What Is Web3 And How You Can Capitalize On The Dawn Of Decentralization
There are a few key moments in the history of the internet where I remember feeling like a new wave was coming.
These are always exciting times because new means new opportunities, especially for entrepreneurs and those willing to dive in and build something.
If you manage to catch the wave as it is rising, your business or project will grow along with it. People will come to you. It will feel like pushing a snowball downhill rather than uphill.
The first time I saw a wave was the late 1990s when the dot com bubble was growing. This was the first time Internet companies were hitting mainstream media, and new businesses like eBay and Amazon were born.
I mostly missed this wave because I was in my late teenage years, too broke and too aimless to go after something serious online.
For the next wave however, I was ready. I was 25, feeling more confident and with more experience.
This new wave was commonly termed Web 2.0, and I jumped in early with a blog and podcast. I grew an audience and then created one of the first ever blogging business courses.
For the next ten years my online teaching business continued to be a success. I sold over $2 million dollars worth of my own digital products while living a pretty amazing life traveling the world.
Today I am 42 years old, and I am quite surprised to feel yet again the excitement of a new wave building, one that I plan to be a part of.
It's called Web3, and in this article I'm going to explain what it is and how you can capitalize on it. It's very early days, so you have a chance to ride this new wave too.
Let's start with a recap of where we have been...
Web 1.0 and 2.0
Web 1.0 was the World Wide Web. An easy to use graphical interface to view content online. To put it simply, Web 1.0 was websites.
Mosaic, one of the first web browsers that allowed you to 'surf the world wide web'.
Web 2.0 took websites and made them interactive. A social layer was added, allowing people to post comments, replies and later interact in real time.
Mobile phones made Web 2.0 portable, resulting in an entire planet constantly publishing content -- posts, pictures, videos -- and interacting with each other.
Along with the explosion of the social web, Web 2.0 and mobile phones ushered in a new era of online commerce. From Uber, DoorDash, Tinder, AirBNB, Zillow, online banking and stock trading, Shopify, Spotify, Netflix, and every product and service you can imagine, are now sold online. Web 2.0 made a lot of people a lot of money.
Web3 is still very new and developing at a rapid pace, but it has its roots in the idea of decentralization, or put another way, open transparent networks of information governed by software and not owned by centralized corporations or governments.
Every business I've mentioned so far from the Web 2.0 movement is centralized.
Companies own what is created on their platforms and charge some kind of fee for taking part in the ecosystem they built. It could be a take rate, a transaction fee, a subscription fee, or they monetize attention by selling advertising or sell the data collected about users.
Companies control the rules, the data, decide how people access what they have built and how much people can profit. That's not entirely a bad thing. These companies maintain infrastructure and employ thousands of people to keep everything running smoothly. Our world would be a lot less convenient without them.
However, there are negative aspects about centralization. It concentrates power in the hands of the few, it takes control away from the individual, and it stifles innovation as monopolies form.
While centralized companies have improved the standard of living for a lot of people, wealth tends to flow to a very small minority. As history shows, this problem gets worse and worse until the point where civil unrest in the general population boils over.
The end result is a break down of the centralized systems that led to so much inequality. Unfortunately these changes do not happen gently, and usually come with a lot of lives lost.
Now you're probably wondering, how does Web3 play a part in all this?
What Is Web3
Web3, as a concept, is about decentralization.From a practical point of view, it means breaking down the 'walled gardens' of content and systems controlled by powerful companies. Instead, software sets the rules that everyone plays by, data is transparent and the individual owns what they create.
This might all sound nice, but until we have examples that demonstrate how web3 systems are better and more valuable than what has already been built, we're still just talking about concepts.
Thankfully, we already have some examples that are taking off, but it's still very early days. This is good, because it means you are learning about the opportunity at the most valuable time -- just as the wave is building.
The first example of Web3 that has gone mainstream (at least in awareness, but not use), is Bitcoin, a cryptographic currency.
The underlying technology that Bitcoin runs on is called the Blockchain, an open ledger where information is stored permanently and maintained by a global network of computers that no one individual or company controls.
Bitcoin is digital currency without a centralized institution controlling it. It's governed by algorithms. This means no ruling body of people can decide to print more money to manipulate the market.
After Bitcoin, the next major player in cryptocurrency is Ethereum, which added a software layer to the blockchain. This software is designed to run and execute what are called 'smart contracts', which basically means a set of actions that are triggered when conditions are met.
From here all kinds of different cryptocurrencies and blockchains have emerged, all focusing on different use cases. It is very much the Wild West still, so how all these different projects will impact our lives and which will go mainstream is an unanswered question.
Decentralized Finance (DeFi) As A First Use Case
As I type this, cryptocurrency, at least for the mainstream population, is a speculative asset class that people hope to profit from.Most don't seek to understand the underlying projects these cryptocurrencies are a part of.
What is important to understand is that crypto is just one use case of blockchain. It's an example of what is known as DeFi -- Decentralized Finance.
Thinking about decentralization of money and finance is a fun exercise. Consider any institution that deals with money today...
- Banks and credit card companies are an obvious place to start. They control daily transactions, saving and borrowing, moving money from one person to another.
- Then there's the collective of companies we affectionately label 'Wall Street', where the buying and selling of stocks, commodities, futures, credit and so on occurs.
- There's also all the institutions involved with insurance, buying and selling property, managing retirement funds, currency markets -- all of these are industries run by centralized companies.
Most of these actions are completed digitally. Ledgers update on centralized databases as money moves, changes format or is created.
The promise of DeFi is to decentralize all of these services and processes. The blockchain and algorithms that run on blockchain eliminate the need for all these middlemen institutions.
Ideally this means less friction, less fees, markets that are governed by a set of rules set in software and are free to fluctuate with supply and demand without interference.
All of this is emerging and far from mainstream, but it's expected that these are the areas where the first wave of decentralization will be felt.
For example, it won't be long before how you move money from one country to another will not involve a bank or a company such as Wise.com or Western Union.
You will open up an app and simply move money from one digital wallet to another. In fact, I already did this, taking rent in $USD that was collected from a property I own in Ukraine, which was converted into the cryptocurrency Ether (Ethereum blockchain), and sent to my blockchain wallet.
Previously to move the money from Ukraine to Canada, I had to involve banks that took fees or hid their fees in poor currency conversion rates, or use third party money transfer services that charge a fee.
There are fees in Web3. Updating the blockchain requires computer power, and these computers have to be paid in return for what they do.
However, these fees are not decided by a group of bankers, or government officials or company directors. There are algorithms that determine the fee based on the demand for computer resources at the time you want to use the blockchain.
There are many projects currently under development in the DeFi space. If you want to see examples of Web3, this is where to look. Most of the projects are focused on crypto for the moment, for example to swap different coins/tokens, and to stake them to earn interest (lock them up to be used in blockchain validation in exchange for interest).
Personally, I'm more excited about the potential for DeFi to open up solutions to more mainstream needs.
For example, I am currently looking to open up a line of credit against a property I own in Canada. I have equity in the property and I want to make that money liquid. Currently I have to go to a bank, get an appraisal done, then I get a certain percentage of the capital available to me at an interest rate set at the time I do the refinance.
DeFi can replace the need for a bank in a situation like this. I take my property to a lending protocol, use my property as collateral, and then have access to my equity on a dynamic basis. All of this occurs on blockchain.
The dynamic part is what excites me the most. I won't need to refinance and get the property re-appraised every few years, paying bank fees and third party fees. Instead, my property's equity value will fluctuate as the market fluctuates in real time, and I will have access to draw on that capital as I need to. The interest rate will also fluctuate, based on the liquidity in the lending pool for assets like my property.
All of this might sound very confusing -- that's totally fine, I'm still confused by a lot of this too. That's actually a good thing, it demonstrates an opportunity.
There are people who will build apps that will make the process of using the blockchain just as easy as it is now to use online banking apps. The difference is these apps will plug straight into the blockchain, connecting people and protocols to deliver financial services, without any central entity controlling everything or charging fees.
Non-Fungible Tokens (NFTs): The New Asset Class With Built-In Benefits
Another big part of the Web3 movement you may have heard about are NFTs: Non-Fungible Tokens.Something that is non-fungible is unique. The blockchain is an immutable ledger, which means you can issue tokens on it that are digitally unique and ascribed to one owner (one wallet on the blockchain). They can't be replicated, and ownership can be transferred from one digital wallet to another, verified on the blockchain.
An NFT can be tied to basically anything. Right now the most popular form of NFTs are digital artwork, which are being bought and resold for tremendous amounts of money.
“Everydays: The First 5,000 Days,” an NFT by an artist named Beeple, which sold for $69.4 million
Digital artwork is not new. Graphics have been a part of the word wide web since the early days. However, making digital art unique is new, and so far people like the idea of saying they own the original of something, even if anyone can copy and paste a JPEG.
I feel confident saying that much of the NFT artwork craze going on at the moment is a fad, and many people are just hoping to make fast money.
What's important is that NFT art is helping to take the concept of the NFT mainstream. It's what comes next that is really exciting.
NFTs can be used to represent basically anything, physical or digital. For example, the first ever NFT property transaction was completed in 2017 -
"The apartment, which was the first property to be sold using blockchain technology back in 2017, was owned by Michael Arrington, founder of TechCrunch and Arrington XRP Capital.NFTs, being on the blockchain, can include smart contracts. This can control everything from how and when an asset is transferred, to unlocking special benefits.Arrington decided to sell the apartment (located in Kyiv, Ukraine) as an NFT to further showcase the power of blockchain technology to innovate the real estate industry."
For example, the NBA can issue every ticket to a basketball game as a unique NFT, and that NFT can include ownership to a unique digital highlight video from the game. NFTs could also unlock access to special experiences, for example, attending the post-game press conference with the coach and key players.
NFTs are fantastic tools to help creators earn more income because they can be minted with royalties included as a smart contract. This means the creator of the NFT can earn a cut of income from any resale of their creation, and the royalty is coded in software, so it triggers every time the NFT is resold.
For example, a painter could issue an NFT to signify ownership of their new artwork (and in this case I mean a real, physical piece of art).
They sell their art for $10,000, transferring ownership of the NFT and giving the new owner the painting. Three years later, the new owner decides to sell the painting at auction, with the final bid price of $15,000. The NFT includes a smart contract royalty of 10%, which means the original creator of the artwork gets 10% any time the NFT is resold. In this case she receives $1,500, 10% of the auction price.
This royalty smart contract continues to trigger every time the NFT is sold and transferred to someone new. If it sells for $25,000 five years later, the artist gets another $2,500. The numbers can really add up if the artist sells multiple pieces of art, all with royalties built in.
You can take this principle to any kind of creation and any kind of smart contract. An NFT can represent a piece of music, and every time it's played, the artist receives a 1 cent royalty. Actors in a movie can own the final production as NFTs, and those NFTs can receive a cut of ticket sales for that movie. Those tickets can also be sold as NFTs at different prices, triggering special experiences and ownership bonuses.
The combination of non-fungible digital assets with smart contracts means you can create immutable ownership with triggered rewards as incentives. Where this goes in the future is impossible to know, but it's clear NFTs are a big part Web3.
In A Web3 World You Get Paid For Participation
Another compelling element of Web3 is how you can create incentives to help grow a network.Networks only become valuable when there are enough participants to create value. The most common example of this are social networks. Without people being on the network, there's no reason to use it. Instagram, Tinder, Slack, AirBNB, Uber -- none of these work until the network has participants.
Web3 decentralizes the architecture that runs the network by using blockchain, but you still need participants to create value. Thanks to tokenization, it's possible to incentivize joining a network early, because people can get paid for participation.
One of the most interesting examples of this is a Web3 project called Helium, a decentralized wireless infrastructure. It's a peer-to-peer, people powered network, which aims to replace the need for wireless infrastructure like cellphone towers.
Helium - By deploying a simple device in your home or office, you can provide your city with miles of low-power network coverage for billions of devices and earn a new cryptocurrency, HNT.
Although it sounds confusing at first, it's actually quite simple. Any person can purchase a small wireless broadcasting device, which they connect to their broadband internet at home. This device then acts as a local hotspot that other people can connect to. In return for hosting the device, you receive HNT, the native cryptocurrency to the Helium network.
The concept of mining crypto in this case is called 'proof of coverage'. The network verifies that your node is providing wireless coverage for a certain area, and in return you 'mine' HNT. As a result of this incentive, the general public is encouraged to purchase devices and stick them on the window in return for HNT.
You can view the explorer map on the Helium website to see how much coverage is already in place across the planet. It's quite impressive!
Another area that is quickly becoming popular in Web3 is decentralized gaming. One of the main reasons for adoption is the incentive of play-to-earn, where you earn cryptocurrencies in return for the time you spend playing a game.
Axie Infinity is the first game that really took off, primarily because a lot of people in the Philippines started playing during Covid lockdowns as a way to make money at home.
While there are several ways to make money in Axie Infinity, one of the primary ways is to breed in-game character NFTs. I know it sounds weird, but it's not really that complicated.
An Axie is the creature you use to play the game, fighting other Axies in battles, much like a classic Pokemon battle. You can also take two Axies and breed them to produce a third one. Each Axie is an NFT, which means you can sell it, or you can play the game with it.
Some players who breed new Axies don't have time to play with them all, so they rent them out or profit share with other people, who use the Axie to earn in game rewards (paid in native cryptocurrencies) and breed more Axies.
There are many more games currently in development, including some like Decentraland and The Sandbox, which are metaverse games.
These are open worlds you can explore, where other people play in the same game world as you. You can complete quests to earn rewards, including items for your character, which are NFTs you can sell.
The Sandbox is an open world game and metaverse.
On top of playing these games, you can also build them. For example, with The Sandbox you can purchase land and then build anything you want on it. This could include a house for you to live in (virtually), or your own gaming quest for other players to complete. You earn a native cryptocurrency for contributing to the game. You can also resell your land, or rent it out, creating another income stream and asset class.
All these kinds of games have been around for many years, but until Web3 they have been owned by centralized companies. These companies earn money when you purchase in game items and some charge a fee for playing their game.
With Web3, you own your character and any items you earn while playing, and get paid for playing and building in the game. NFTs turn digital assets into valuable commodities, and all of this encourages more adoption and more creation, thus the games become more compelling to play.
On top of all this, each game has a native token or coin, a cryptocurrency that trades on exchanges. As games and applications gain in popularity and use, their tokens also increase in value. Some people speculate on these cryptocurrencies, basing their decision to invest based on the underlying project, believing that if the project takes off, the token will rise in value.
It's very early days for all Web3 projects and as a result, the value of cryptocurrencies associated with new projects fluctuate widely. This represents an opportunity for people willing to play in highly volatile markets, who trade in and out of cryptocurrencies as new Web3 industries and technologies emerge.
Decentralized Social Media
Personally, when it comes to Web3, I am most excited about decentralized social media and the creator economy.Today, most creators share content on the big social platforms - YouTube, Instagram, Facebook, TikTok, Snapchat, LinkedIn, Pinterest and Twitter.
All of these are independently owned platforms which do not share access to the content published on their networks (except for Instagram and Facebook, both owned by Meta).
Creators use these platforms to build an audience and earn from advertising and sponsored content. The companies that own the platforms earn the lion share of revenue and make all the rules, including how much revenue they share with creators.
Overall, creators get a pretty bad deal with the current structure. They upload all their content to these media organizations, who then profit by selling user data and ads. Because creators have to go where the audience is, these platforms continue to control media. Sadly, besides a few superstars, most creators do not make a living from their efforts.
I became a creator in 2005. In many ways I was lucky, because I grew up with blogging and email newsletters as my main creator tools. I never relied on social platforms. I enjoyed the benefit of owning my content and only relied on Google to send search traffic. Back then Google search results were not drowned out by so many ads, so it was easier.
Although I initially made some money from advertising on my blog, it didn't take long to switch from an advertising income model to selling my own digital products like a membership site and online courses. I never had to share my income with any platforms besides transaction fees with Stripe or PayPal.
Today creators who grow tired of their lack of control and poor ROI, also make the choice to start email newsletters and sell their own products, usually digital information or e-commerce. These select few become the most wealthy creators, but there are not many of them when we look at the overall size of the creator economy.
Decentralized social media has the potential to change this.
When social media moves to the blockchain, no companies own or control user data. It is open and transparent, ready to be curated by apps to serve niche purposes. Users can earn directly from their efforts, any content they publish instantly exists on all platforms and there are no company controlled algorithms that decide what you should see, or who gets banned.
I didn't really grasp the magnitude of these changes until recently, when I experienced the first dedicated decentralized social media platform. It's called DeSo, a blockchain and also a native cryptocurrency of the same name.
Without getting too technical, a social media blockchain like DeSo is different from other blockchains because it's built to store social interactions, not just financial ones. For example, if you like someone's post, or write a comment, or change your profile name, all of these are updates to the blockchain.
The first interface to DeSo was an app called BitClout that came out back in early 2021. I was curious about BitClout because it introduced an interesting concept -- Creator Coins or sometimes called social tokens.
Creator Coins are a cryptocurrency that represents a person. You can buy into that creator coin if you believe they will create future value, or because you want to support that creator. Creators can reward people who hold their coin, returning benefits or sharing revenues like a dividend.
You can buy and sell creator coins as a speculative asset, attempting to profit as other people buy into a creator coin, increasing its value (but watch out if lots of people sell it - the price will drop!).
Every creator becomes a company, with a liquid asset to represent their value and to help them monetize their audience. Creator coins have real value, you can exchange them for the native DeSo token, which can be exchanged for Bitcoin and then fiat currency like USD.
Here's my creator coin on BitClout. I have a market cap of over $9,000 USD.
All of this is very new and will likely get the attention of government regulation in the future, especially when it comes to things like paying out dividends and speculating on coin value. For now though, it's the wild west.
After I discovered BitClout I explored the interface, which is a lot like Twitter. I created an account, saw my own creator coin come into existence, checked out the creator coins of certain celebrities, made a few posts, then forgot about the platform.
Fast forward to November of that same year and I hear a podcast about DeSo with the founder of the blockchain, Nader Al-Naji. Through this conversation I discover that he was the creator of BitClout, but that was just a beta app to test out the concept of decentralized social media. Now Nader and his team are focused on the DeSo blockchain itself, and not any specific app.
At the same time I learn about DiamondApp.com, the latest Twitter-like interface into DeSo created by another team of developers. I immediately open up DiamondApp and am surprised to see I'm already logged in, even though I've never used the platform before. I click my name and the page instantly refreshes.
I see all my previous posts from BitClout there, my creator coin is there, my profile info and picture are all there.
At first I'm puzzled, then it clicks in my mind...
Decentralized social media means there are no 'walled gardens' between content. Everything you do is on the blockchain, and different apps can present this content in any way they want to. It's as if what I post to Twitter also goes to Facebook and YouTube and LinkedIn and TikTok and Pinterest all at once.
The purpose of a DeSo app is to create a curated experience of the content on the DeSo blockchain. Each creator owns their content and it's all public, and apps provide an interface to explore and contribute content, and also make money.
As I began to explore DiamondApp my mind expanded. I saw native NFTs, Diamonds (a 'like' on a piece of content, but instead there is money sent from one user to another like a 'tip'), hundreds of new apps in development, each with their own creator coin and founder rewards (a founder reward is a percentage of creator coin purchases that goes direct to the creator/project).
This is when I started to grasp where we are headed with Web3 media. Let's take a closer look...
Peer-To-Peer Monetization With No Companies Stealing Profits
The simplest way for me to illustrate the potential of DeSo (Decentralized Social Media) is with an example using my favourite food - chocolate.Imagine you are a creator who specializes in chocolate. You sell your chocolate through your little e-commerce store, plus you share content online - pictures and videos of your chocolate creations to drum up business.
In a DeSo world, all kinds of new monetization options open up.
The first and simplest way DeSo benefits you is direct revenue from diamonds.
Your followers and other members of the social community, if they like your content, click the diamond icon just like they click the like button on other social platforms. Instead of receiving just a nice feeling from a like, a diamond is real money.
The person who clicks the diamond decides how much to give -- anything from one penny to hundreds of dollars (this money is given in DeSo cryptocurrency). Your followers might give you 5 cents or $1 at most on a post, but if you have a few people do so on each post, it can add up.
You might be thinking -- we already have this in the form of donation sites like Patreon.
That's true, but there is something different about asking people to donate to you on a regular basis through an external platform compared to sending a tiny bit of money directly in thanks for a piece of content natively on the platform. Plus of course, Patreon is centralized. They have a profit motive and hence take a cut from each transaction.
It also helps that cryptocurrency as a part of DeSo creates a monetization layer that all users adopt. Having a money-native component (the DeSo token) makes giving diamonds feel natural, especially because you have also likely received diamonds for your content. It's a peer-to-peer flow of value, without a middleman corporate entity taking a cut.
Decentralization and tokenization (crypto) are very much intertwined, with one acting as the financial liquidity to support the building and maintenance of the technology. Just as Bitcoin and Ether support their respective blockchains and incentivize use, DeSo the cryptocurrency, supports the use of the DeSo blockchain.Using blockchain and cryptocurrency makes it very easy for one user to give money to another with a simple blockchain wallet transfer. Diamonds are a great example of how to reward content creation using this technology.
Now, back to chocolate...
Crowdfunding Using Creator Coins, NFTs and Cryptocurrency
Our chocolate creator starts to make a little extra money from diamonds given in return for their amazing chocolate recipe posts and short video cooking guides.Previously they didn't earn anything directly from their content, so it's nice to feel the thanks from your audience.
When our chocolate creator joined DeSo their creator coin was created. Using this technology, our chocolate creator decides to do something they've always wanted to do - crowdfund a new chocolate product.
Our chocolate creator tells their community that they are going to make a new limited edition chocolate, with only 100 units created for the first run. Each chocolate will include the chocolate itself (edible), and an NFT of the chocolate (not edible!), which in the future will qualify the holder for bonuses, discounts and invites to special events.
This new chocolate project is also a new product line, which our chocolate creator hopes to sell long term from their e-commerce store after the initial 100 limited edition run is sold out.
Using DeSo as the platform, our chocolate innovator rolls out the following campaign to their audience -
- They tell their audience that all their creator coin holders will receive a share of royalties from the sale and any re-sales of the limited 100 NFT chocolate run.
- They announce that every quarter they will distribute 10% of business net profits back to their creator coin holders as a form of dividend. The more coin you hold, the greater percentage of the dividend you will receive. This includes profits made from the new chocolate line selling from the online store after the limited run is over.
- To produce the 100 unit limited edition chocolates requires $10,000. To raise this money, our creator sets the 'Founder Reward' percentage to 25%. This means when someone buys their creator coin, 25% of the DeSo crypto used to buy the creator coin goes directly to them, which can then be turned into Bitcoin/USD to buy the chocolate ingredients.
- If they fail to raise the full $10,000 from creator coin founder reward revenue, they will sell a small amount of their own creator coin that they hold to make up the difference.
A few months later the limited edition chocolates and NFTs drop and sell out immediately. The new line of chocolate is released and continues to sell from the online store. Profits are distributed back to coin holders every quarter, the coin value goes up and more founder rewards flow in.
Our chocolate maker starts planning their next unique creation, all the while using decentralized social media to stay connected with their audience and to reward their supporters.
This example scenario demonstrates a virtuous cycle that doesn't need any outside entity (banks, VCs, crowdfunding apps, etc) to support entrepreneurial projects. It's just the creator and their fans/customers/backers.
As a creator, you can fund your creations thanks to your audience. You can reward supporters with a return on investment and special limited edition items like NFTs that unlock bonuses. You are your own eco-system, with a direct-to-audience business model that creates value for all involved.
Best of all, no companies, no social media platforms and no banks are taking a cut. Software runs the platform, allows seamless transactions and guarantees rewards are distributed.
Of course, this scenario today, won't run quite as seamlessly as I made it sound. The technology needs to advance, especially the interface design, and people need to become comfortable using things like crypto wallets, NFTs and creator coins.
The foundation however is already there, you can go explore it right now on DiamondApp.com which uses the DeSo blockchain. You can follow my DeSo profile here - Yaro on DeSo.
Decentralized Everything
So far I've covered many of the decentralized technologies that already exist and are gaining traction today. Next we can begin to postulate on what may come in the near future.Some of these are just ideas I had while brainstorming how Web3 might impact different industries. They may already be under development or they may never come to fruition, or they could represent untapped opportunities for you.
Let's predict the future...
1. Decentralized Marketplaces
There are so many incredibly successful marketplace businesses, from AirBNB for accommodation, DoorDash for food delivery, Uber for cars, and UpWork for freelance staff.
Each of these were built by a company that enjoys a take rate (rake) from each transaction on their platform. They collect this money in return for building and supporting the platform, but they are also motivated to make a profit for themselves and their shareholders.
With decentralization, the community and software can run the platform. The community can also own the platform in the form of tokens, which incentivizes people to build and support the infrastructure (for example, to operate a node on the blockchain, or to build an app that taps into the blockchain).
With this structure, incentives align, as the software exists purely to facilitate connection and transactions between clients and value providers.
For example, DoorDash could be a decentralized blockchain platform with a token. The marketplace operates as usual, connecting food producers, delivery people and hungry customers. Transactions occur on the blockchain, and tokens are distributed to reward development and participation.
The take rate fee reduces down to what is necessary to keep the platform going, not to maximize profits for a small group of company shareholders.
If you want to see this idea already in action, take a look at Braintrust.com, a decentralized Upwork, connecting freelance talent with clients.
2. Decentralized Information
Another area where blockchain can make a positive impact is transparency of information.
Take for example medical data. Right now patient data is locked behind private walled gardens that only the medical and pharmaceutical industries have access to.
What if every patient had an open record on the blockchain. The data would be anonymous, so there would be no way to link what's on the blockchain to a specific individual, just like today with financial blockchain.
However, because the information is public, any doctor can access the collective repository of medical data submitted to the blockchain. If you want to see how 55 year old males with diabetes reacted to a certain drug treatment, the data is on the blockchain.
The same thesis could be applied to property data. If every property existed on the blockchain, including each time it was listed for sale and how much it sold for, photos from over the years, information on insurance costs, renovation and repair costs, rent collected, etc, it could lead to reduce costs and more efficient transactions.
This in turn could result in a decentralized Zillow (another marketplace) and direct peer-to-peer property transactions.
You're probably thinking as you read these ideas there will be resistance from people about sharing such personal data about health and assets like property, and you are right.
However, like with most societal shifts, these decentralization ideas can start with an early adopter minority who prove the value in niche use cases. Then over time, as the technology demonstrates a positive impact, it starts to scale to the mainstream.
It's already happening now with DeFi and DeSo. These concepts will continue to spread further if they provide value as an incentive to use them.
By getting involved early, you can ride the wave, possibly with your own project, or at the very least as a participant in other projects where you own the tokens.
3. Decentralized Companies
Right now a new kind of organization is emerging called a DAO - Decentralized Autonomous Organization.
A DAO is an entity with no central leadership. Decisions get made from the bottom-up, governed by a community organized around a specific set of rules enforced on a blockchain. Decisions are made via proposals, which the group then votes on to decide what direction to take.Many Web3 projects are launching with a DAO as the governance structure for the project. People join the DAO and contribute to the growth of the project. In return they have a say in how the project is developed, including what features are built and how money is spent.
DAOs are governed by software, with rules set in place that control how decisions are made and incentives are distributed. In theory, this makes them less corruptible, since no one person can simply change their mind or take control.
What's also interesting about DAOs is how it impacts ownership and investment. Founders who opt for a DAO are choosing not to start a company and then sell equity in their company to raise funds with the hope of one day enjoying a big exit like an IPO or acquisition.
Instead, organizers of a DAO can raise funds by selling tokens, and can profit by being early holders of tokens, which appreciate in value as their project gains traction. Money raised from selling tokens goes back into the community treasury, which is then used to support the platform (build features, pay people to create content about the protocol, support node operators, etc).
Where To Next?
I hope this article and the examples I have shared have helped to clarify what Web3 is currently and where it's heading.Web3 is one of the most dynamic parts of the internet, with new technology, new projects and new concepts emerging on a daily basis. No doubt I am just scratching the surface of what is to come.
I encourage you to learn more about decentralization - blockchain, cryptocurrencies, NFTs, the metaverse and gaming, DeFi, DeSo and DAOs and then put your brain to work on how you might take part.
There are so many opportunities. You could start your own project, build on a blockchain already operating, mint an NFT collection, disrupt current platforms with new Web3 versions, or just dip your toes in the water by purchasing some crypto tokens.
This is your chance to ride a wave. Attention is flowing to Web3, as are investment dollars. If you have a good idea, now is the time to start.
Good luck!
Yaro