Tech conversations are now peppered with a new, contentious buzzword: Web3, and we’re all likely to hear a lot more of it in the coming years. It’s an umbrella term for disparate ideas all pointing in the direction of making the internet more decentralized using blockchain-based applications.
If Web3 fully materializes, which we believe will happen once a few acute shortcomings are addressed, it is going to have profound implications. Web3 optimists point to decentralized technology’s ability to challenge the power of big internet middlemen like Facebook, Google, and Twitter, while Web3 skeptics understandably struggle to connect the dots on how the current state of Web3 applications could ever truly rival the user experiences and network effects that Web2’s most successful tech companies have built.
Given the current state of Web3 applications (nascent but improving quickly), you won’t need to squint much longer to see the potential of this technological paradigm shift. Web3 means many things to people, but our team finds the most important characteristics of the shift from Web2 to Web3 to be the following:
Data portability was an afterthought in Web2, but it’s a first-class citizen in Web3
There’s nearly no end-user friction involved in porting your data from one service to another in Web3. We shouldn’t underestimate the impact of improved data portability – users’ aversion to friction influences most of our online actions today, so changing the friction involved in switching services or trying new ones.
Web3 is rewiring incentive structures on the web, unleashing user behaviors that directly challenge the advantages incumbents have long enjoyed in Web2
When the friction of users’ porting data from one service to another service approaches zero, companies will need to radically rethink how much value they extract from users without offering comparable incentives to that user. By making data portability virtually frictionless, Web3 has provided the technological foundation to chip away at the moats many large internet businesses rely on today to fend off upstarts.
While Web3 has the potential to reimagine how we use the internet, it also raises…