How Tech Giants Became Giants
Platforms and companies that won and came out far in front in the era of Web2.0 could do so by aggregating user data. These tech giants grew more powerful, and so did their ability to provide unmatched personalization and customer experience.
When users sign up for services in Web 2.0, they submit their data to intermediaries to accomplish anything. Once that is done, the user has little to no control over what happens to their data and how it will be utilized.
Tech companies closely guard their secrets. And, even if a user deletes their account, there is no way to ensure that their data gets wiped out, too. In recent years, through massive data breaches, consumers of Web 2.0 realized that their attention is the currency and perhaps their data.
Services such as Google, Facebook, YouTube and Amazon that are free to use are leveraging user attention and data to make money elsewhere. For instance, Facebook (Meta) tracks user behavior data to fine-tune its algorithm to an extent where its ad targeting and content feed are dramatically more efficient than any other social platform’s.
The tech giants of Web 2.0 became so because they held control of user data, locked it in and leveraged it to create a competitive advantage.
The disadvantage for users is that even if they are dissatisfied with a service and how they handle their data, there is nothing they can do about it.
Related Reading: The Next Evolution of the Internet: From Web2 to Web3
Is There a Better Way?
Web3 proposes a better way. Instead of exploiting user data to make money, Web3 takes on the approach of building open platforms that share value with users to create more value for everyone, including the platform.
In Web3, users own the content they create as well as the data and digital objects they purchase throughout their engagement with Web3. A key part of Web3 is the blockchain-powered sovereignty of data, a reason why Web3 is also called the “creator economy”.
Many issues with Web2 came down to the concentration of power and lack of representation and participation in building and using its tools. Web 2.0 companies were built to make profits so that customer experience and needs came second.
One may argue that even a majority of Web3 builders are the same as Web2 developers. However, unlike Web2, it is easier and more accessible for anyone to build for Web3.
Related Reading: How DeFi and Web3 Could Shape the Future of Finance
Web3 Proposes Portable Data
Digital assets for the Web3 economy are typically created as per interoperability standards on public blockchains instead of being privately hosted on a particular company’s servers. This means that these assets are portable.
A user can leave a given platform whenever they want to by unplugging from the app and moving elsewhere, along with their data. This ability for users to walk away with their data is fundamentally different from how their data is handled in Web2 and can introduce a healthy competitive pressure for services and platforms to do better continually.
How Interoperability in Web3 Enhances Digital Experiences
If a platform doesn’t offer a preferable digital experience, users can simply move away from it. In Web3, new market entrants can incentivize high-value users to move to them. For instance, the NFT trading platform LooksRare, built by anonymous founders, challenged an industry leader, OpenSea, to produce $307 million in protocol revenue within 30 days of launch against OpenSea’s $110 million over the same period.
LooksRare used the vampire attack strategy for its launch. Vampire attacks are a crypto/Web3 phenomena that refer to a method to suck users from an existing platform by offering a lucrative incentive.
The dynamic of Web3 is less zero-sum (one person’s gain is equivalent to another person’s loss), so the overall value creation opportunity is huge. If platforms build on an interoperable layer, they can plug into broader content networks, expanding the scale and diversity of value they can offer users.
Web3 Offers Trust
The cost to create user trust is low in Web3 as the underlying technology is blockchain. Digital assets are managed on public ledgers so that users can clearly see which assets exist and who owns them. If an artist claims that an artwork is limited to 400 editions, then prospective owners can identify and verify the information on the blockchain directly, without having to place their trust in the artist or an intermediary organization.
Even software that runs Web3 platforms is inherently trustworthy as key operations are encoded as smart contracts, which automatically execute when certain conditions are met. Smart contracts are auditable and immutable, allowing a platform designer to commit upfront to certain design features, such as royalty agreements and pricing rules.
Related Reading: Web3 and Metaverse: Key Challenges
Unknown Entrepreneurs Can Leverage Web3
All these features mean that it is easier for unknown entrepreneurs to create for and launch in Web3. Entrepreneurs can create products that plug into an existing network without needing permission from an established platform.
However, plugging into a network does not guarantee success or user engagement. Entrepreneurs still need to build a product that solves a user need. Once a founder has that, they can leverage established networks and easily deploy and scale their offering.
Is Web3 Safe and Accessible to the Regular Internet User?
Several malicious actors have emerged on Web3 to leverage the hype and high volume of transactions on Web3 to carry out scams. Many Web3 experiences of today were meant for the more tech-savvy power user and not the ordinary user with limited to no knowledge of vetting source code.
There’s still a long way to go before Web3 applications can be securely rolled out to the general public.
Web3 Turns Users Into Fans
Web3 applications hold the potential to unlock a special network effect by making users feel like part of a community invested in its success. Owning digital assets leads to a sense of psychological ownership, making consumers feel like the product is almost an extension of themselves.
SushiSwap, a fork of Uniswap, set up a strong brand and community with an active reward system for users to drive high engagement and positive sentiment about the platform, quickly emerging as a successful competitor of Uniswap.
Web3 can unlock a more valuable, trustworthy .and fair internet for everyone. If you’re looking for consultation or implementation around your Web3 idea, KiwiTech’s Web3: Center of Excellence should be your go-to place. Our free initial consultation with experts can instantly put you ahead of the curve in this booming industry.