Web 3.0
Web 3.0
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Over the last two weeks in our updates, Etherbridge has covered smart contracts and oracles. This week we will explore another piece of the puzzle, Web 3.0. Combined, these technologies will unlock and allow for a wide variety of new use cases.
The movement towards Web 3.0 will result in the internet becoming more decentralised, leveraging innovations in the Internet of things (IoT), AI and machine learning. This new internet will require a distributed accounting system, one that is capable of processing, executing, and settling transactions not only between humans but between machines.
Imagine this, your smart wearable device (IoT) acts as an oracle to your insurance contract (a self-executing smart contract). The insurer gives any user a 5% discount on their premiums if certain fitness goals are met. Your wearable device will need to be constantly communicating with your insurance contract. The information and its validity need to be robust for this to work effectively at scale. By leveraging blockchain and cryptography, we can ensure that information is coming from an authentic source, that the information has not been tampered with, and that messages received by the insurance contract are valid and true.
In the future, we will see smart contracts and oracles being used in combination with IoT, machine learning and AI. Blockchain will serve as the underlying accounting system to this new decentralised internet of value.
Web 3.0
The internet as we know it has changed significantly since it was first created. ARPANET, the first workable prototype of the internet sent a message from a computer to another computer on October 29, 1969. The message was LOGIN, something that would be easy to send from our computers or phones nowadays, however, this simple message crashed the network and only the first two letters were received. They may not have known it at the time, but their invention would allow humans to share information and collaborate on a scale never previously possible.
What is Web 3.0?
To understand Web 3.0, we need to go back and look at how the internet has evolved:
Web 1.0
This was the original internet. It is the internet that you accessed via your Windows 95 interface. The websites you would visit were static HTML pages. These websites or version of the internet only had the ability to display information. You could easily read anything available but as a user, you did not have the ability to change any of the data.
Web 2.0
This is our current version of the internet and the one you will recognise today. Towards the end of the 1990s, the internet started moving towards a more interactive experience. Users of the internet could create content and distribute it to others across the globe. This is the version of the internet where we’ve seen the rise of companies like Facebook, Netflix, YouTube and Google. It provided many individuals with the opportunity to create new innovative business models, be their own bosses, and reduce the barriers to entry for content creation.
Web 3.0
So now that you can visualise the gradual change in what the internet is, we can address the next step in its evolution. The inventor of the world wide web, Tim Berners-Lee had a vision for where the internet would eventually take us:
“I have a dream for the Web [in which computers] become capable of analyzing all the data on the Web – the content, links, and transactions between people and computers. A ‘Semantic Web’, which should make this possible, has yet to emerge, but when it does, the day-to-day mechanisms of trade, bureaucracy and our daily lives will be handled by machines talking to machines. The ‘intelligent agents’ people have touted for ages will finally materialize.” – Tim Berners-Lee, 1999
The next generation of the internet will be influenced by machines in an incredibly significant way. Using AI and machine learning we can create a more intelligent web. It has also been dubbed the ‘Semantic Web’. What the use of AI and machine learning will do is create an experience that is more personalised with more relevant information. However, this is not where it stops.
We will start entering a more spatial digital environment. The boundaries between technology and the physical world will become ever more blurred. It will exist in space, integrated and indivisible from the real world. There is a combination of technologies that make this possible including augmented and virtual reality, geolocation, 5G networks and IoT devices. Another important piece of technology that will facilitate and make it all possible is that of blockchain. Blockchain will be the platform that makes these technologies interoperable (able to communicate with one another), yes, they may be able to facilitate basic use cases without it, but it becomes extremely powerful when coupled together. Below is a diagram that shows how Web 3.0 may be designed and interacted with compared to its predecessors:
These changes will open up new business models and opportunities, and usher in technology we probably cannot even imagine at this point in time.
What Does Web 3.0 Mean for us as Users?
1) Ownership of One’s Own Information or Data
We as end-users will now be able to own and control our data and personal information. We could then share this information on a case-by-case basis.
2) Eliminating a Central Point of Failure
Data will no longer be controlled by middlemen. This means that there is less risk of big internet companies being hacked and personal information being stolen. There is less chance for government censorship and no individual can control the identity of another.
3) Access to Information
Access to information and the internet will become ubiquitous. Information will be easier to understand and access. We will start receiving more relevant suggestions and as more devices connect to the internet, the data to make better decisions will increase.
4) Better Advertising and Marketing
Using AI and machine learning we could target users with more specific adverts that are relevant to their needs. It will reduce the number of “annoying” adverts and hopefully make your online experience more relevant.
5) More efficient browsing
Browsing the internet will change, currently, something like Google helps you find things by searching for keywords. The new semantic web will be able to understand the context and therefore create detailed and relevant search results. Reducing time and energy spent sifting through the nonsense.
Overall Web 3.0 will have a remarkable impact on our lives. It will create a more ubiquitous digital environment and further integrate technology into our lives. It will also allow us to take back some form of sovereignty and allow us to own and profit from the data that we are creating on the internet.
Notable Articles and News Stories This Week:
Crypto Exchange FTX Has Enabled Stock Trading on Their Platform
Major cryptocurrency derivatives exchange FTX has launched a new offering which allows trading in fractional stocks — a share of a company that is tokenised (digitally represented) and traded on a blockchain. The products were launched on October 29 in partnership with German-licensed investment Firm CM-Equity and specialised tokenisation firm Digital Assets AG. More than a dozen equity and crypto pairings are available to trade on FTX, including fractionalised Tesla (TSLA), Apple (APPL), and Amazon (AMZN) derivatives.
You can read more about it here.
Avanti Financial Joins Kraken as a Wyoming-Approved Crypto Bank
Another crypto company gets its banking charter approved. The US has opened the flood gates for financial institutions to provide crypto-related services to individuals and other institutions. Even the well-established banks like JP Morgan are jumping on the bandwagon.
You can read more about the Avanti story here and JP Morgans outlook on Bitcoin here.
Bitcoin and Risk Assets are Decoupling According to Crypto Statistician Willy Woo.
A common perception of market participants is that bitcoin and cryptoassets are nowhere close to being a “safe-haven” asset. This conversation is usually supported by pointing to a liquidity crisis and short term correlations between cryptoassets and traditional risk assets. We wrote about this on the 14th of March 2020, you can find that report here. Willy Woo, a pseudonymous crypto analyst dives into the latest signs that bitcoin is beginning to decouple from the S&P500.
You can read Willy Woo’s analysis here.
Whilst we all have the option to look, to seek to understand, it’s often easier not to. Bitcoin, Ethereum and distributed ledger technology are complex systems that require significant due diligence. At Etherbridge we aim to lower the barriers of understanding this fast-growing digital economy.
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This is not financial advice. All opinions expressed here are our own. We encourage investors to do their own research before making any investments.