Demystifying web3

The web advances

The original web (1) simply connected computers and users worldwide (hence the name World Wide Web) and is often called the “read only” internet. Web2, often called the read-write internet, broadened content and connections to encompass things like social media, real-time content/news, online shopping and more elaborate web applications. This is where we are now, where we’re all creating and sharing content on social media. But most of this data is owned and controlled by the platform companies.

Web3, often called read-write-own, represents the next big step in the evolution of online interactions. It enables a bridge between the physical and virtual worlds by introducing new ownership and transactional models that stretch across and blend digital and physical realms.

PwC sees web3 as a fundamental shift that results in a truly decentralized ecosystem where users have ownership and control of their assets, enabled by emerging technologies.

What should I know about web3?

At the heart of web3 is the concept of decentralized ownership, currently facilitated by blockchain technology. The distributed ledger establishes a verifiable and traceable way to ensure that items and assets are authentic. It also introduces a way to compensate individuals for their time, data and input — while permitting them to retain control of their personal data. An advertiser, for example, might offer consumers some form of currency if they’re willing to share income information. 

Suddenly, it’s possible to pay or reward customers and brand devotees for helping to collaborate on a new product or service, whether it’s a clothing line or an eye-catching label for a soft drink bottle. It’s also possible to buy, sell and exchange digital NFTs, as well as tokens representing a “deed” of property in the physical world or digital sports cards in a virtual NFT gallery.

There are three primary components to web3.

• Ownership: Until web3, tokenization was available only at the point of contact for a specific transaction or an ongoing interaction. This imposed limits on what’s possible online. However, blockchain allows for an entirely new ownership model. In this new world, digital assets become more like physical assets. People can take their digital assets wherever they go and transfer those assets to others at any time. A movie or book bought online can suddenly be sold to a friend, a transaction that has to be done physically at the moment.
• Aligned incentives: Web3 supports tighter alignment between brands and consumers through the ownership of digital property. The importance of this shouldn’t be ignored. In a web3 world, one-way connections, and things like linear subscriptions, go away. Consumers are suddenly partners and even owners. With a stake in the web3 world, a business suddenly has an opportunity to create a new and more actively involved type of brand advocate. A social media influencer, for instance, might choose to promote a brand or product on their individual platforms because of incentives that extend beyond money — maybe influence on how a company is run, equity or co-branding opportunities.
• Community: It’s tempting to think of community as an entirely separate entity from ownership and aligned incentives. In reality, the three are deeply intertwined. Incentives and rewards created through tokenization produce a new and potentially more valuable community. Businesses that get this equation right may have an opportunity to achieve a new class of super-loyalty. Collaborative communities can generate art, videos, photos and online posts that aid marketing teams and web creators in developing a brand. No less important: Members of a community are likely to increase their transactions in the physical world.