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If networking teams at large global enterprises are not closely following developments with Web3, they should be. Web3, also known as Web 3.0, is a concept for a new iteration of the Web based on blockchain technology, which incorporates practices including decentralization and token-based economics.
Some have maintained that Web3 will offer increased scalability, cyber security and data privacy for users and counteract the clout possessed by powerful technology companies. Even though much about Web3 might be theoretical and still evolving at this point, it’s a good idea for enterprises to understand what it might look like at a global scale and what it might mean for their businesses.
According to a March 2022 article by Bloomberg, the concept of Web3 has captivated investors and the technology industry for more than a year.
“In some respects, Web3 is a successful re-brand of blockchain technology, a similarly hot trend that attracted growing levels of venture capital investment for several years until 2018, when funding levels faltered,” the article states. “That all changed in 2021: Investment into web3 startups suddenly zoomed up to $23.7 billion, according to startup market intelligence firm Pitchbook.”
Research firm Gartner stated in a February 2022 article that Web3 will not overtake Web 2.0 in the enterprise before the end of the decade, “but you can start talking today about a world with less authority and more automated business execution.”
Web3 makes peer-to-peer interactions the essence of a “new generation of networked commerce and society,” Gartner said. “It retires centralized platforms, servers and authorities as the key managers of information and value flows.” Web3 will initially benefit large enterprises through applications that benefit from new blockchain-enabled business models and social and gaming networks.
The first step for IT and business executives is to understand the key ways in which Web3 differs from Web 2.0, the early Web3 use cases and related technologies, Gartner noted.
Web3 is attractive to businesses because it enables peer-to-peer interactions without centralized platforms and intermediaries. It is “intended to give any participant in the web their own autonomous power and control,” said Whit Andrews, distinguished vice president and analyst at Gartner.
Existing Web3 applications are limited in enterprises, Gartner said, but public applications such as decentralized finance (DeFi), non-fungible tokens (NFTs), play-to-earn games and community-organized decentralized autonomous organizations (DAOs), are thriving.
“Examples of Web3 success in well-established industries are sparse, and large enterprises will likely be slow to cede governance, oversight and control of applications they use in conjunction with other digital ecosystem participants in order to move to Web3,” Gartner stated. “Nevertheless, most organizations will ultimately want to implement applications and processes that benefit from trust-minimized computing and new business models and opportunities that only Web3 promises to enable.”
The firm said among the enabling protocols and technologies for Web3 are privacy-preserving, trustworthy off-chain computing integrated with on-chain smart contracts; cross-chain interoperability that enables assets to move easily across isolated blockchains; and middleware abstraction layers that make it easier for developers to implement portable applications.
Other components will include scalability tools that remove the computing burden from primary base-level blockchains such as Ethereum and Bitcoin; distributed, persistent and secure storage systems for off-chain data linked to blockchains; technologies such as privacy-preserving protocols that protect confidential information, and artificial intelligence (AI) models that can infuse NFTs with intelligence.
Clearly, the latest iteration of the Web, whenever it comes to the mainstream, has the potential to impact countries worldwide.
“Web3.0 is expected to greatly improve the existing Internet ecosystem, effectively solve the problems of monopoly, lack of privacy protection, and malicious algorithms in the Web 2.0 era, making the Internet more open, inclusive and secure,” Yao Qian, director of the Science and Technology Supervision Bureau of China’s Securities Regulatory Commission, wrote in an article published in March 2022.
As a public infrastructure, the construction of Web 3.0 needs to “give full play to the innovative spirit of the private sector, through mass innovation and competition,” the article stated.
Some are recommending that CIOs and other executives approach Web3 with caution. “Much of Web3 sounds attractive in theory: Enthusiasts promise a Web that’s fairer, not dominated by big tech companies, and where users control their own data,” noted Martha Bennett, vice president and principal analyst at Forrester Research.
“Whether it’ll be possible to deliver on these promises is another matter,” Bennett said. “Signs to date indicate that turning theory into practice is proving difficult in key respects. We’re already observing the emergence of power structures very like the current unequal power structures that Web3 advocates want to replace.”
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