A New Interactive Landscape: Web 3.0

Navigating the Vision of Web3

By John Paul Oei

What is Web3?

Web3, or Web 3.0, refers to the development and vision of a new, decentralized internet that allows users to have greater control of their data and online experiences. This vision stems from the birth of the blockchain, the decentralized public list of information, and the desire for greater transparency in the use of data by large companies such as Google. The thesis of Web3 generally states that the blockchain will be used in new and innovative ways to build products that preserve data privacy. Blockchain technology and its use has thus increased dramatically in use in recent years, branching into new industries that make use of the tech in innovative ways.

How is the Blockchain Used?

The typical example use-case of blockchain is in cryptocurrency. Cryptocurrencies are digital currencies that use the blockchain as a ledger, ensuring legitimacy of both the transactions and the currency used. This initial use of the blockchain was to counter the ever-changing and inflating fiat currency of the USD, as many currencies such as Bitcoin require an arduous process, usually in the form of a complex math problem in order to create additional coins.

Decentralized finance (DeFi) is an emerging financial technology that spawned out of the crypto industry. It promises to challenge traditional banking with platforms that provide lending, borrowing, and trading services to anyone who has an internet connection. Many platforms utilize tools like Natural Language Processing for smart banking contracts that expand the capabilities of the user and enable a more efficient financial experience. Developments of DeFi include movement towards AI in Automated Market Makers and algorithmic stablecoins.

With blockchain technology innovating the finance space, people are also realizing its capability and applying it to solve common problems within other industries, expanding the influence of Web3. The main benefit of the blockchain is its decentralized nature. The built-in privacy aspect of the anonymized ledger adds an extra layer of security to its data that old databases lack. Companies in the Web3 space are now realizing this attribute can be leveraged in industries that suffer from data privacy issues. Some of these industries include healthcare, with securing patient data, cybersecurity, and operational management.

Risks

Though the concept of Web3 is enticing for those who wish to innovate, it also presents multiple risks and challenges. Regulatory uncertainty comes with any new technology, but the regulatory environment can significantly impact Web3’s growth and adoption. Additionally, many blockchain startups struggle with scalability due to multiple factors including a lack of user understanding and security vulnerabilities, as products like smart contracts are still prone to errors or hacking. There are also environmental concerns as many blockchain networks require large amounts of energy that must be addressed as the technology evolves.

Conclusion

The Web3 industry is at the forefront of technological innovation, offering new ways to interact with the digital world. While the opportunities are exciting, it's essential to approach Web3 with caution and awareness of the associated risks. As the industry continues to evolve, education, responsible investing, and a focus on security will be critical for individuals and businesses looking to navigate the Web3 frontier successfully.

Sources:

https://www.forbes.com/sites/bernardmarr/2023/09/15/3-major-ways-web3-will-disrupt-the-financial-serv

ices-sector/?sh=576383ca6a63

https://hbr.org/2022/05/what-is-web3