TL;DR: These technologies are the groundwork for a new Web3 era of the internet where extended reality communities have full control of their digital assets, rather than the tech giants owning the user base and their data.
If you only turned to traditional news media or influencer skeptics to gather info on crypto, blockchains, or NFTs, you’d think it’s simply a bunch libertarian get-rich-quick gambling tokens and platforms that are destroying the environment.
Australian Dogecoin co-creator Jackson Palmer recently referred to cryptocurrency as an “inherently right-wing, hyper-capitalistic technology”. Elements of it are definitely that – the tax avoidance strategies, whales (coin hoarders), minimal governmental oversight, and inside traders are a real ongoing situation. It’s important to criticize the blockchain industry. Finding genuine faults is crucial for regulators and consumers as the tech evolves.
But many only talk about these systems as climate killing nerd projects that billionaires eat up excitedly because money and neglect any possibility of the democratizing potential of these emerging technologies, or the projects that are more environmentally sustainable (i.e, Algorand),
First off – blockchains
They are basically a public global ledger (list) that shows who owns what. An asset tracker. So people anywhere on the globe can verify that you are truly the owner of a digital asset. They are decentralized, meaning they aren’t owned by any specific group so they are immutable. They can’t just be brought down by a quick server hack of a specific company.
Web3 is an idea for the next stage of the World Wide Web based on blockchain technology. We are currently in Web2, where huge portions of the internet are owned by centralized companies like Facebook or Google.
Web1 was the internet of the 90s, where we only read information. Web2 is the early 21st century era of the internet, where platforms like Facebook or Twitter allow us to upload and interact on their platforms. Web3 allows us to engage but also to own pieces of the internet for ourselves. dApps (decentralized applications) can give far more governance to their user base, and blockchain participants like validators (the various computers around the world that verify transactions) get paid in the cryptocurrency native to that blockchain.
Second – Cryptocurrency
People often talk about the volatility of cryptocurrency in comparison to the price of the US dollar. Short term prices change by the minute. Long term, many coins see a steady climb upwards in value as they gain more demand. Bitcoin has risen and fallen but it continually hits new high values over time. But many crypto enthusiasts aren’t just out for a quick buck and don’t even pay attention to the dollar value of a coin at any given time. “1Doge = 1Doge or 1D = 1D” Dogecoin holders might say, regardless if it’s $0.01 or $1.
Critics complain about tax avoidance, or how crypto is used to buy drugs. Crypto is arguably one of the worst methods for purchasing or doing anything illegal – because every transaction is globally accessible and immutable. Physical dollars are the best method of paying for illegal items. Not digital blockchain money. And for what it’s worth: crypto doesn’t have the faces of slave-owning presidents on it.
Cryptocurrency is arguably the ideal currency for the 21st century with the continued growth of digital communities. Current financial systems have a bunch of institutions taking fees and slowly processing international payments. Crypto is fast. A New Yorker can send crypto to a Tokyo resident in seconds. That’s not the only asset on blockchains though.
Third – NFTs
NFT stands for Non-fungible token. Non-fungible simply means non-interchangeable, or non-irreplaceable. Basically, unlike a dollar which can be traded or replaced with another dollar, an NFT is unique and can’t just be replaced with something else. Today’s NFTs are basically like digital collectibles. Like sports trading cards but verified on the blockchain. Many have heard of Bored Ape Yacht Club pictures selling for loads of money.
Many people make fun of NFTs. “Why would I want an NFT of this picture if I can just print it out or download it myself?” To answer that question, you have to answer why people do the same thing with sports cards or original artwork like the Mona Lisa. If you can print out or download a copy of the Mona Lisa, why have the original?
But that aside, NFTs also have many potential uses outside of digital trading pieces. You can think of them as immutable receipts. So they can be a birth certificate, or an ID card, or a deed to a house, or tickets for a concert. The list goes on.
The Ownership Economy
So how does this fit into the Ownership Economy? And what is that?
The ownership economy is what web3 entails. A world where users are the owners of the platforms they participate with – where participation and value creation on the platforms equal rewards.
Helium is a great example of decentralized technologies rewarding the participants. Referred to as “The People’s Network,” Helium is a blockchain-run wireless service that provides long-range connection to nearby Internet of Things (IoT) devices, by using individually-owned hotspots. The hotspot owners earn Helium tokens (called HNT) the more they’re used, compensating them for their initial offering and continued hosting of the hotspot. That way, Helium doesn’t have to install a bajillion hotspots all over the world, and people can get a piece of the decentralized pie. Scalable, open, and affordable.
Lastly – The Metaverse
Web3 and the metaverse are used interchangeably by some parties who believe an interoperable Metaverse depends on web3 technology. The metaverse can be thought of as the internet but with extended reality thrown in. Virtual worlds that are interoperable, where you can carry your digital belongings from world to world, platform to platform, regardless of the company or servers hosting it.
Ready Player Me is a cross-app avatar platform for the metaverse. You create an avatar (digital version of yourself) on their platform and it’s your “passport to the metaverse” with partnerships for various apps and games that allow integrations of the avatar. Similar to a universal “google sign-in” for different accounts today. The avatars are also a NFT. 10-20 years ahead there could be a dozen major NFT avatar platforms that act as a universal account for the Metaverse. These platforms will hold blockchain data that includes not just your avatar but your cryptocurrency and other digital assets (NFTs for digital clothing, keepsakes, game tools, and more).
Companies like Meta who are currently considering a 47.5% creators fee would instead fall in line with personal asset management. When a standard protocol was developed for internet websites, companies like Coca-Cola didn’t just decide to create their own. When Twitter arrived, big companies didn’t create new Twitter platforms… they created Twitter accounts.
When you’re sitting in a virtual room next to a friend who’s in another country physically, you want to be able to quickly transfer assets as if you were physically present. Insert crypto and NFTs.
The web2 status quo of our financial and tech industry is incredibly capitalistic, but these emerging systems could become the groundwork for an interoperable web3 Metaverse that takes power out of a select few tech company board members and into the hands of digital communities – the user base. The problems mentioned earlier still needs solving, and web3 won’t entirely fix growing inequality (or even come close), but it could very well be a step in the right direction if navigated thoughtfully.