The term Web3, sometimes referred to as the "decentralized internet," covers some important internet trends. The vision of Web3 is to create an internet that is not controlled by big corporations like Alibaba, Baidu, Google, and Facebook that set most of the rules of the internet and control what we can and cannot do online today.
There are many technologies behind Web3 such as blockchain, cryptocurrencies, non-forgeable tokens (NFTs) and decentralized autonomous organizations (DAOs) to name a few, giving us the tools we need to create the online space we truly own , or even implement a digital democracy.
Why Web3? A brief look back at the history of the web shows that Web1 was the first era of the Internet, which was primarily a read-only network of static websites. Web2 (or commonly referred to as web2.0) refers to the user-generated web, and with the advent of social media platforms like Weibo, WeChat, and eventually Facebook, this brings us to Web3 - the decentralized network.
The idea is not without its critics, however, as some worry that, in reality, it might simply mean a shift of power from one group of technocrats to another. It was also emphasized that in order to run technologies such as blockchains that make decentralization possible, it often takes a lot of computing power. These are of course challenges that need to be addressed before the concept will gain social buy-in, which is what it needs to reach its potential. In 2023, we may see progress in this regard, and we cannot continue to be pessimistic. So let's take a look at some of the trends that will shape the future of Web3 in 2023.
Decentralized Metaverse
The metaverse is pretty much a hot trend right now, with everyone from Facebook to Microsoft MSFT pitching their concepts and ideas for the "next evolution" of the internet. However, the future supporters of Web3 have their own ideas, and they do not involve the platforms controlled by these giants and major manufacturers.
DecentralandMANA +6.7% and The Sandbox are perhaps the two most visible examples of decentralized metaverse platforms. The data that makes up these digital worlds is stored on a blockchain -- EthereumETH's blockchain, in fact.
This means that, in theory, only those with permission can edit, add and delete content. The servers that house the data that makes up the entire world have no individual owners who can censor activity that doesn’t align with their political views. This obviously doesn't suit a company like Facebook, which owns the servers and will always have the final say.
The decentralized virtual environment is the core part of the next decade of Web3, and it will bring us a beautiful vision. In 2023, we can expect pioneers to continue laying the foundations that will eventually make it a reality.
Practical NFT
Non-forgeable tokens (NFTs) are unique tokens that exist on the blockchain. Unlike cryptocurrencies, which may have millions of identical tokens existing on-chain, NFTs can be used to represent something unique.
Most of you have probably heard of NFTs, which are pieces of computer art that often sell for thousands or millions of dollars.
Facilitating the sale of digital artwork, however, is just one use case for them, their real value for those who believe in the future of the decentralized web lies in the tokenization of items, data, and even ideas across the digital and physical realms.
In a decentralized internet, NFTs may be the keys we use to unlock and interact with the digital products and services we purchase. They may also represent contracts we enter into with other parties to obtain goods and services, known as smart contracts.
In 2023, the focus will be on "practical NFTs" rather than NFTs that simply represent virtual works of art. Hopefully this will lead to a change in thinking about this potentially highly transformative technology and a better understanding of their place in the nascent Web3 ecosystem.
One of the goals of Web3 is to create a decentralized social network. If it does come to fruition in 2023, it might even be thanks to Elon Musk.
The Tesla CEO has spoken of wanting to create a social network where users pay a small amount of cryptocurrency every time they post to deter giants and spam. These ideas came to light amid legal action surrounding Musk's plans to buy Twitter
A core advantage of a decentralized social network, Web3 proponents say, is that it is resistant to censorship. Currently, companies like Meta (owner of Facebook, WhatsApp, and Instagram) and Twitter have the final say on what can and cannot be said. Of course, if Web3 users say whatever they want without censorship, there will come a time when the authority of governments and legislators will be challenged, whether that is a good thing or not.
Green Web3
Even the most ardent Web3 advocates have to face the fact that Web3 technology is called into question when it comes to its green credentials.
At its peak, the BitcoinBTC blockchain network alone would use 130 megawatts of energy per hour, and a single Bitcoin transaction would generate 772 kilograms of carbon dioxide emissions. Clearly, this isn't sustainable, and because of this huge amount of energy usage, Tesla CEO Elon Musk has said it's one of the reasons his company is no longer involved with the technology.
Since then, there has been a concerted effort to reduce energy usage while preserving blockchain and related Web3 technologies. Perhaps most notably, the Ethereum network recently completed a switch from a proof-of-work to a proof-of-stake algorithm, which is said to reduce the total amount of energy used on the network by 98%.
In addition to reducing the amount of energy directly used by Web3, in 2023 we can also expect more and more efforts to be invested in achieving the green goals of Web3 technology. The World Economic Forum has highlighted the technology's potential to enable organizations to coordinate and build collaborative technologies aimed at accelerating climate change mitigation and is currently exploring a project called Regenerative Finance (ReFi), which provides financial Incentives to try to protect resources that are vital to the well-being of humans on Earth.
Increasing government intervention and regulation in the Web3 space
As the transformative impact of this technology becomes more apparent, the likelihood (and some say necessity) of government intervention to monitor and regulate its economic, social and environmental impacts grows.
In the US, states like Wyoming have used their powers to create and pass their own legislation positioning themselves as "Web3 friendly" zones. The idea is that in exchange for being regulated and supervised, businesses involved in Web3 activities will receive favorable treatment and special tax considerations. Also this year, Colorado became the first state to officially accept cryptocurrencies as payment for taxes and state fees.
Outside of the US, Dubai has shown that it aspires to be a Web3 and cryptocurrency friendly society. The emirate has economic plans aimed at attracting companies involved in Web3 efforts to set up operations within its borders, while also promoting itself as a natural home for innovations in artificial intelligence, cloud computing and the metaverse, all of which are closely related to new Web3 developments relevant.
2023 may see other countries position themselves as Web3-friendly, often through the use of central bank digital currency means, such as India's upcoming e-rupee, and my country's upcoming digital yuan.