Talking Nerdy: Blockchain, Mixed Reality, & Web3 (Part 3)

Released: 3-12-2024

TL;DR: Web3 represents a shift to decentralization, empowering users with control over data and online experiences. It diverges from Web1 and Web2, emphasizing decentralization, ownership, transparency, and immutability. Key concepts include decentralized storage, identity management, tokenization, blockchain, and DeFi. Businesses are exploring these for deeper engagement and new revenue models. Web3 promises a future where users have unprecedented control online, fostering loyalty and reshaping internet dynamics.

Q: What's the best way to explain Web3 to your grandparents?

A: It's like the internet, but you own your cat pictures on a fancy spreadsheet everyone can see.

Blockchain

Imagine a world where contracts execute themselves, supply chains whisper their secrets on a tamper-proof ledger, and every transaction is etched in digital stone. That's the beauty of blockchain. No more middlemen, no more blurry processes, just pure, transparent trust woven into the fabric of your business. This isn't just about cutting costs; it's about building unshakeable customer confidence. Think frictionless payments, automated logistics, and a supply chain so transparent, you could track an avocado from orchard to guacamole bowl.

Mixed Reality

Get ready to blur the lines between the real and the virtual. Mixed Reality – the harmonious marriage of Augmented Reality and Virtual Reality – is about superimposing digital information onto the physical world, or transporting us into whole new virtual universes. Imagine product demos conducted in your living room, training simulations so real you can smell the virtual oil, or collaborative meetings held anywhere in the world, rendered in stunning 3D. This is the future of work, learning, and even shopping – one where physical and digital seamlessly blend to create experiences as real as, well, reality itself.

Web3

While ushering in the age of the empowered user, Web3 is all about decentralization. With the power shifting from corporate giants to communities and individuals. This means owning your data, participating in open-source governance through blockchain, and even shaping the future of the internet itself through digital assets like NFTs. For businesses, this translates to deeper engagement, loyal communities built on shared ownership, and innovative revenue models beyond the control of centralized platforms.

History of Web3

Web1

Web 1.0, the "read-only web", was like a giant library of static web pages with limited interaction. Think of browsing informational websites with little chance to comment or add your own content.

Web2

Web 2.0, the "participative social web", revolutionized things by allowing users to create and share content. This is the era of social media platforms, blogs, and user-generated content that we're familiar with today.

Web3

Web3, still evolving, is the concept of a "decentralized web". Here, users would have more control over their data and online experiences, with power shifting away from large tech companies and towards distributed networks that manage themselves.

Core Web3 Concepts to Remember

Decentralization

This is the defining feature of Web3. Instead of relying on centralized servers and authorities, Web3 utilizes distributed systems like blockchains and tokenization, spreading control and data across a network of computers. This aims to create a more open and censorship-resistant internet.

Ownership & Participation

In Web3, users have greater ownership of their data and online assets. This can take the form of cryptocurrencies, Non-Fungible Tokens (NFTs), or even virtual land within online worlds. Additionally, Web3 emphasizes user participation, allowing individuals to contribute to and govern online communities and platforms through mechanisms like Decentralized Autonomous Organizations (DAOs).

Transparency & Immutability

Data stored on blockchains is typically transparent, verifiable, and immutable, meaning everyone can see it, and once recorded, it cannot be easily altered. This can increase trust and accountability within online interactions.

While Web3 is still in its very infancy stages, there are still some available offerings for businesses today to adopt. These technologies focus around the following topics:

Data Storage
Identity Management
NFTs and Tokenization
Virtual Assets & Commerce
Blockchain
Finance (DeFi)

Let's break them down further.

Data Storage is all about decentralization in Web3. This could be any combination of cloud resources like Azure and AWS, file servers located on a business premises or colocation, or an individual owner's extra hard drive space. You heard that right, an individual can sell unused encrypted space on their hard drives as a means of income (cryptocurrency) allowing for a highly cost effective solution for users. A network like Filecoin has an orchestrator and a blockchain ledger tracking where, when, and how the data is stored and allows it to be publicly verifiable without accessing the contents unless you are the owner. This allows for a level of redundancy greater than even the largest cloud providers because the data is fragmented (broken up), stored in multiple places at once and managed by the decentralized orchestrator. In the future, this is how all data will be stored where anyone can verify its integrity but only the owner can allow access with some heavy identity authentication. Think how easy this will be to share medical or other personal information with ease and security.

Web3 Identity Management is the future of navigating the online world maintaining individuality and security. Imagine ditching the password headaches and data breaches of today's web and controlling your own identity with a secure digital vault. This lets you prove who you are (or aren't) without relying on any one company. Web3 empowers you to share specific credentials for each login, keeping your personal information under your lock and key. It's like having a superpower for the digital age, granting permission for access while keeping your identity safe and sound. In today's latest business offerings, internal identity is centralized (like Microsoft Entra/Active Directory) but authentication is passwordless using methods like Biometrics or soft tokens like SMS (text messaging) or Authenticator apps. Now customers truly leverage Web3 Identity Management by utilizing preexisting accounts like Facebook, Google, etc using shared identity tokens. I'm sure you've seen this when creating an account online and it asks you if you already have one of these other identities and it makes the login seamless without creating a new account each time.

Tokenization transforms assets, both physical and digital, into bite-sized digital tokens. Think of a Token as an identity that represents something and can only exist once. These tokens live on secure blockchains, making them easy to trade, track, and even fractionally own. Imagine co-owning a rare painting through tokens, or buying and selling concert tickets on a secure marketplace independent of Ticketmaster. This will eventually revolutionize the real estate industry where someone can see the complete history of a physical property as well as any smart contracts that are leveraged against the value like liens. There won't be a need for expensive closing costs, 30-60 day time frames, or even title insurance as everything is public and accessible. However, the big marketplace in Virtual Assets and Commerce for tokenization currently is for buying and selling high end shoes and virtual real estate in virtual realities like the Metaverse. With shoe sales, the physical asset has a mirrored digital token so someone can easily track validity and provenance in a highly counterfeit market. This is the very early start to this physical/digital twin marketplace and current products allow for this to be done at scale.

Blockchain is the secure and transparent record-keeping system that provides the foundation for Web3's decentralized infrastructure. Imagine a web where data isn't locked away in corporate servers, but spread across a vast network of computers. This is what blockchains enable, creating a tamper-proof ledger that underpins Web3 and business applications. Currently, businesses are leveraging blockchain technology to track supply chain and inventory distribution, smart contracts, reward/loyalty points, and more. If this interests you, I highly recommend checking out my Blockchain chronicle here.

Web3 is shaking up the world of finance by introducing Decentralized Finance (DeFi). DeFi bypasses traditional gatekeepers like banks, enabling peer-to-peer financial transactions through secure blockchain networks. Imagine borrowing and lending directly with other users, cutting out most middleman fees. DeFi also opens the door to new investment opportunities, with cryptocurrencies and tokenized assets offering alternative pathways to grow wealth. What we see today in a growing market is that business are using DeFi for rewards/loyalty point program tracking as well as sometimes creating their own internal currency to minimize external costly bank transactions.

To wrap things up, Web3 represents a paradigm shift towards decentralization, empowering users with greater control over their data and online experiences. It marks a departure from the centralized models of Web1 and Web2, emphasizing concepts like decentralization, ownership, participation, transparency, and immutability.

The core concepts of Web3, including decentralized storage, identity management, tokenization, blockchain, and decentralized finance (DeFi), redefine various aspects of the digital landscape. Businesses are beginning to explore and adopt these technologies, offering opportunities for deeper engagement, innovative revenue models, and more secure and transparent operations.

As Web3 continues to evolve, it promises a future where users have unprecedented control over their online identities and assets, while businesses can foster loyal communities and explore new avenues of growth. While still in its infancy, Web3 holds immense potential to reshape the internet and redefine how we interact and transact online.

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