The term “Web 3.0” has re-emerged in reference to the current blockchain revolution. Ready or not, digital natives are taking the internet into their own hands. Artists and whales are assuming pseudonymous identities and defining new governmental constructs. Music lovers are bringing back P2P music. Collectors are transacting billions of dollars in digital art. Financial experimenters are inventing new unregulated financial instruments. Entire countries are endorsing and adopting digital currencies.
The term “Web 3.0” or web3 is being used to refer to the decentralization of user identity, ownership, and organizational governance enabled by blockchain technologies. While the space is still chaotic, there is a large set of technologies emerging (eg. cryptocurrencies, The Internet Computer, DAOs, and non-fungible tokens) to support the decentralized world.
We should acknowledge the bear case. Prices are volatile, often inflated, fraud happens, illegal transactions are enabled, Ponzi schemes celebrated, and so-called “stable coins” are propped up on assets more questionable than a stack of subprime mortgage champagne glasses. It’s still the wild west.
Here’s how I’m thinking of it. Imagine a new country and government (DAO) was formed on the moon, with its own currency and shared computing resources. Instead of a treasury administering the money, it was code. Individuals living on the moon then transacted directly with each other using code (smart contracts) to establish the rules. Now imagine someone born on the moon traveled back to earth and had to interface with your business.
What do people want and why?
Access, trust, transparency, and reliability. Technology is expanding into ever more facets of our daily lives. As email is to snail mail, cryptocurrency is to your online bank account.
It’s appealing for funds to travel from person to person, without the vulnerability of being stored on a centralized server. When a game (for example) enables assets to be re-sold and re-used outside of the game, it opens up exciting new possibilities. But didn’t iTunes beat Napster because convenience beats decentralization? At the moment, the decentralized internet is slower and less convenient than the “managed” internet. The bet is that it will become faster and more convenient over time.
What opportunities does Web 3 pose for new and existing businesses?
Here are some conversation points, and links to existing work that demonstrate the effect of Web 3 on new and existing businesses.
- Identity. The name you have now is effectively your “state given name.” As consumers adjust to their public key being their identity, they will want to sign in using a wallet. Idea: Gravatar (and other metadata) for public keys. A DID standard is in the works for giving everything on the distributed internet a unique ID (much like a URI on the existing internet).
- Governance. Businesses will need to interface with (participate in, send payments to, communicate with) DAOs. Idea: aggregate DAO proposals and provide analysis to the voting members (for a fee). Tribute is a service to help anyone create a DAO.
- Payments. Wires, remittances, compliance. Businesses will need to interface cryptocurrency balances with their existing accounting systems. Idea: bulk payments. For example, Audius struggled to payout to 10,000 addresses.
- Data Storage. Arweave.org, Filecoin. Many blockchain systems are slow and publicly visible services, but if your company has a large amount of data, or wants to certifiably track the history of the data… or especially, share data with a business partner (think supply chain) – blockchain is a choice to consider.
- Legal Contracts. Businesses will need to participate in decentralized contracts as part of the normal course of business.
- Intellectual property. Blockchain could be used to establish the provenance of data used in academic research and publish patent-like records.
- Messaging. XMTP. Idea: Mailchimp for sending messages to 1000s of wallets at a time.
- Consumer financial services. Managing multiple wallets. Tax calculations. Earn interest on your holdings. Eco Phantom
- BlockChain meta-services. DNS for finding wallets (ens.domains), and verifying their ownership – eg. to perform a bank transfer. Handshake. Also, archiving and searching transactions is a giant task.
- Defi. Investment, loans, Compound. Polychain. Idea: banking service to automatically balance a corporate account.
- Currency trading. Uniswap acquiring and trading cryptocurrencies has become a huge business.
- Hosting, IT, Infrastructure, Regulation. Run code on a blockchain-based distributed network. Private chains. Chia. Fleek. Keep. Oasis. VPN Orchid. Solana. Idea: Webflow for decentralized web hosting. Running your node.
- Real-time payroll. Hourly workers can get paid immediately for every hour (or minute) worked.
- Content. Cryptokitties Foundation.app OpenSea
- E-commerce. OpenBazaar
- Creators. Rally.io
- Media. Audius.co Simplified digital rights, royalty collections, and the transactions among a (hopefully smaller) number of intermediaries.
- Advertising, attention. Brave
- Developers. Workflow tools. Infrastructure for hosting a blockchain. Near
- Cashless / Mobile / Emerging world. Celo Diem Cryptocurrencies enable cross-border payments without bank fees. El Salvador has made Bitcoin an official currency and companies like Starbucks and McDonalds accept payments which mean customers can pay electronically without having a bank account.
- Shipping. Blockchain could provide a shared ledger for asset tracking.
- Manufacturing. Materials provenance and counterfeit detection (via the shared database provided by a shared blockchain). Supply chain monitoring for greater transparency.
- IOT. Modern devices can generate terabytes of information. A distributed and possibly shared ledger of events and data is a potential blockchain application.
- Compliance. Could you write software to facilitate continuous SOC certification or HIPAA compliance? What would submitting your tax return look like on the blockchain?
- Play to earn. Axie is a game where you can play, invest, or build a business paying others to play. NFT based games.
- Learn to earn Rabbithole, 1729. Coinbase provides sophisticated ad placements where currency organizations offer tokens to users for watching videos.
- Judge to earn. “People will be able to serve as judges via decentralized protocols and will be paid for their input. They will build a reputation, which will impact their earnings and future opportunities.”
- Participate to earn. For example, delegating your votes to another participant to vote on your behalf. “These delegates, or protocol politicians, will eventually be a meaningful segment of the participate-to-earn opportunity set. How they will be compensated is a topic of ongoing debate.”
- Wealth management. For consumers, products are starting to emerge that allow you to manage both your traditional and crypto investments. There may still be a need for services catering to corporations.