for everyone to understand. In his book, “Crossing the Chasm,” Geoffrey A. Moore shows a model that dissects and represents the phases of high-tech product adoption.

The model goes through five phases based on the psychographic characteristics of customers in each phase: innovators, early adopters, early majority, late majority, and laggards. Everything revolves around two fundamental concepts: innovation and trust. Innovation is the means to reach early adopters and opinion leaders, but it alone is not enough for mass adoption because the masses need something that has already been adopted and used, whose purpose is to solve their problems without “experimentation,” thus avoiding the risk of failure that could negatively affect ROI (Return on Investment). This is where innovation gives way to trust. In this case, trust addresses the public’s need to have an economic advantage over existing technology, to be easily usable, and to have a social context for its use. Think of recent innovations such as the Internet, email, QR Codes, the iPhone, Tesla, and so on. They have all gone through these macro-cycles before being used by the masses. And why should the path of Web3 and its associated technologies be any different? In this specific case, I feel we have already surpassed the first phase and are in the midst of the second, with Early Adopters taking the lead.

But what are the challenges the future holds to accelerate mass adoption? What are the fears that plague the early majority?

First, we must contextualize the momentum: we are in an era where information or misinformation is accessible to everyone. Just open the Internet or, worse, social networks, to get answers to our questions, but can we say whether these answers are correct or manipulated? I will not delve into this debate but ask you to think about the first thing the masses associate with Bitcoin. Many of you probably thought of scams, economic bubbles, fictitious technologies with little real-world application, and so on. But how many, before passing judgment, actually understand what this technology is and what benefits it could bring to the real world? The same thing happened between the late ’90s and early 2000s with the famous dot-com bubble: the creation and subsequent failure of poorly capitalized, small companies that saw technological progress as a speculative wave, fueling the bubble until its collapse. History repeats itself, but it becomes even more complicated because the last decades have been fertile ground for customer centricity and Web2.

Web2 and the Needs of the Early Majority to Reach Web3

In the early 2000s, the concept of dynamism, social interaction, collaboration, and sharing of one’s content developed worldwide, all through the World Wide Web. Thus, Web 2.0 was born, making the Internet much more interactive thanks to advances in web technologies like HTML5 and Javascript. Mobile, social, and cloud were the three fundamental layers that led to the birth of this new Web. Known as the Social Web, Web 2.0 enabled the development of interactive platforms like Facebook and YouTube. This allowed the use of user-generated content and made it possible to distribute and share data across various platforms and applications. While Web1 was about accessing information, Web2 is about creation and contribution. It became the foundation for the commercialization of the Internet, and it is in this phase that e-commerce, social media, and virtual communication platforms took off. These same years were also characterized by a process known as Customer Centricity: companies sought to understand their customers’ true interests to maximize satisfaction and strengthen trust. Companies particularly benefited from the expansion moment of Web2. Increased connectivity facilitated better interaction and communication between organizations and their customers, leading to greater satisfaction and increased revenues. It also reduced the time-to-market of products while lowering communication, travel, and operational costs. Marketing became more targeted and measurable than ever, and access to competitive knowledge outside an organization was just a click away. But all this power came with compromises, notably at the expense of users’ personal privacy. These platforms on which we all depend (both personally and professionally) are centralized on servers owned by a small number of large companies. This means that an enormous amount of power and control is concentrated in the hands of a few, a fact that has caused much concern in recent years. Users “pay” to use these platforms by giving up the rights to much or all of their personal data: their name, date of birth, IP address, device, browsing history, and even purchasing habits. All this data can be collected, stored, and then sold to advertisers, often without the user ever being aware. In short, while in Web1 users were consumers, now with Web2, it is understood that they are the product.

Web3, Its Characteristics, and AI

Thus, Web3 is the natural transformation of a technological, social, and cultural evolution that we will inevitably face because it aims to solve many of the shortcomings associated with Web2, which its users complain about at the peak of its usage. A new vision of the Web where decentralization and blockchain technology can guarantee greater privacy, security, and trust in online interactions. Addressing those Customer Centricity needs that require control over one’s data, identity, and resources; applying the principles that are the DNA of blockchain:

• Decentralization: Web 3.0 will have no central point of control; decentralization and blockchain technology will change the way data is used and monetized, with the individual in control.
• Increased information availability and interconnectivity: Given the decentralized nature of Web 3.0, larger data sets will be available, meaning there will be more information for algorithms to analyze. This will further help people get more accurate information that meets their specific needs.
• Greater navigation efficiency: The developments we have seen in recent years have made search engines better at showing relevant results. However, some of the systems used, such as social tagging systems, can still be manipulated. With Web 3.0 and smarter algorithms, AI should be able to filter even manipulated results and provide users with unbiased data.
• A personalized Internet experience: By applying semantics on the Web and enabling machines to decode meaning through data analysis, Web 3.0 will provide a personalized Internet experience. For example, leveraging smarter AI systems, Web 3.0 can improve advertising and provide users with useful and relevant ads to their needs.

Its decentralized protocols will allow people to connect to a new generation of the Internet where they will not only own their data but also control who profits from their time and information. Additionally, the use of more advanced AI and machine learning algorithms will ensure a more personalized user experience. For example, non-fungible tokens (NFTs) already provide creators with better and fairer compensation, allowing them to profit directly from their work through built-in royalties. Cryptocurrency will play a huge role in Web3, with tokens acting as a financial incentive for users to participate in web governance. Token holders can form communities, known as decentralized autonomous organizations (DAOs), and vote on how the funds of a decentralized app (dApp) are distributed. Blockchain-based games, dubbed “play-to-earn” (P2E) games, are a great example of this system in action. In P2E games, players are rewarded for their time and participation with digital money or NFTs, which can then be exchanged on decentralized exchanges (DEX). Additionally, crypto wallets will eliminate the need to rely on centralized third-party electronic payment systems that require users to provide sensitive information and personal data. Many participants in this space believe that this will help with financial inclusion for the unbanked populations, as decentralized services do not rely on traditional credit scores.

Killer Application and Conclusions

In essence, the direction is the right one; we “only” need to find the Killer Application that can make this technology trusted by a large number of people, companies, and corporations. To enable this, we need to involve the early majority and thus:

• Focus on the end-user: Highly technological sectors must rely on Senior figures from the “new economy” capable of embodying the innovative vision of blockchain, thinking not only vertically about technology but also about how to make it easily accessible to the masses. Currently, a major limitation is the speed at which this technology continues to evolve, to the detriment of its “grounding” in real life.
• Integration to overcome biases: The term aggregation is very popular at this historical moment, and its use is strictly necessary in this sector. Recent narrative events have demonized Bitcoin and decentralization, instilling in laypeople the bias that it is always a scam, completely fictitious, and not applicable to the real economy. Industry insiders must practice integrating the new technology with the UX and UI of Web2, possibly even modifying those definitions to which we are all attached (NFT, Token, Metaverse, etc.) in favor of less technical terminology. Take NFTs, for example: they have enormous potential for real-life application, but due to the bubble created in the last bull run, everyone thinks they are overvalued trading cards. But what if tomorrow a Web2 site were to create its loyalty campaign using Tiers that leverage blockchain technology, would the user notice if we didn’t call it an NFT? And could both the company and the customer benefit more than they do today? The Tier could simply be a digital card, registered on the blockchain, whose owner is unique, can easily prove ownership and perhaps be the only one with those characteristics (or be part of a customer sample), and can even resell it if no longer interested, profiting from its status. Conversely, the company could use blockchain to register its customers and start creating new back ends that leverage this technology to streamline its processes. A revolution in the CCare world if we want to broaden our view.

Ultimately, the road ahead is still very long, but the path has already been taken; it is a matter of mental, legal, and social elasticity, but the coming years will be governed by those Geoffrey A. Moore calls the Early Majority.