The term "Web3" may sound a bit futuristic and technical, but it actually refers to something pretty nifty—a new iteration of the world wide web that hosts decentralized apps that run on blockchain technology.
Web3 is an ideology focused on freedom and democracy, as well as ownership. It allows people to build and own digital assets, rather than being products or beneficiaries of technology-powered business models.
The Emergence Of Web3
Web 3.0, or Web 3 for short, can be considered a successful re-branding of blockchain technology. It was first coined in 2014 by Ethereum co-founder Gavin Wood in an article on his blog, "Insights into a Modern World.”
The concept of Web3 has captivated investors and tech industry insiders for more than a year now, with investment into Web3 startups reaching $23.7 billion in 2021, according to research firm Pitchbook. That same year, blockchain analytics firm Chainalysis Inc. estimated that total NFT sales reached nearly $41 billion.
Web3 is still in its early development phase. The industry and community are eager to integrate Web3 into the mainstream, but it could be years before we see widespread adoption of the standard.
Web3 Strengths and Weaknesses
Web3 has spurred the creation of new opportunities for artists, gamers, and big-name brands through the use of cryptocurrency, non-fungible tokens (NFTs), virtual reality (VR), augmented reality (AR), and other virtual-based interactivity.
According to a Gemini survey, half of all crypto owners in the U.S., Latin America, Asia Pacific, Brazil, Hong Kong and India first bought digital assets in 2021. Furthermore, 41% of those surveyed who did not own crypto said they were interested in learning more or buying it in 2022.
Crypto.com reports that 295 million people worldwide were using cryptocurrencies at the end of 2021. If the current growth rate stays consistent, that number might reach 1 billion by the end of 2022.
As interest in crypto-assets grows, regulators have stepped up their scrutiny of the industry (they say) to protect consumers. This May, The Group of Seven (G7) called for swift, consistent and comprehensive regulation of crypto-asset issuers and service providers.
As governments enter the crypto space and begin drafting regulations, decentralized technologies must remain prominent across the industry if they want to hold true to the core precepts that led to their creation.
Because governance tokens can be bought and sold, it's possible for one entity to gain control over a platform. This could create an unfair system that benefits wealthy individuals.
The $800 billion supply of Bitcoin is owned by the top 2% of accounts, while 80% of NFTs' market value belongs to the top 9% of Web3 addresses.
Another problem with Web3 is that DAO source code is available to the public, making it vulnerable to cyber attacks if hackers can exploit weaknesses in the code. For example, in 2016, a decentralized venture fund called TheDAO was hacked.
Web 3 is exciting, but it's also exposing weaknesses such as cyber thefts, plagiarism and fakes, exclusivity and elitism. The future of this internet chapter is currently competing with those chasing money and clout.
Web 3 builders are implementing security measures that will target fraud and hacks. Though crypto-related crime is at an all-time high, it is growing much slower than overall crypto adaptation, which was at $15.8 trillion in 2021.
The path to disruption is paved with hype and failure. Think about the dot-com bubble that preceded mainstream successes like Amazon, eBay and Craigslist.
Brands' Web3 Adoption & Strategy
Brands are getting involved in Web3 just as they did with building websites, developing a mobile strategy, and participating in social media.
While Twitter and Reddit let users show off their favorite NFTs as profile pictures, Smart TVs allow people to discover, buy, sell and trade them. Accenture designed a metaverse for employees; Lacoste has enabled a DAO-like voting system for its community of NFT collectors; Coca-Cola, Gucci, Louis Vuitton, and many more companies have embraced NFT collectibles.
Here’s a breakdown of some of the ways brands are adopting Web3.
Starbucks announced the launch of Starbucks Odyssey, a new Web3-powered experience that will offer Starbucks Rewards members and Starbucks partners (employees) in the United States the opportunity to earn and purchase digital collectible assets that unlock access to new benefits and immersive coffee experiences.
Unilever, a consumer goods company that owns brands including Magnum, Vaseline, Dove and Ben & Jerry's, is embracing the metaverse by creating a cross-functional Web3 collective.
Marks & Spencer is using virtual influencer Mira to promote clothing and accessories on Instagram. Mira is an acronym for ‘Marks & Spencer, influencer, reality, augmented’ and the digital character has been developed using a combination of photography, cutting-edge CGI and computer vision.
Tiffany & Co., a leading name in luxury goods for over a century, made a splash by selling out all 250 NFTs called "NFTiffs" in early August. These NFTs are digital passes exclusive to CryptoPunk NFT holders and give them access to custom pendants containing gemstones and diamonds.
Coachella sold three NFT collections: Sights and Sounds, Desert Reflections, and Coachella Keys as the festival returned in person this April. One set of 10 NFTs conferred lifetime passes to the annual event; a second set of 1,000 NFTs sold for $180 each. Buyers received a photo book not available to others. All ticketholders were eligible to claim a free NFT that could be used for extras such as expedited entry. More than 63,000 ticketholders claimed their free NFTs, and more than 13,000 benefits and experiences were redeemed above and beyond the faster entry.
Time's Web3 Strategy - TIMEPieces
99-year-old publisher Time is leading legacy media into the NFT future by way of its TIMEPieces initiative. The initiative includes four collections to date: Genesis, Inspiration, Long Neckie Women of the Year, Slices of TIME, and later announced, Beatclub Collection.
Brands aren't the only ones adopting Web3, government agencies are also getting in on the action. For example, back in April, the United Kingdom made headlines by announcing a non-fungible token treasury project. In Japan, Digital Agency said it would establish its own decentralized autonomous organization (DAO) to better understand how it works before permitting it legal status.
Building a Web3 Strategy team
Web3 strategy officers are becoming increasingly common in companies, along with the hiring of chief metaverse officers. The need for a person to lead Web3 efforts is growing at companies. Many firms have already hired these types of people, including Procter & Gamble, Spanish telecoms company Telefonica and luxury goods maker LVMH.
Twelve years ago, businesses didn't think they needed a social media team — they thought they could do it all themselves. But now, with so many people using Facebook, Twitter, and other social networks? They've realized that having a dedicated social media director and an entire social media team is essential for their businesses. The same is true for companies playing in the Web3.
As you begin to contemplate how your brand will appear in the Web3, it is important to consider how blockchain can help solve problems that were not possible before. Until you define both a pain point and a solution, it’s unlikely that you’ll convince people to come to your door. Aligning your strategy with the Web3 ethos can help ensure its success.
Within three to five years, I think we will see a lot of businesses based on blending metaverse experiences and Web 3 technology.
Right now, the Web3 is still in its infancy. It hasn't broken through to mainstream use yet, but this shouldn't deter people from using and exploring it. After all, we forget that the Internet itself took some time to be embraced by the mainstream.
If you are looking to get involved with the Web3, don't wait to get started. It's important to have a strategy in place before diving headfirst into the new paradigm.
If you're interested in getting a head start on Web3, don't hesitate to get in touch with me.