In the twinkle of an eye, the internet as you know it today may be shaken with big-tech giants being replaced by emerging technologies. In this article, we explored the current state of the web and how we can rebuild internet interactions based on new frameworks. Learn more below.
Made for Tech-Giants - Call it Web 2.0
The web as envisioned by Tim Berners Lee was supposed to be a system where anyone could access information for free (although science-based at the time). However, the internet today is a far cry from that vision as big-tech giants sit in the middle of the system harvesting and monetising the data of users.
A 2019 report shows that 43% of total internet traffic came from only Meta, Google, Netflix, Apple, Amazon, Microsoft. And these institutions are all centrally owned and managed. Facebook, for example, allows users to create and share content on its platform while monetizing their data behind the scene. The principles applied here can be seen across several industries in the world as the internet has become the primary office of many businesses of today.
The financial industry, for example, is largely controlled by intermediaries who typically use the money of depositors to create markets and earn good profits without rewarding them adequately. Mat Dryhurst, an artist and researcher, stated that "in its current state, the internet can largely be characterized as a place where a very few people in charge of very few platforms dictate conditions and agreements for a great many atomized people." Users who contribute to the growth of these platforms with their content/funds have little or nothing to show for it while still paying the price for service with their data.
A common pattern is revealed here - one central authority sets up a platform and retains total control, intermediates between users (creators and consumers), charges both parties for this service in money or personal data.
Web 3.0 - Rebuilding the Web: Blockchain technology, Smart Contracts, DeFi, DAO, NFT & Metaverse
Blockchain technology is a distributed ledger for securely recording information/transactions that are cryptographically linked to each other in a peer-to-peer network. As opposed to centralising data with one entity like in Web 2.0, blockchain uses a peer-to-peer approach for distributing data among several nodes in a network. At the core of this are three fundamental features - decentralisation, immutability, and transparency.
Nodes in the network own a copy of the entire blockchain and reach consensus before any update is made to the ledger. No one party can make changes to the records in the network or prevent another user from participating, hence making blockchains censorship-resistant. All updates made to the network are immutable and even if a bad actor tries to game the system, the high transparency of blockchain systems ensures they fail and fetches them out.
These features of blockchain makes it the perfect foundation to build the future of the internet and enable it to fulfil all the lofty expectations placed on it.
Currently, blockchain technology is transforming businesses in different industries of the world and has brought several innovations along with it. With blockchain technology, supply chain traceability is improved, personal identity management systems become highly secured, ownership of data is proven easily, security breaches are prevented, there's no central point of failure, and of course, there's a new wave of solutions propelling the Web 3.0 movement.
The idea of smart contracts was first proposed in 1994 by American computer scientist, Nick Szabo. While they didn't gain much attention in preceding standards of the web, they form the basis for many Web 3.0 protocols.
Smart contracts are autonomous self-executing agreements programmed into computer codes that act based on a predefined set of rules.
This removes the need for a trusted central party to intermediate between internet users as smart contracts automatically enforces terms of agreement in a contract. Hence, allowing even anonymous persons to conduct transactions within themselves without needing any legal arbitration of any kind. Parties involved are certain of the outcome as long as they fulfil their end of the agreement. The oldest representation of how a smart contract works can be seen in vending machines.
These smart contracts are built on blockchains and inherit all their underlying features - once a smart contract is deployed, it can't be reversed, the terms are publicly verifiable and can't be manipulated. With smart contracts fees for internet services are greatly reduced while increasing speed in the same process and further shifting power away from intermediaries. Smart contracts can be used for business management, crowdfunding, health systems, insurance, etc. Smart contracts and blockchains have set the pace for rebuilding the internet into a user first technology through DeFi, DAOs, NFTs and Metaverse.
DeFi, short for decentralized finance, is an ecosystem of financial products and services leveraging smart contracts and blockchains to create a fairer and open financial market for the world. In DeFi, smart contracts and blockchain technology replace banks and other financial intermediaries to make financial services cheaper, faster and more accessible.
A host of DeFi protocols are currently providing services such as decentralized digital payments through cryptocurrencies, lending and borrowing, decentralized exchanging, insurance, staking, cross-border payments, etc. DeFi lending and borrowing platforms, for example, offer APR (annual percentage rate) of up to 15% for liquidity providers with the ability to earn in compound interest. Borrowers could easily access loans in minutes.
In contrast to the traditional banking sector where depositors receive meager interest rates and loans take days (sometimes weeks or months) before they are approved. DeFi also reduces the fees charged by these intermediaries. Another major benefit DeFi brings to the world of finance is a low barrier of entry as anyone can easily use DeFi protocols just with an internet connection. regardless of race, religion, gender, region.
Decentralized autonomous organisations are democratic internet-based organisations that automate decision making through smart contracts. DAOs eliminate the need for a central structure of authority as they enable organisations to be collectively owned and controlled by internet users.
Decisions are reached through a system where members submit proposals that are subject to a voting process. Users typically pool funds together in a smart contract and in turn receive tokens representing voting rights. Members vote on proposals with these tokens and the smart contracts automatically execute them based on the voting outcome.
DAOs use blockchain technology to record and store all decisions and activities that occur within them, hence, enabling anyone to publicly verify their activities. This allows internet users to form and manage organisations by themselves without surrendering power to one central authority who may be biased or limited in quality decision making. The potentials of DAOs can potentially rewire the structure of business organisations on the web.
NFTs & The Metaverse
NFTs, short for non-fungible tokens, are digital tokens used to denote ownership of specific assets - both digital and physical - on a blockchain ledger.
In economics, fungibility refers to the property of an asset to be interchangeable with other assets of the same kind. A popular example of fungible assets are fiat currencies, cryptocurrencies, commodities or goods. Non-fungible tokens, on the other hand, are unique and not interchangeable. They can be used to represent almost any assets on the blockchain from music, videos, stickers, articles, paintings, game characters, deeds to land or car, legal documents, invoices, tickets to events, etc. NFTs can be traded on digital exchanges and allow for the speedy transfer of assets.
Through blockchain technology and smart contracts, ownership of NFTs are easily tracked and publicly verified. No one party can delete, modify, or copy an NFT. One of the stand out benefits NFTs brings to the Web 3.0 revolution is found in the content creation business. NFTs give content creators the ability to earn more both passively and actively for their efforts.
The Metaverse, on the other hand, is a network of interconnected digital environments -social media, gaming, - powered by virtual and augmented reality, NFTs and digital currencies. The Metaverse expands the use case of cryptocurrencies and NFTs pushing the internet from a 2D age to an immersive three-dimensional environment.
The different building blocks explored here are only just the beginning of the Web 3 revolution. These technologies are gradually changing how the web functions and they are empowering internet users over centralized platforms as seen in Web 2.0. Web 3.0 is still in its early stages and with time its full potential will be made manifest. Get set for the revolution.
In our upcoming Web3 report, we covered the momentous growth of the NFT market as well as major events and innovations that followed during its breakthrough year. Subscribe to our newsletter to stay connected.