Is Web3 Really the Future of the Internet or Just Another Buzzword?
VYSYN Weekly Release #89: Web 3.0 app decisions amid recent events raise decentralization doubts
The internet has been buzzing over the development of a decentralized network that will disrupt existing economic and social networking systems. While some believe that this emerging trend, dubbed Web3, is the future of the internet, others feel it is just a fad.
In the latest VYSYN Release, we will give you a comprehensive overview of what Web3 is and what is driving the hype around it. We will also consider recent incidents that have fueled controversies surrounding Web3.
What is Web3?
Web3 or Web 3.0 is a term that is broadly used to describe a new generation of internet services for websites and applications. The ultimate goal of the Web3 movement is to make the internet more open, intelligent, and connected by placing power in the hands of individual users rather than the big tech companies.
The current systems are dominated by large tech companies that clearly utilize user content and data for making a profit while giving back little or nothing to these customers. Internet users sometimes end up being exploited by companies, which is something that Web3 is seeking to change.
To achieve this high level of decentralization, Web3 relies heavily on the revolutionary blockchain technology. This will help develop governance structures that don’t exist in any centralized system. Blockchain-driven structures such as Decentralized Autonomous Organizations (DAOs) will allow users from across the globe to transparently vote on upgrades that will affect the future of the internet using tokens while being rewarded for their contributions.
The digital asset industry, via DeFi and NFTs, offers tantalizing insights into what Web3 would look like. The DeFi space is teeming with thousands of on-chain financial products that address several core problems of the traditional financial system. These products are typically owned and governed by their user community who have the power to decide what happens to the protocols.
NFTs and blockchain-based gaming are currently redefining the concept of asset ownership. NFTs empower art creators to design and issue one-of-a-kind digital artworks that provide indisputable proof of ownership. The introduction of the play-to-earn model in blockchain games is also revolutionizing the gaming industry, allowing players to own in-game assets and get rewarded for the time and effort they devote to the games.
It isn’t just smaller DeFi communities coming together to realize Web3. Tech giants have been making significant moves as well. Last year, the parent company of the popular social media platform, Facebook, changed its name to Meta in reference to the Metaverse, a central part of Web3. Google's parent company, Alphabet, is also toying with the idea of joining the rapidly developing blockchain technology and Web3 space. Interestingly, there are some who do not buy the idea. Some high-profile figures in tech have voiced their displeasure and lack of support for the concept.
Censorship exposes centralization in acclaimed Web3 pioneers
Last year, Twitter's former CEO, Jack Dorsey came under intense heat from Web3 supporters when he called it another "centralized" movement. According to Dorsey, Web3 is just another centralized entity owned by venture capitalists (VCs) and their limited partners (LPs).
Tesla boss Elon Musk also revealed his lack of support for the trending Web3 movement. Musk opined in one of his tweets that Web 3.0 is more of a marketing buzzword than a reality.
While these opposing opinions have been controversial, recent events have led many to wonder if Web3 is sufficiently decentralized. Amid the ongoing Russia-Ukraine conflict, some projects pioneering the Web3 movement blocked users in certain regions from accessing their services. MetaMask and Infura were among the projects that blocked users in certain regions during this global turmoil. Moreover, the popular digital wallet solutions have previously locked Venezuelan users out of their accounts, resulting in them losing access to their digital assets which were supposedly “decentralized” and “censorship-resistance”.
MetaMask noted that its service provider, Infura, was not available in certain jurisdictions "due to legal compliance." The duo subsequently pointed out that Venezuelan users had been accidentally locked out while it was "changing some configurations as a result of the new sanctions directives from the United States" against two separatist Ukrainian regions, Donetsk and Luhansk.
NFT marketplace OpenSea deleted the accounts of Iranian users from its platform, citing the US sanctions list where Iran was included. By buckling to sanctions, these projects are setting a precedent for other "decentralized" projects to block certain users from accessing their services under regulatory pressure. All of this is contrary to the promise of true decentralization that Web3 offers.
Is decentralizing the internet of the future possible?
Web3 can mean different things to different people. Enthusiasts believe that the concept will introduce broader earning opportunities, put power back in the hands of the people, and allow mainstream users to create institutions that will replace existing centralized corporations. Web3 critics argue that it is a scam, a massive bubble, and just a speculative mess. There have also been controversies around its perceived decentralization.
Like the early days of the internet, it is difficult to determine the scope of the Web3 evolution, whether it turns out to be a scam or the internet of the future. As for the promise of complete decentralization, Web3 is nowhere near that goal. However, it is also imperative to remember that Web3 is just a concept, and there is room for more development and innovation.
Inarguably, the current trends driving the Web3 movement, including NFTs, DeFi, GameFi, Metaverse, are introducing innovative solutions to the users. As a result, over $27 billion has been invested in these technologies. While the concerns expressed by critics remain relevant, the large amounts of funds and talent working towards the development of Web3 will greatly influence a positive future.
About VYSYN Ventures
VYSYN Ventures is a longstanding venture capital company that specializes in funding and supporting disruptive startups in the blockchain and cryptocurrency industry. We have provided early-stage support to several projects that have grown USD market capitalizations of hundreds of millions and even billions. Our incubation program focuses on providing capital allocation, versatile marketing support, and tech assistance.