Web 3.0 demystified: Understanding Blockchain, NFTs, and the Metaverse and what they mean for your organisation’s strategy
What exactly is Web 3.0, and why is it being hailed as the future of the Internet?
Web 3.0 refers to the next vision for the Internet, characterised by principles such as decentralisation, and often underpinned by distributed ledgers such as Blockchain and a token economy.
Web 1.0 represents the beginning of the Internet. It used to be a mass catalogue of websites that you could go on and read stuff – the Internet of reading. Web 2.0 marked the explosion of social media giants and e-commerce, becoming the Internet of reading and creating. Web 3.0 is the next step of that, where we hope that we’ll be able to transact value directly, becoming the Internet of reading, creating and owning.
Web 3.0 is typically underpinned by distributed systems such as blockchains. Blockchains were made famous by Bitcoin, which was released in 2008 and represented a computer science breakthrough that allowed users to send and receive value directly, without needing to trust any middleman or intermediary, for the first time. The absence of those middlemen made public blockchains the world’s first public infrastructure for transacting digital value. This meant that it was open to anyone with a device and an internet connection, and not owned by any single entity.
How do NFTs fit into conversations about Web 3.0?
In Web 3.0, users transact value represented in the forms of tokens. NFT stands for non-fungible token, meaning a token that is not readily interchangeable with another token having identical value, owing to some unique properties.
NFTs allow Web 3.0 to include the transacting of not only fungible things such as money, but also non-fungible assets such as unique goods, artwork and others. NFTs cannot be replicated, and each of them has its own distinct value and ownership. This is in contrast to traditional fungible tokens, such as cryptocurrencies, which are interchangeable and have identical value as each other. One bitcoin is worth the same as another bitcoin, for example.
The ability to own non-fungible assets is critical to the success of any digital world’s economy. NFTs allow creators to monetise their digital creations in a way that was previously not possible. For example, an artist can create a digital artwork and sell it as an NFT, with the buyer receiving a unique token that represents ownership of that artwork.
What does the Metaverse have to do with Web 3.0?
The Metaverse and Web 3.0 are entirely separate technology phenomena.
The Metaverse is a broad umbrella term that refers to the blurring of previously entirely digital or entirely physical experiences using technology. Implementations typically include the use of a reality technology (AR/VR/XR/MR) often together with machine vision and other frontier technologies.
For example, if you want to go and buy a t-shirt, you either shop in store or you shop online. The Metaverse blurs these actions. Whether it’s because your online experience feels more physical, or your physical experience feels more digital, that is the Metaverse.
Though very separate concepts, the Metaverse is often discussed in the context of Web 3.0, as some (but, importantly, not all) Metaverse implementations are underpinned with Web 3.0 technologies, such as distributed systems. Proponents of Web 3.0 believe Web 3.0 can make for more rewarding, immersive and valuable Metaverse implementations. We know however that the two technologies exist separately, and the merits of using them together on a given project must be carefully considered.
The Metaverse isn’t just a thing organisations do to appear innovative, it’s central to driving business growth. At MDRx, we always focus on delivering real and meaningful value for our clients rather than being dictated to by a specific technology.
The Metaverse is inevitable. Web 3.0 isn’t, yet.
Strategy and the role of experimentation in Web 3.0
When thinking about incorporating Web 3.0 into their digital strategy, businesses should focus on the “why.” There are some industries and businesses that suit Web 3.0 solutions natively, without having to reinvent their business model. These businesses should assess what they are doing today, where they want to be in ten years, and then figure out how, if at all, Web 3.0 forms a part of that.
At MDRx, we recommend that whatever businesses do in terms of Web 3.0, they should inch their organisations further towards their target end-state goals. Disney is a great example of how to do this well, as they dipped their toes into the Web 3.0 water by launching their Golden Moments collection – a series of relatively simple NFTs that were little gold statuettes of famous Disney characters in iconic moments.
This was an interesting and valuable experiment, and some people bought the NFTs, whilst others didn’t. But most importantly, Disney used it as an internal business learning tool that empowered them to know, as an organisation, what it meant to “do” Web 3.0 in practice. They have since gradually expanded their operations.
What Disney did very well was to be open to failure, or rather prepared to define success quite widely beyond immediate revenue gains. Every project they launched didn’t need to make them hundreds of millions of dollars, provided it was inching them in the direction of that target end-state. The more lessons you learn as a business whilst experimenting with Web 3.0, the better your chances of success will be.
A lot of our clients come to us asking for a blockchain solution and do not leave with one because the first question we always ask is – does this need blockchain? Often, the answer is no, because the same objectives can be achieved using alternative technologies that are cheaper to implement, more scalable as well as easier and quicker to realise value from.
What are the key concerns that businesses need to be conscious of when pursuing Web 3.0?
It pays, when pursuing a Web 3.0 project, to consider the law and regulation upfront. At MDRx, we talk about “compliance by design” underpinning everything that we do. That means from the ideation stage, coming up with the concept, and formulating the strategy, we make sure that we leverage the best lawyers across the Mishcon de Reya Group to give us that comfort that we can proceed and innovate with confidence, without the legal and regulatory issues tripping us up at the last minute.
When businesses are executing on their Web 3.0 strategies, they need to make sure that they also consider the transformation of their in-house functions, whether that’s operations, marketing, procurement, HR or legal. They need to have a common working understanding of the technology, and be cognisant of the effort that needs to be put in to make the changes required to support the business.
We know that equipping your organisation and support functions to understand and engage with these technologies allows you to go faster and do better when it comes to innovation. This is why, when we are crafting strategies for our enterprise clients, we make sure that training and knowledge transfer takes place as well. This way we can run together at speed, once they decide which way they want to run, and they’ll be able to continue the work once we’re gone.
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Web 3.0 is here to stay, and businesses should be considering their position in relation to it. If you’re not sure what your next step should be, get in touch. We’re working with some of the world’s most innovative organisations across both public and private sectors to create impactful strategies all the way through to implementation.