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Understanding the potential of Web3

The core distinctive feature of Web3 is the decentralization of business models. To that extent, it marks a third phase of the internet (hence “Web3”) and a reversal of the current status quo for users. While the first incarnation of the web in the 1980s consisted of open protocols on which anyone could build—and from which user data was barely captured—it soon morphed into the second iteration: a more centralized model in which user data, such as identity, transaction history, and credit scores, are captured, aggregated, and often resold. Applications are developed, delivered, and monetized in a proprietary way; all decisions related to their functionality and governance are concentrated in a few hands, and revenues are distributed to management and shareholders.
Web3, the next iteration, potentially upends that power structure with a shift back to users. Open standards and protocols could make their return. The intent is that control is no longer centralized in large platforms and aggregators, but rather is widely distributed through “permissionless” decentralized blockchains and smart contracts, which we explain later in this article. Governance—and this is one of the trickiest aspects of Web3—is meant to take place in the community rather than behind closed doors. Revenues can be given back to creators and users with some incentives to finance user acquisition and growth.
What does this mean in practice? Intermediaries may no longer be required with respect to data, functionality, and value. Users and creators could gain the upper hand and, through open-source rather than proprietary applications, would have incentives to innovate, test, build, and scale.
According to Statista, the global Metaverse market is worth $47.48B in 2022 and is set to soar to $678.7 billion by 2030.