Web3, predicted as a new digital paradigm based on decentralisation and blockchain technology, is closely related to other technological trends such as the metaverse. And despite a number of challenges to overcome on the road to its adoption, the new era of the web may be closer than we think.
During the early days of the web, open protocols and static pages designed to be viewed passively dominated. With the emergence of the major social networks, new interactivity options, the personalisation of content defined by algorithms and the promotion of audiovisual formats, what experts call Web 2.0 was created. This evolution towards more connected global networks would also be characterised by another factor: the beginning of the big tech hegemony. Now, the so-called Web3 could be the beginning of a new chapter in this story.
This new stage of the web aims to move towards a digital economy without intermediaries, giving users control of their data and giving them the opportunity to take a slice of the pie. Supported by blockchain technology and linked to other trends such as DeFi (decentralised finance), its advocates predict that it will represent a new era of the Internet that is more democratic, decentralised and monetisable.
What advantages and challenges will Web3 bring? What business opportunities does it open up? How will it progress in the coming months? These were the questions that BBVA Spark in Mexico wanted to answer at the recent Innovation Masterclass on Web3 and metaverse.
Towards a definition of Web3
The co-founder of the open source blockchain platform Ethereum and creator of the term, Gavin Wood, defined Web3 in 2014 as a reinvention of the web where relationships between parties would be fundamentally different, with less reliance on central authorities. A proposition he summarised as “less trust, more truth.”
Since then, the ideal of decentralisation as a way to give more control back to users and of blockchain technology as a guarantor of transparency has been gaining momentum. Although they are sometimes used interchangeably, the main proponent of Web 3.0 or semantic web—the so-called father of the Word Wide Web, Tim Berners-Lee—insists that Web 3.0 and Web3 are two distinct concepts that should not be confused.
“It is clear that Internet 2.0, as we know it right now, is changing,” explains Iván Moreno, from the Strategy and Digital Assets Department at BBVA. “The expectation is that users can interact with other users and environments at the same time, in a secure and decentralised way, to ensure that they have full management and control of their identity and assets.”
Frida Vargas, general manager of Binance in Mexico, emphasised during the BBVA Innovation Masterclass how the new stage of the web will allow for the elimination of intermediaries and give value back to users: “The transition to Web3 will allow you to become the owner of your digital identity and choose how to monetise it.” This new stage, which marks a turning point in the evolution of the Internet, will open up new economic opportunities and allow users to tokenise their digital identity, make peer-to-peer transactions without intermediaries and guarantee the ownership of their content through NFTs (non-fungible tokens). These digital identities and assets registered and protected through the blockchain could also be a strong impetus for the development of an integrated metaverse and a seamless user experience.
An opportunity to transform finance
Those in favour of Web3 say it will be the source of major changes in the business sector, including finance, driving trends such as decentralised finance (DeFi). “A value chain of new financial services is going to be created,” notes Vargas. “Web3 offers new investment options, to generate liquidity protocols or even to issue debt.”
“We are creating a new financial model based on a technology and even new company and business models,” explains Marcos Carrera, head of blockchain and Web 3.0 Iberia at Fujitsu. “On top of the traditional shareholder model of a company, another complementary one is created, the ‘tokenholders’, and value is distributed to both.” By tokenising a piece of content, the creator perceives the value generated and in turn returns it in the form of value to the community through that token and its usability. This generates what Carrera describes as a regenerative economy. Because the differential value of Web3, the expert emphasises, is precisely that: “You create a token with a very simple offsetting entry, which then adds value and can be exchanged for another type of service. Thus, out of nothing, we have generated a value economy”.
The road to Web3
Back in 2014, Gavin Woods predicted that more and more websites would use Web3 components (such as Bitcoin) in their ‘back-ends’ until, eventually, they would move to a proper Web3 browser. But what are the challenges to be overcome to achieve adoption at this level?
- Scalability. Currently, the drivers of Web3 “are focused on building the connections so that different open source protocols [in particular, solutions that allow blockchain networks to be scaled up] can connect and function in a faster and more flexible way,” explains Frida Vargas of Binance.
- Accessibility. “There is an effort being made to understand how we can make Web3 interfaces easier to access and more user-friendly,” Vargas says. Marcos Carrera, from Fujitsu, agrees that usability is one of the most important factors: “The closer we get to the point where using a platform is simple and you don’t see any blockchain, the closer we get to the point of adoption,” he explains. “There is a lack of more business and humanistic profiles, not talking so much about technology, but about solutions and people.”
- Security. For Carrera, another key aspect for the development of Web3 is crypto-cybersecurity: “Being able to mitigate risks is going to allow us to have a lot more confidence when it comes to adopting this technology.”
- Regulation. “This year we are going to experience a spectacular moment in the legislation, which is going to help to bring about a massive adoption of Web3 by institutions and big players,” predicts Carrera. “We are in favour of having a regulatory framework to provide security to users,” adds Binance’s Frida Vargas, who also stresses the importance of dialogue with legislative bodies.
- Alliances. “To be able to offer market solutions, the blockchain world will have to have centralised components,” says Iván Moreno, of BBVA. “A regulated financial sector must be a participant in this new paradigm of the decentralised economy and contribute what it has contributed throughout its history: confidence and guarantees to users.”
But if there is one thing that could be a really valuable lever for the development of Web3, it is the openness to the coming changes on the part of organisations, legislators and users: “Banking institutions such as BBVA and the regulatory bodies must become part of this new wave. What’s more, they should take the lead,” says Iván Moreno of BBVA.
A decentralisation paradigm capable of blurring the boundaries between traditional banking and DeFi, a business opportunity available to everyone and a technology that determines a new era of the World Wide Web. Will Web3 be all of this?
