Web 3.0: Empowering creators to thrive

By Daniel Shin

Web 3.0 is a blockchain and cryptocurrency-related concept that came into use from 2013. It really took off during the pandemic when early-stage investors and media outlets started pushing the subject along with the related concept of metaverse. Now, everyone is talking about ChatGPT or Bard, a flagship AI engine that can generate complex answers to multi-faceted queries. But not a lot of people talk about Web 3.0. Is Web 3.0 dead? Blockchain and Web 3.0 are both in steep decline in major search engines recently.

There are many progressive-thinking tech liberals of many different alignments who are trying to unite their technology aspirations into one faith, namely Web 3.0. Decentralization, freedom from censorship and a bottom-up design with widespread participation and experimentation are music to their ears. Social media platforms have enabled people to connect and share online like never before. Web 3.0 is certainly much more than that.

Blockchain has been around for many decades. It is not a new or novel technology, but it has become widely popular since Bitcoin first emerged, a cryptocurrency built upon a blockchain with a public distributed ledger. Cryptocurrency has failed to be widely used yet for payments because of large price fluctuations caused by speculation. Since 2017, blockchain has become the hottest trend in the financial services industry for many forerunners integrating into mainstream services.

"Central banks are rolling up their sleeves and familiarizing themselves with the bits and bytes of digital money" as Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) pointed out. If Central Bank Digital Currencies (CBDCs) are designed prudently, they can potentially offer more resilience, safety, greater availability and lower costs than private forms of digital money.

The idea for central bank digital currencies is rooted in cryptocurrencies and blockchain technology, but CBDCs are not technically cryptocurrencies as many argue. In spirit, cryptocurrencies are almost always decentralized. They can't be regulated by a single authority but CBDCs are the digital form of a country's fiat currency, which is regulated by its central bank. As cryptocurrencies and stablecoins become popular, central banks are providing alternatives like CBDCs.

CBDCs have their own purpose to serve. CBDCs in developing countries have the potential to bank large unbanked populations and boost financial inclusion for the underprivileged, which can increase overall lending and reduce bank disintermediation risks per the IMF's perspectives. Over 100 countries are actively developing CBDCs in some form and eleven countries have already launched them.

CBDCs may have some benefits as the IMF and many policymakers rightly said, but their drawbacks are also considerable. CBDCs can improve payment efficiency and provide central banks with new monetary policy tools. Customers must use unique digital fingerprints to identify themselves to banks in order to use CBDCs.

However, CBDCs could raise severe concerns about financial privacy, surveillance and control, financial stability, cybersecurity and commercial bank disintermediation. These are what draw a clear line between cryptocurrencies and CBDCs. The CBDCs operate on authorized private blockchains, whereas cryptocurrencies operate on permissionless public blockchains.

Cryptocurrencies might be an important pillar for Web 3.0, but Web 3.0 is not only about cryptocurrencies. At its core, Web 3.0 uses blockchain, cryptocurrencies and NFTs to give power back to the users in the form of ownership according to the Ethereum Foundation. In a nutshell, if anyone is hoping to interact on Web 3.0, they need a crypto wallet to do so. Web 3.0 relies on blockchain networks and blockchain relies on cryptocurrency to facilitate operations and make transactions.

Many Web 3.0 use cases have recently emerged. They are differentiated by the use of blockchains and decentralized applications (or dApps), which allow users to interact and transact with one another without the use of middlemen. This notion gives them full influence and control over their online activities.

One of the best Web 3.0 use cases is the creator economy. It gives people the chance to make money for those who used to spend a lot of time online in different digital environments but haven't gained that much from doing so. For example, NFTs and several emerging metaverse services give creators a variety of fresh alternatives for monetization beyond YouTube or Amazon while it gives freedom to bypass traditional gatekeepers. As a consequence, the Web 3.0 use case for the creator economy will provide a beneficial way for creators to market their work directly although there is a lot to develop.

We may not technically classify the creator economy as Web 3.0's sole use case. However, it is one of the key features of the Web 3.0 advancement for sure. Web 3.0 use cases also allow businesses to streamline their operations by cutting out the middleman and directly connecting stakeholders over the network. In philosophy, this facilitates communication and collaboration among employees, partners and customers and eventually makes for a more efficient business.

Web 3.0 is a set of values and technical applications that define a new era of the World Wide Web. With blockchain technology, Web 3.0 will be a more secure and transparent Internet. It would be much harder for the government and large corporations to censor or interfere with Web 3.0 users. That said, users will be able to sell their own data through decentralized data networks and embrace their own creative expression at full height, ensuring that they maintain ownership control over their data and digital assets.

Web 3.0 can lead to greater economic and social empowerment. Web 3.0 vision, which is powered by blockchain and not supposed to be controlled by any single entity, users will be able to control which information they want to share with others such as advertisers and tech firms. This makes a sea change of difference to the effectiveness of the sales and marketing relationship. Web 3.0 is certainly different from the Web 2.0 platform economy, where user-generated data and content are largely controlled by tech giants.

Daniel Shin is a venture capitalist and senior luxury fashion executive, overseeing corporate development at MCM, a German luxury brand. He also teaches at Korea University.