The world is of building a new internet, web3. It's in development, which means makers are currently creating all kinds of solutions to solve various problems. In this article, we explore what is being built, to help you better understand what web3 means.
Web3 is built on the blockchain. It’s more secure, open(source), and creates lots of new opportunities for a digital world. Let’s see in the TLDR section what is going on;
Digital tokens are a form of digital money, which you can buy on (decentralized) exchanges.
DAOs (Decentralised autonomous organizations) are internet native global collectives who work towards a common goal; they share resources and build products. They are bottom-up, not top-down.
Then you have social tokens; they are a way for creators to monetize their work. It’s a way to create mini economies for a community. This is very interesting since it's challenging to monetize your content on Twitter and Facebook (web2), all of the revenue is earned by the platforms themselves.
The metaverse is a 3D experience - an online world - where people can socialize, make profits, and build communities in a different way. It’s like a game. Where most of web2 is about 2D timelines, web3 will be more about spatial interfaces. A spatial interface gives the user more freedom, it's easier to collaborate and more fun to use.
If the crypto space is completely new to you, it all sounds maybe a bit vague. Let’s explore three topics more in-depth. DeFi, DAOs, NFTs.
Decentralized finance is an umbrella term for a variety of financial applications in cryptocurrency. An example of such an application is UniSwap, a decentralized exchange, just like the Nasdaq. DeFi isn’t controlled by a single, central source, just like crypto, which does not have single gatekeepers.
Anyone with an internet connection has access to DeFi apps; they are open 24/7 (unlike the stock market)
Ethereum.org has created a great list of the kind of problems that DeFi is solving:
In today's crypto landscape, most DeFi apps are built on Ethereum, the world's second-largest cryptocurrency. On top of Ethereum, people can build smart contracts that automatically automate a transaction/action when certain predefined rules are met.
DEXs (Decentralised exchanges) is not the only example of DeFi apps. Stablecoins is another example; this is a cryptocurrency tied to a dollar or, for example, a euro; one stable coin is worth one dollar.
But most things we know outside of the crypto world have DeFi apps; think of lending platforms or predictions markets.
In all of these apps, you - the user - has total control over your money. This is different from traditional financial systems (e.g., a bank.)
This space is growing exponentially, which means many new solutions and apps are being developed. All of them are open-source, and some of them are run by a decentralized organization.
Decentralized Autonomous Organizations are an organizational structure built on top of the blockchain with no central leadership, and all decisions are made bottom-up. It's autonomous because everyone within the group can share proposals and vote on the suggested ideas. When you build a new DAO, you set the organization's rules that it needs to abide by.
Aragon, a company that builds software that makes it easy to set up a DAO, calls it “the next frontier of human coordination.”
Starting a DAO makes it easier to allocate capital efficiently and build communities with the goal individuals can collaborate. Everyone has skin in the game.
DAOs are made for the remote world; you can call it an internet native structure to set up a company. It's easier to find talented people if you can see the whole world, rather than just the city you live in, as your talent pool.
DAOs are completely transparent; the balance sheet is available on the chain, visible to everyone.
We are at the beginning of this new technology. Since it's relatively easy to start a DAO, many people will experiment with this, which is great because then the collective can figure out the best use cases.
It's also possible to work anonymously and globally for the first time.
Today the best use case is to set up DAOs for specific problems and create a space with like-minded people who agree to work on solutions, e.g., climate change, inequality, or health-related problems. All these topics should have as few gatekeepers as possible and deserve many different resources.
In our Non Fungible token list, we joke around that NFTs are expensive jpg. This is true, but they are also much more and highly underrated in how this will change our daily lives.
An NFT is a way to verify something, not only art. The lack of verification is a big problem in web2 and the offline world. It's not fungible, where a bitcoin is fungible. This makes it unique and scarce.
An NFT is on-chain; this means it's visible to everyone, and you can trace all the transactions. If we create an NFT and sell it to you, and you sell it again to a friend, all these transactions are visible to everyone, creating trust.
Art is a great way to understand this new concept since its visual. But your work contract or your mortgage is also something that could be NFT. Especially with a house, it would be beneficial to see the history without having to doubt whether it's true; now we have the blockchain to verify these assets.
In the last couple of months, the inevitable move towards an economy driven by tech has accelerated, and NFTs make this shift even more apparent. Where big tech was winning, this recent shift creates a lot of possibilities for individuals. In an excellent post, Jarrod Dicker gives this new movement a name - “The ownership economy”:
A new media structure will be wholly owned by the creators, operators, and consumers themselves. It will be a product of both the public and its producers and not limit participants to a single company.
We are moving toward a world of nomads, traveling from tribe to tribe to work on what and where each individual is excited and in a completely transparent way.
In web3, the maker has more control. They can receive more of the profits (take rate). Social media platforms don’t share revenue with the users; with web3, most of the value is going back to the users. For example, with (web3) social platform BitClout, they only take 10% of the take rate. Musicians keep over 90%, and this is not different in the world of gaming.