What all entrepreneurs need to know about Web3

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You almost can’t escape the hype surrounding NFTs, cryptocurrencies, and Web3. Some say these technologies will revolutionize every aspect of society. Others say this is a false dream.

Since the majority of entrepreneurs do not focus on technology, it can be difficult to understand Web3 and what the future means for your business, especially when it is still in focus.

If you have no idea what Web3 is or why it is important, you are not alone. The term was coined by the co-founder of Ethereum, and it is actually quite obscure. But enthusiasts say that Web3 is the future of the Internet and there are two main ways to define it.

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The potential future of Web3

One potential future of Web3 is an integrated blockchain internet. Cryptocurrency and NFT will be integrated into the platforms we use daily.

Now, blockchain is another hot topic that could lead to some question marks for entrepreneurs. To put it simply, a blockchain is a digital ledger. Arranges information in a publicly visible digital series of “blocks”. It is well known that this is what cryptocurrency is built on. However, it can be used for a variety of applications.

Web3’s second potential future is more complex and controversial. Enthusiasts say that Web3 will lead to a completely decentralized Internet owned by users, not businesses. Blockchain and its many applications can help realize such a future. But critics say the same has been said about the cryptocurrency itself, and it has so far failed to do so.

Cryptocurrency was created and branded as a way to give individuals power over their finances. So far, instead of revolutionizing the world of finance, it has become a high-risk speculative investment category without any consumer protection. Instead of promoting justice, the world of cryptocurrency and NFT is full of scams and unpredictability.

With one Bitcoin costing more than most Americans would in one year, there are definitely questions to be asked about who the cryptocurrency gives it financial strength and freedom. But keep in mind that even though we’ve been in the cryptocurrency space for several years, it’s still a relatively young industry, with plenty of room for growth.

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What does decentralization mean?

According to some Web3 proponents, the Internet is currently owned by a small group of companies. Think huge companies like Meta, Amazon, and Google. They call this “electronic feudalism”. Basically, they claim that we all “digitally toil” about the default characteristics of Mark Zuckerberg and other tech giants.

Web3 is the fix, they say, bringing back the power to its users. Here is a look at what a hypothetical decentralized social platform might look like: Instead of undergoing an IPO, the platform will generate crypto tokens and then deliver them to early users. People will be rewarded for spreading quickly or using the platform with tokens, which can also double as governance tokens. Users can use tokens to vote on important platform decisions, from content moderation to other wide-ranging policy issues.

Essentially, instead of the company deciding how the platform operates and which users live with the impact of their decisions, users will collectively set the rules.

Wait, what happened to Web1 and Web2?

To some, it may seem like we’ve gone straight from zero to three. Fortunately, Web1 and Web2 are easier to understand than Web3. This is partly because Web3 is still largely speculative, while the first two actually paid off.

Web1 is the first iteration of the internet when your computer shrieked practically every time you went online. Think of the slow, static web pages of the 1990s. The Internet at that age was mainly used to digitize and share existing media, such as books, magazines, and newspapers. By the late 1990s, the blog was born, and for internet savvy, a new opportunity to engage with the masses.

Web1 also runs on an open source protocol. This is one aspect that Web3 evangelists want to return to.

The evolution of Web2 began in the early 2000s when the Internet began to become more widely read/write. It has evolved from a place where the average user logged in to see content into an accessible platform where more users can create, share and store unique information, photos and videos.

Including the rise of sites like Facebook (now Meta) and YouTube, this era eventually spawned transformative technology like e-commerce, social media, and the creator economy.

Web3 advocates essentially want to provide the complexity of Web2 with the open source, community-governed nature of Web1 – via blockchain technology.

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Controversies surrounding Web3

There are a lot of ideological and practical battles surrounding Web3. Some, like Elon Musk, say it’s just a buzzword right now. However, he does not rule out his future.

Critics say that incentivizing users to take digital action with tokens can create a situation in which ill-intentioned actors seek to participate at all costs. However, it can be demonstrated that even without emoticons, many social media users are already doing so. This may just be a side effect of the mass use of the Internet.

Beyond philosophical questions, many have questions regarding the viability of a modern, decentralized Internet built on the blockchain. Ethereum, on which many potential Web3 projects are based, is incredibly inefficient.

It has a high environmental cost and is expensive to operate on a large scale. This means that for many small businesses, it is not possible to adopt at the moment.

While many are working on building apps on top of Ethereum to make it work better, some critics question why we’ve poured resources and talent into fixing the big problems of such an inefficient foundation.

Also, the main advantage of the blockchain is that it stores information publicly, so that all users can see it. In some cases, this is a useful innovation; However, in some applications, allowing all network users to see anyone’s complete transaction history would be a downside – and potentially dangerous.

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What does Web3 mean for your business?

At the moment, Web3 is largely default. This means that no one is completely wrong or right about that. We don’t know what it will be after, or if it will be anything at all.

Some say it will create a just, digital future governed by society. Others, such as former Twitter CEO Jack Dorsey, Say It will only lead to an alternative central authority.

There are some malicious actors who are using these futuristic buzzwords to hurt people. For example, the British military’s social accounts were recently hacked to promote scam NFTs. According to a Federal Trade Commission (FTC) report, Americans have lost over $1 billion to crypto scammers this year alone.

It is important as a business owner to have a basic understanding of the capabilities of Web3, so you can make smart decisions to take advantage of any technological advancement and avoid the risks of drifting into hype.

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