It is easy to overlook Web3. This is a buzzword that get tossed around. Of course, people associate it with cryptocurrency, something that was tarnished by the "price go up" mantra that so many espouse.
That said, there are fundamental reasons why Web3 will be bigger than people think. In fact, this could be as disruptive as the Internet itself.
In my research, I try to understand what is taking place at the fundamental level. This is where we can separate the hype from true technological advancement. With Web3, this takes us down a path not often discussed.
Here we are going to delve into the true transformation that is bringing to light. It is something that has always happened, which is why industries get disrupted.
This is also why Web3 is going to be enormous.
Abundance and Scarcity
We often discuss the Age of Abundance.
This is a bit misleading. In totality, we are going to see abundance as the digital world tends to create more. Actually, that is the path of technology in general.
However, one thing that we have to make clear is that not everything is abundant. There is always scarcity. In fact, value is derived by the shift from abundant to scarce. When this occurs, the value is pushed elsewhere.
For example, the Internet was a game changer for many industries. Why? Because it disrupted the abundance/scarcity equilibrium.
Prior to the Internet, information was scarce. Hence, it was a valuable commodity to have. The Internet changed this, making information abundant.
So what became valuable? The networks.
We saw the rise of Facebook, Google, Amazon, and other companies that were able to control the networks. The second half of the 1990s and early 2000s saw incredible amounts of money spent on building infrastructure. At that time it required spending billions of dollars running cables all over the place.
As we can see, the scarcity shifted.
People question have can there be value in a world of abundance. They key to this is understanding scarcity always exists; it just keeps moving around.
The Disruption of Web3
Web3 promises to be so disruptive for a number of reasons.
To start, using the scarcity/abundance idea, it once again changes the equation. At present, networks are the scarce item. This is because people do not have access to them from a development standpoint. One cannot simply go and build on Facebook's network. The same is true for Twitter.
Web3 makes networks abundant.
Not only can anyone build on a public network, the software is open source. This means developers can fork Bitcoin, Ethereum, or Hive. This means we could eventually see million of networks set up, many for specific purposes.
The second feature that is standard is the ownership of data. Here we also seeing the model switching.
At present, whatever is posted on the siloed system is property of the company behind it. A picture posted to Instagram belongs to Mark Zuckerberg. The same is true for a product review posted on Amazon.
This is not the case with Web3. By having ownership, users are able to [share in the economic value generated through this data. Here we are entering a realm that is only just starting to be realized. data is becoming more valuable with each passing year.
For now, it is going to increase the market capitalization of those corporations harnessing it for gain. Over time, we all will benefit financially as the open source and Web3 communities start to implement it.
Why Disruption Happens
We all heard the term "disruption" but how many have actually researched it? In other words, do you truly know what it means?
If you want some deep dive information, search Clayton Christensen.
Basically, disruption is the entry of a new player into an industry, with a lower quality product that is less expensive. This attracts the more price sensitive buyers as well as newer customers. The threat is ignored by the incumbent until it is too late.
Over time, the product improves until it crushes the incumbent. This firm(s) often realize it at a point where it is too late to change.
We have to keep in mind that existing companies have a lot invested in their present business models. This can be everything from the compensation plans of executives to the infrastructure built to support existing operations.
Even when incumbents see the threat coming, they are often unable (or unwilling) to take the radical steps necessary to fend this off. It happened repeatedly throughout history.
It is also why Web3 is going to spread like wildfire. Everything in the digital world is now up for grabs. We are dealing with a fundamental change in how the Internet, the most disruptive force in the last 150 years, works.
Equity Value
Web 2.0 is an extractive system.
When we look at the different platforms, we see they have their hand in everything. Facebook gets 100% of the ad revenue. Apple takes 35% (or is it 30%?) of sales on its app store. PayPal takes a percentage of every transaction that occurs.
Web3 is going to alter this. There will not be this degree of extraction. Instead, it will remain within the ecosystem, with the members having equity stake.
This, naturally, comes in the form of tokens. We discussed the idea of cryptocurrency being misleading. Here is where we clearly see how these are value capture tokens, hence crypto-assets.
Here we see a massive shift in the entire distribution model. Instead of that being directed to founders, venture capital firms, and investors, we see how those who are generating the value, through their activity, are the ones receiving the financial benefit.
What this means is the userbase is incentivized to grow the value of the network because they are sharing in it. Here is where we see the transformation of scarcity which we will cover in the next article.
In Conclusion
It only makes sense that Web 2.0 proponents, i.e. the ones truly benefitting, are going to slam Web3. This is a tidal wave unlike anything they ever saw before. At some point we will be dealing with a tsunami that obliterates the siloed entities. History shows this is the case.
Even if the Web 2.0 companies wanted to transform, they could not. The likes of Meta and Google have responsibility to their shareholders. Wall Street is not going to allow a company to have bad numbers for a couple years while it transitions to fend off a disruptive force. There are a number of industries where the end of the decade is the end for these companies.
The scarcity/abundance flow is very telling. People who grasp this early can see how disruption happens. Companies spend a fortune building their operations around something scarce, only to find it abundant in the future. Once something become commoditized, like we saw with information, those entities that benefitted take a major hit.
Web3 is going to be much bigger than people think. There is a fundamental shift in scarcity taking place. There are a lot of companies that hold something to be scarce which is actually becoming abundant.
This is the opportunity for thousands of projects around the world.
Posted Using InLeo Alpha
