When most people hear "blockchain technology," they think of Bitcoin and other cryptocurrencies that folks have been investing in at the right time to try to get rich quick.
With all the hype it's easy to dismiss, most aren't aware, however, that this technology has evolved to create a new form of ownership, not just of money but of organizations, art, all forms of digital property and even historical artifacts. The possibilities are endless.
It is actively breaking down barriers to finance and fundamentally changing the way we deal with money (and all forms of property) online.
What business owners really need to be paying attention to is the application layer being developed as it will inevitably impact many businesses in the future. It's like when smartphones got apps, at first it was mostly just games but it introduced new ways we did things with our phones. Web3 is the app layer of blockchain and is introducing new ways we will use The Internet.
It's like when smartphones got apps, it introduced new ways of using our phones. Web3 is the app layer of blockchain and is introducing new ways of using blockchain technology.
But first, you need to understand what Web3 is and how it works.
What is Web3?
According to Packy McCormick "Web3 is the internet owned by the builders and users, orchestrated with tokens."
Or to put it another way: using various types of tokens on the blockchain you create a way of exchanging property and information without needing platforms middlemanning (and taking fees) from every transaction.
Many people are categorizing the history of the Web as:
Web 1: The Information Economy
- Read Only
- Dominated by newspaper sites like Yahoo
Web 2: The Platform Economy
- Read / Write
- Dominated by social media like FaceBook and YouTube
Web 3: The Token Economy
- Read / Write / Own / Execute
- DeFi and "the metaverse"
Over the past year the momentum has grown. Creative people have started building some very incredible applications which are just starting to show how powerful this blockchain application layer will be.
What are some Web3 use cases?
So tokens, property rights, decentralization... sounds good but what is it actually used for?
This is very new but we're starting to see some very interesting things develop, including:
1) Decentralized Finance (DeFi)
- People are pooling money to make loans and anyone in the world can participate.
- Large funds are being raised for initiatives like buying carbon credits, works of art or even the constitution
2) In-game economies
- If you've ever played a MMORPG video game you have seen they have their own in-game currencies. Now people are playing games and the money is real.
3) Governance experiments
- Tokens can also give you access to voting rights. Organizations know as DAOs (Decentralized Autonomous Organizations) are being run off members voting on policy proposals on platforms like https://snapshot.org/ and the ethereum name service just launched tokens and is holding a vote with their users on its constitution.
4) Power to content creators
- By representing ownership of art with NFTs (non-fungible tokens) artists can go directly to patrons with a smart contract and be able to have a clear, direct relationship with the people consuming their art. Scroll around https://opensea.io/ or https://objkt.com/ and see all the different artists creating and selling their work.
Web3 introduces a real ownership model to the Internet that combines economics, art, technology, game theory and technology in an incredibly interesting way.
This is just starting but the trajectory is up and momentum is moving it rapidly. The changes for business owners will likely be larger than the magnitude of how mobile or the Internet itself changed the way businesses worked. It's certainly a space worth paying attention to and fun to experiment in.