Web3 Demystified, by Imad Choucair.
Updated: Sep 29, 2022
I recently read a good book by Shermin Voshmgir named “Token Economy, How the Web3 Reinvents the Internet.” In the second edition of her book, Voshmgir provides a wealth of information on how Web3 will provide a vast token-based economy using blockchain networks. The book covers the history of blockchain and its various networks and protocols, digital assets and NFTs, blockchain strengths and limitations, and many other related topics.
As much as I enjoyed reading the entire book, I got many open questions. The book starts with a bold statement, “The Internet is broken,” and the new Web3 is there to fix it.
So what is Web3? What is broken in the web today, what will Web3 fix, and how? Why do many writers like David Lucatck from Forbes describe the web as closed and static?
What is Web3?
According to the World Economic Forum (WEF), “Web3 will level the playing field and unlock income equality. Web3 is a new approach to corporate governance, value creation, and stakeholder participation.” Also, according to the WEF, in Web3, people are not products but beneficiaries of technology-powered business models, builders, and owners of unique digital assets. So, in simple terms, Web3 is about democratizing the web and unlocking the control of the few players controlling the web today, such as Facebook, Google, Amazon, TikTok, and Microsoft. In Web3, data will be stored and distributed on the blockchain network. Digital assets will be produced and traded by Web3 users on a decentralized and distributed series of blockchain networks.
Web3 will bring new social network systems based on the blockchain. Such systems will bring new innovative user experiences like virtual and augmented realities where users engage, trade, and invest in digital assets. Web pages as we know them today will also be stored on the blockchain and become decentralized.
Who is building Web3?
The Internet is congested with content by companies building different types and flavors of blockchain-based solutions. Such companies are NFTs trading platforms, smart contracts solutions, token-based social rewarding solutions, soft and hard forks of existing blockchain networks (forks are network updates), and many more. Others are using the blockchain to build new organizational models referred to as Decentralized Autonomous Organizations (DAO), claiming that such new organizational structures based on computer software will change the way organizations are designed today by eliminating the existing classical structure. This triggered my extra curiosity as my Doctorate is in the field of organization design and alignment, making me consider writing a dedicated article on DAOs.
Who is funding the development of Web3?
The many hundreds or more companies developing various blockchain-based solutions are funded by various investors who constantly raise funds to accelerate their activities. There is a gray area between blockchain-based technologies and cryptocurrencies, and NFTs. Many investors are perhaps not investing in Web3 but rather in a product that should be like Bitcoin. Some are creating NFT trading platforms, others are converting current assets into NFTs and selling them, and some are creating token-based social rewards systems. Others are producing content about blockchain and Web3 and giving training and seminars. Many articles and books are written promoting the blockchain, Web3, and the metaverse and stating how they will change everything we know. So, a whole industry is entirely doing stuff based on the blockchain.
Is the Internet today broken?
Let’s wind back and talk about the web as we know it. Most sources stating that the web is broken, static or closed refer to the control of a few companies of people’s data and the services provided. So what is meant by broken is not physical or architectural but referring to the model and services. From the technology perspective, it would be hard for anybody to say the internet is broken, closed, or static. It is, in fact, the opposite. The companies controlling the web today are also investing in building blockchain solutions. Meta, for example, has announced and is building a metaverse with Libra token-based cryptocurrency. So, what is happening?
Can Web3 fix the Internet Model?
Web3 and blockchain being the backbone for a new model, do not necessarily solve the assumed problems described with the web. Some may say fixing the internet model does not need to wait for Web3 and does not need moving to the blockchain. Moreover, blockchain does not seem to be the technology suitable for a new internet model, at least today and the following top 10 reasons:
Most blockchain networks are inherently token-based trading platforms and cannot efficiently store different kinds of data structures.
Blockchain networks are decentralized, and each network works on its own. Blocks in different blockchains have different structures, and integrating them through exchanges is not straightforward and is a series source of problems and security risks.
Building a digital identity on the blockchain does not make sense if it is decentralized. This is leading to many blockchain networks built as centralized (owned by specific institutions). This reminds us of Web2.
The blockchain can go out of control at any time. Stealing or unauthorized access to digital tokens is much more accessible than security tokens used today.
Blockchain is much slower in data retrieval than classical databases used today in building social networks. Blockchain is not designed for large data retrieval.
Data analytics is very hard with the blockchain. If you need to extract all blockchain data to build a BI data storage for analysis, that will defeat the entire purpose of the distributed ledger; what about who can and can not do it?
Data on the blockchain is hard to be secured. Very hard to implement comprehensive security and control governance models.
Integrating blockchain with existing databases over the web is very tough and not efficient. Smart contracts can call and receive API calls, but that is so slow and does not scale.
We see today that most blockchains are built to mimic a regular existing architecture and used as marketing tools as being modern and trendy.
Most blockchain solutions do not cover their real purpose of being associated with cryptocurrencies; still, most companies involved in blockchain go out of business for different reasons.
We all know the world is driven by the creation of economic business value. Institutions create products or services, and depending on the demand received, such products gain their value. The internet was not an exception. The Internet facilitated additional business models where the products are the users and the users’ attention is sold, creating a crazy boom in the digital advertising market worldwide.
Is the Internet broken? The short answer is no, whether you like or dislike how the Internet works today. Will the Internet change in the future? My sincere answer is yes; how it will change is a complex subject. Prominent players on the Internet will try to influence the internet in specific directions to fulfill their commercial and strategic objectives while making it attractive to users.
Web3 can be seen as a hope for a better web and by others as an opportunity. Web3 will happen, but not necessarily in the way being described today.
If you see Web3 as an opportunity, that is great, but what you will get out of it would depend on your objectives and approach. It is vital for stakeholders to carefully plan their moves when considering the building of future innovative technology-based solutions. That requires deepening their understanding of what is happening today and developing forward-looking strategies considering the entire echo system and the macroeconomy. Two approaches can be adopted; benefit from the system and/or actively participate, shape, and develop the system.
About the Author:
Imad Choucair has an impressive track record as a business practitioner, leader, and doctorate-level researcher. Imad helps organizations improve business performance through better organizational design and technology.
Imad held vital positions in reputed organizations such as Microsoft Corporation and Dubai Holding’s CIO. Imad is a doctoral researcher candidate focusing on organization design and performance. In addition to his doctorate, Imad holds an MBA from Liverpool University and BS in Computer Science from AUB.
During the past 30 years, Imad helped hundreds of companies and engaged with top senior business leaders all over the region.
To know more, visit the website, www.imadchoucair.com.
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