Web3 and the transition towards true digital ownership

Web3 and the transition towards true digital ownership

Were you unable to attend Transform 2022? Check out all the summit sessions in our on-demand library now! Look here.


How do you think you would answer if I asked you the following questions: What do you own online?”

In real life, you own your home, the car you drive, the watch you wear, and anything else you’ve bought. But do you own your email address or your business website? What about the photos that fill your Instagram account? Or the in-game purchases on Fortnite or FIFA video games or whatever else you play?

My best guess is that after casting your mind over the things you use the internet for (which for everyone is pretty much everything, socially and professionally), you’d struggle to come up with a solid answer.

Perhaps you will ask me to explain what I mean by “ownership.” But it doesn’t really matter. And while I don’t think this is a trick question, it kind of is. Because in the current version of the internet, we don’t have ownership rights on the web.

Event

MetaBeat 2022

MetaBeat will bring together thought leaders to provide guidance on how metaverse technology will transform the way all industries communicate and do business on October 4th in San Francisco, CA.

Register here

Digital ownership: Participants and products

To understand why we don’t own anything online, we must first understand the evolution of the internet and how it gave rise to the business model that has dominated its current iteration.

In the 1990s – the decade of desktop computers and dial-up connections – the internet was mainly a content delivery network consisting of simple static websites that displayed information. What we today refer to as Web1 was slow, siloed and disorganized.

Then came the platforms, such as Facebook (now Meta) and Google, driven by wireless connectivity and the development of hand-held devices such as laptops, smartphones and tablets, which gave us free-to-use services that allowed us to edit, interact with and generate content. These platforms centralized the web, putting in place a top-down structure that made users dependent on their systems and services.

This development of the internet took place in the mid-2000s and is the version we know today. We call it Web2. It is a model based on connectivity and user-generated content, created in the image and interests of companies such as Facebook, Twitter, Instagram and YouTube.

In this environment, online users are both participants and products. We sign up for services in exchange for our data, which is sold to advertisers, and we create content that generates value and drives engagement for these platforms. We do all this while not having rights to anything online.

Our social media profiles may be removed and our access to email accounts or messenger apps suspended. We do not own any of the digital assets we purchase and have no autonomy over our data. Companies we build online are often dependent on platforms and are therefore vulnerable to algorithms, data breaches and shadow bans.

The deck is stacked against us. Because the option of not being involved, when so much of the commerce and communication in the world takes place online, isn’t really an option at all. And yet there is nothing we can point to and call our own. Nothing we have any real authority over.

And it is this dynamic that Web3 is determined to change.

Web3 and the “internet of value”

Right now, when most people hear the term “Web3,” they probably think “metaverse.” But a better way to think of Web3 is the evolution of the internet.

Today, the digital experience is very corporate and very centralized. Web3 will offer the dynamic, app-driven user experience of the current mobile web in a decentralized model, shifting the power of big tech back to users. It will do this by spreading the data out—putting it back into the hands of online users who are then free to use, share, and monetize it as they see fit—and expand the scope and scale of interactions between users and the internet.

The basis of this extension will be guaranteed access, which means that anyone can use any service without permissions and no one can block, limit or remove any user’s access.

The idea then is that Web3 will not only be more egalitarian, but that it will create an “Internet of Value” because the value generated by the web will be shared much more fairly between users, companies and services, with much better interoperability. Users want full ownership, authority and control over both the content they create and their data. But how will this help us transition to true digital ownership?

NFTs hold the key to digital ownership

The truth is that digital ownership is not also difficult problem to solve. And we already have the solution: NFTs.

In the public consciousness, NFTs are known for the projects that have received the most media attention, such as CryptoPunks and Bored Ape Yacht Club. While projects like these have thrown the term into the zeitgeist, the usefulness of the underlying technology has been much less discussed.

Simply put, NFTs act as proof of ownership. The details of the NFT’s holder are recorded on the blockchain, all transactions and transfers are tracked and transparent and accessible to the public, and everything is managed by the token’s unique ID and metadata.

So how does this work in practice? Let’s say I create an NFT. As soon as I upload it, a “smart contract” is created that tracks the creation, the current owner, and the royalties I will receive. If someone decides to buy it, they own that NFT and any additional benefits that come with ownership. Their details are recorded on the blockchain and no one can edit or remove them.

Now let’s say the market for my NFTs starts to heat up, demand grows and the value of my collection starts to rise. If the owner decides to sell, they earn and I earn a small royalty on the resale. The change in ownership is tracked on-chain in real-time, and the smart contract ensures that my royalty fee is deposited directly into my wallet. This is the key value proposition of NFTs: Verifiable ownership and the ability to liquidate digital assets.

What’s next for Web3?

This is what ownership looks like in Web3. It is the promise that online users will be able to own their digital assets in the same way as they own their home, car and watch. NFTs will usher in a fairer digital economy and will play a central role in the future of digital commerce.

The fact is, right now we’re still writing the Web3 rulebook. This is still a very new, very young space. And while few things are certain, what we can say with certainty is that the internet is only moving in one direction: ownership.

The guiding principle of Web3 is to accelerate the transition towards a fairer digital environment. There is a lot of opt-in, an internet built by the people for the people. It is one where ownership is the foundation on which new products, networks and experiences are built. And it is fundamental to establishing the internet of value.

Over the next few years, as Web3 evolves, it will work alongside Web2. The infrastructure supporting Web2 is very strong and I don’t see us moving away from it completely anytime soon. But in the medium to long term, Web3 will completely reshape our relationship with the internet.

Filip Martinsson is co-founder and operations manager at Moralis.

Data Decision Makers

Welcome to the VentureBeat community!

DataDecisionMakers is where experts, including the technical people involved in data work, can share data-related insights and innovation.

If you want to read about cutting-edge ideas and up-to-date information, best practices and the future of data and data technology, join us at DataDecisionMakers.

You may even consider contributing an article of your own!

Read more from DataDecisionMakers

Leave a Reply

Your email address will not be published.