Recent months have seen extensive discussion of what the next generation of the internet, dubbed Web 3.0, will look like.
Gavin wood, creator of Etherium, characterises Web 3.0 as having four main components: “static content publication, dynamic messages, trustless transactions and an integrated user-interface”. Another key component of the Web 3.0 is the addition of machine intelligence, dubbed the “semantic web”.
Cryptocurrencies, notably Bitcoin, are the first major disruptive force to come out of the Web 3.0 and have garnered huge amounts of hype, as we highlighted in a recent blog, with Bitcoin reaching a peak valuation of $19,343 in December 2017.
For its advocates, the Web 3.0 has the potential to provide solutions to everything from security breaches, election fraud and storage, as well as to transform the way we consume and pay for experiences. However, opponents have cast doubt on these claims. Economist Nouriel Roubini notably called blockchain “one of the most overhyped technologies ever”, and the Verge has dubbed the technology “meaningless”.
So, beyond providing opportunities for speculative trading (and generating column inches) what are the key components of the Web 3.0, and how might it actually be useful?
Fintech
As blockchain technology removes the need for an intermediary to process transactions, digital payment companies are already making use of the Web 3.0. Removing intermediaries entirely would dramatically reduce costs for companies and users.
Start-ups such as Stellar and Request Network allow users, banks and payment systems to enable anyone to request a payment at almost no cost. Established banks have also adopted blockchain – Santander last month unveiled a blockchain-based payments system that allows users make same-day international transactions.
Social media
Another key change is around personal data. As the recent Facebook/Cambridge Analytica scandal has highlighted, most large internet companies are currently modelled on the collection of personal data and sale of this data to advertisers. With information on a shared ledger or blockchain, the mass collection of data is no longer possible.
This makes the chances of mass data breaches or leaks much more difficult, as information is not stored in one place, and also has the potential to transform how social media companies are operated.
New social media sites using blockchain include Sapien, a “highly customizable, democratized social news platform”, and Indorse, which has been dubbed an alternative to LinkedIn. The user base of these new sites is still tiny, but looks set to grow, particularly given user’s current dissatisfaction with the traditional social media model.
Entertainment
Creators of content and entertainment have also seen opportunities in the new Web 3.0.
On the Steemit platform – created on the Steem blockchain – content producers are paid by their peers. Popular content gets up-voted, and each vote pays the creator in Steem, the platform’s native currency. Similarly, music platform Voise is a decentralized platform for music, directly connecting artists with consumers.
Removing the need for a single host such as Spotify, Youtube or Netflix, has the potential to disrupt the current distribution of music, film and entertainment, giving more power to smaller producers or individuals.
It’s impossible to predict whether the Web 3.0 will be as transformative as its advocates claim. However, innovations in digital payments, entertainment and social media suggest that it’s more than just hype. Investors in these sectors should take note.
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