Covering Disruptive Technology Powering Business in The Digital Age

image
Is Web3 Still Relevant? The Jury’s Still Out, But the Clock Might Be Ticking for This New Paradigm
image
March 1, 2024 News Feature Article Web3

Written by: Martin Dale Bolima, Tech Journalist, AOPG.

 

Not all tech pans out—at least not right away.

This much can be said about Web 3.0, also known as Web3, a fancy term coined by the computer scientist Gavin Wood to refer to what is supposed to be the next iteration of the World Wide Web; new, decentralised, built on blockchain, and controlled by its participants.

It was the Internet for the people, by the people.

That was the plan, at least, with the technology believed to be on track to changing the face of the Internet forever. But is that truly within the realm of possibility for Web3, or has it succumbed to overhype and inflated expectations?

Opening New Gateways of Collaboration and Data Sharing

Kurt Nielsen, President and Co-Founder of Partisia Blockchain, is among the many believers of Web3, which he characterises as having the ability to “transform the data economy.”

“Web3 remains highly relevant and is poised to become even more so with the integration of Multi-Party Computation (MPC) technology,” Nielsen told Disruptive Tech News (DTN) in an exclusive email interview. “Web3 envisions a decentralised Internet where users have greater control over their data and transactions, and MPC is pivotal in achieving this vision.”

Multi-party computation, according to the Institute of Electrical and Electronics Engineers, is a data-sharing paradigm where several parties share data with one another for computing tasks, without revealing the exact data they possess. Hence, with MPC, “all parties are privy to the output of the computing tasks, but no party learns anything about [the] others.”

In simpler terms, it’s akin to sharing without delving into the intricate details—just grasping the end result.

Sharing. Anonymity. Multiplicity. All hallmarks of a decentralised system. All building blocks of Web3. No wonder Nielson remains bullish about it.

“This technology [MPC] will underpin and transform the data economy as blockchain and MPC users get to share the use of data and not the data itself. Hereby, the users are in full control and can keep benefitting from putting private data to work,” Nielson added. “For the ordinary Internet user, the obvious use cases are self-sovereign identity, online advertisement, and health advice. For organisations, the technology opens new ways to collaborate around applications like Decentralised Finance (DeFi), supply chain management, and secure data sharing.”

Indeed, the possibilities are as endless as they are exciting. However, mainstream adoption of Web3 continues to be challenging.

Web3 Is Potentially Life-Changing—If It Goes Truly Mainstream

David Li, Chairman and CEO of the leading global Web3 provider GreaterHeat, knows fully well the potential of Web3 to revolutionise life as we know it. But, at the same time, he knows firsthand the many challenges of actually getting Web3 off the ground.

“Web3 still has value, potential, and impact,” Li affirmed when asked via email by DTN about its demise. “It represents a new Internet paradigm that is decentralised, transparent, and trustworthy, with the potential to profoundly change the way we live our digital lives, from transactions and contracting to social media and content creation.”

Despite this potential, Li admits there are challenges that need to be overcome for these possibilities to come to fruition anytime soon. He identified three of the biggest:

  1. Technical complexity. How to use and understand Web3, cryptocurrencies, and Decentralised Applications (dApps) remains a challenge for most average users, according to Li.
  2. Uncertainty in the regulatory environment. This uncertainty, Li explained, poses risks and uncertainties for both businesses and developers, who will have to follow whatever Web3 mandates governments and regulatory bodies will be implementing. Such uncertainty may inhibit stakeholders and Web3 organisations from entering and innovating in the field.
  3. Challenge of decentralisation. The decentralised design means that network security, data privacy, and scalability all need to be handled in new ways, according to Li. This will require developers, operators, and users to be more aware of these new technologies and tools to ensure they are used correctly and securely.

Add to these what Nielsen describes as “the lack of robust privacy-preservation technology,” which he says has “historically hindered the widespread adoption of Web3.”

“Users and enterprises have been cautious about transitioning to decentralised platforms due to concerns about data breaches and privacy violations,” Nielsen pointed out. “However, MPC technology addresses these concerns by enabling secure and private interactions within Web3 ecosystems. With MPC’s integration, Web3 can overcome this hurdle and gain broader acceptance, ushering in a new era of trust and privacy in online interactions.”

The Building Blocks Are [Somewhat] in Place

The idea of a new era, a new paradigm sounds good. And, for Li, Nielsen, and other Web3 proponents, it will dawn soon enough.

Even McKinsey seems to agree—somewhat and partly.

“Because of the collective nature of blockchains, if and when Web3 fully arrives—elements of it are already in place—it will, in theory, signal a new era of the Internet, one in which use and access are controlled by community-run networks rather than the current, centralised model in which a handful of corporations preside over Web2,” McKinsey claimed in the article, “What is Web3?”

Among these elements are:

  • Blockchain: The so-called digital ledger that is distributed and decentralised, with new blocks added for new data created—all while updating the information in previous blocks. This helps ensure that no single block represents either a point of control or a point of failure.
  • Smart contracts: Software that sets specific conditions to trigger automatic execution. Smart contracts are coded into blockchains, making it difficult to alter them.
  • Digital assets: These are digital items, like tokens, whose value is often volatile. Bitcoin, stablecoins, central bank digital currencies, and non-fungible tokens are notable examples.

It also appears that these building blocks are enough to facilitate actual real-world use cases. An example is the multinational finance corporation JPMorgan Chase making a cross-border blockchain transaction with DBS Bank in 2022 as part of Project Guardian. Another example is digital asset securities firm Securitize launching an Avalanche blockchain-backed tokenised fund in collaboration with global investment firm KKR.

Forging a Path in Finance . . . and Maybe More

The fact that Web3 seems to have found footing in the financial sector is no surprise, as it, along with the gaming industry, is the vertical getting the most disruption from what is considered to be the Internet’s next iteration.

This can mainly be attributed to the gradual rise of Decentralised Finance (DeFi), a financial paradigm that uses technologies like blockchain to remove centralised institutions—banks come to mind here—and other third parties from financial transactions.

Web3 insights“Although the buzz around Web3 may have diminished over the past year, Web3 still holds sway in sectors like finance and gaming. Globally, DeFi continues to grow, with daily transactions volume exceeding USD $10 billion in 2022. Gaming companies like Sony are also starting to explore Web3 gaming opportunities and adopting Web3 components,” said Tony Petrov, Chief Legal Officer at Sumsub, an identity verification firm.

But as Roman Andronchik, FinTech Product Manager at trusted global software development company Modsen, previously discussed, Web3 is actually affecting finance in ways other than enabling DeFi.

“Web3 has the potential to transform the finance and banking industry by creating a decentralised and transparent financial system,” Andronchik wrote back in 2023. “DeFi, digital identity, tokenisation, and CBDCs (Central Bank Digital Currencies) are some of the applications of Web3 that can provide several benefits, such as reducing the cost of financial services, improving financial inclusion, enhancing transparency, and increasing security. As Web3 continues to evolve, we can expect to see more innovative applications that can further disrupt the finance and banking industry.”

In a vacuum, these are highly specialised use cases for a select sector and segment of the general population. But they are irrefutable proof that there is something to Web3—something that suggests a brighter, more promising future.

“Despite its difficulties and challenges, Web3 is still an important technology that is closely related to our daily life, work and social development, and may be widely used in various scenarios in the future,” noted Li, whose company, GreaterHeat, is among today’s major Web3 players.

In the meantime, Petrov wants the various Web3 stakeholders—the businesses that will benefit from it and the regulators, in particular—to come together and institutionalise Web3 by setting regulation and compliance mandates.

“All in all, Web3 is still very much relevant,” he said, “but what is still absent is Web3 compliance and achieving this requires a joint effort from businesses and regulators.”

The best guess, of course, is it will likely take a lot more for Web3 to fulfil its immense promise of changing the Internet forever. But the foundations have already been laid out—and it is solid enough to at least keep Web3 relevant as it continues to hit the jackpot so to speak and hit mainstream status.

(0)(0)

Archive