Imagine virtual transactions occurring without banks as intermediaries. Imagine accessing any part of the web without Google or AWS, or Microsoft servers in the picture. Sounds both unbelievable and equally intriguing, right? Web3 or Web 3.0 is the web technology that could make these possible.
People know about it, but what they don’t realize is that it is here and now. Companies like Venmo and PayPal accept crypto, NFTs have been launched by major brands, and there’s a real estate gold rush in places like Decentraland. If you’re sitting on the sidelines, you’re missing the boat.
How will Web3 change everything?
Web3 is the next incarnation of the web. The goal is to enable a world in which people (and machines) can interact with data and counter-parties through an underlying layer of peer-to-peer networks, without any third-parties being involved. That’s how transactions will occur without banks serving as intermediaries (and taking a cut), and how devices, like smart refrigerators or tractors, will speak directly to computers that deploy AI to diagnose problems.
The decentralization of the Web in Web3 is what makes it revolutionary. It means individuals can own portions of the web. In Web3, the internet will no longer be the authority of one of a handful of internet giants, rather will be distributed among individuals.
As Web3 follows a decentralized approach upon which blockchain and cryptocurrency works, these three technologies will have a strong intersection. According to Techtarget, Web3 will make extensive use of blockchain-based technologies. Bloomberg mentions Web3 as an umbrella term for services built around cryptocurrency tokens and blockchains.
A decentralized approach removes the barrier of central authorities providing access to web pages based on conditions (e.g. Geography). In Web3, there will be no bank playing the intermediary role to facilitate transfers between two persons.
What makes a Web3 ecosystem?
Servers – Computers owned by individuals connected to the other nodes (servers) in the blockchain.
Developers – Developers (Network Participants) will develop decentralized apps (DApps) that will be built on blockchains. They will be aiming to build highly secured and stable apps that can be used across a decentralized network of nodes (servers).
The communication enablers – Semantic web and Artificial intelligence that help computers understand inputs like humans and provide the most unbiased and relevant data to users.
End users – Individual users accessing the web for information, making use of applications on the web to perform jobs.
What makes a Web3 ecosystem?
First, we’ll start with the common ground and the significant difference that forms the base of Web3.
The common ground – HTML forms the structure and defines how web pages are delivered in Web 1.0 and Web 2.0. Web3 is no different in this context, as HTML will continue to be the foundation of it.
The difference – How HTML connects to the data will be the key game changer in Web3. These data sources could reside in decentralized yet interconnected systems owned by individuals.
So with Web3, the data sources aren’t centralized, and hence no single authority governs the operations. Some say, Web3 will be driven by a self-governance approach.
Web3, Users and machines will be directly interacting with data, and making these conversations sensible is the part where semantic web and AI come in.
The Web3, Semantic web and AI cocktail
Semantic Web – The goal of the semantic web is to make all data machine readable. To do that, AI is required to parse out the meaning behind words and symbols. For instance, take the two phrases:
- I’m surprised by Web3
- I’m :O by Web3
The syntax or the way the input is constructed is different, but the semantics are the same. Both means I’m surprised, except that in the second example, an emoji or emoticon would replace the word surprised. The semantic web would consider both the same. It decodes the meaning or the emotion behind the symbol instead of a keyword.
Artificial Intelligence – The semantic web will help a computer understand what the data means. AI will make use of this information to provide most relevant results.
You could ask, “Web 2.0 also offers such capabilities, and what’s so great about Web3 anyway?” Though Web 2.0 offers such capabilities, it is still mostly human-based that paves the way for biased reviews or ratings.
In Web3, where providing relevant results is entirely governed by AI, there’s no room for fake reviews being rendered as results. Here’s a real-world example. Google’s AI system recently removed approximately 100,000 negative reviews for the Robinhood app from the Play Store. Why? The AI detected an artificial attempt to downvote the app. This is just an example of AI maturity right now. When AI seamlessly fits into the Web3 system, some predict that its ability to weed off biased information will improve, and users will be delivered the most relevant and trustworthy data.
Now that we have the basic components of Web3 out of the way, let’s dig deeper into ways it could influence eCommerce. We are anticipating that Web3 will usher in a new wave of innovation that will transform the way we work, socialize and engage in commerce. At the moment, much of the discussion focuses on crytpo, the metaverse and blockchain, but that’s because it’s what we know. At the time of Web 1.0, we couldn’t imagine the world of social media, for instance. But it’s safe to assume that in 5 years time, we will all be fully immersed in Web3, making the switch without quite realizing it.
How Web3 will transform eCommerce
Loyalty programs are a great way for eCommerce stores to retain customers and encourage future purchases. Loyalty and reward programs offered by eCommerce stores provide reward points for each purchase or every dollar spent. These reward points can be later redeemed to purchase other store items or buy products at a discounted price. Brands provide such rewards hoping customers might need them, but there’s less transparency in letting the customer know the value of it.
NFTs in Web3 enable brands to create more valuable loyalty programs. Instead of providing rewards points for which the customer doesn’t know the value till the time of redeeming, brands can issue NFT-based tokens that have a clearly defined value.
For example, a company that provides 50 loyalty points for every $500 purchase can issue NFTs to its customers. The advantage here is since every NFT has a predefined value, customers get to know the exact value of the rewards the brand provides them. For a customer, knowing the actual value makes each reward far more valuable. This is good news for the brand’s loyalty program.
Marketing campaigns can promise customers to provide NFT-based rewards of a set value, and consumers would believe it as the blockchain guarantees it. As NFTs are on blockchain, companies need not get involved in informing the market value of an NFT reward token to a customer. Customers can redeem them in the purchases that are appropriate to their budget in hand and the value of NFT rewards.
Web3 helps overcome the exploitative advertising in Web 2.0 where the centralized servers are owned only by a few entities who get data from users to offer access to applications.
Many believe that, the data transparency that Web3 offers could eliminate intermediaries and directly connect brands to their consumers. Brands need not waste money by focusing only on the target directions provided by companies that own centralized servers.
Due to the data transparency that Web3 offers, it eliminates intermediaries and directly connects brands to their consumers. Brands need not waste money by focusing only on the target directions dictated by technology giants who own centralized servers.
With more interactive ads, advertisers can bring in more participation. The focus for advertisers in Web3 will be more on getting the messaging right. Web3 will provide advertisers complete control over their data and enable them to add real value to their customers.
NFTs and crypto wallets, secured by blockchain, will eliminate the need for people to log in and provide their credit card and shipping info, streamlining eCommerce even further. Many believe it will also bring an end to the hacks and intercepts that plague our current eCommerce environment.
Web3 is revolutionary. The concept of decentralizing the internet is a huge step in the history of the web. It aims at establishing a web ecosystem that’s fair and equal to everyone involved through its key concept of decentralization and all the benefits associated with it, like an individual’s authority over their data and so on. As Web3 evolves and its adoption takes place, the web will become a smarter and more personalized space for users to interact with brands.