Fri. Dec 3rd, 2021

The next iteration of the internet requires a bit of magical thinking. Web3 is a technological utopia. It envisages a world of decentralized collaboration that will end the dominance of large corporations by wiping out lucrative data collection and digital advertising markets. Yet building that world would require exactly the kind of investment that only Big Tech can provide.

Pressing the reload button on the internet seems tempting after years of disinformation and data hacking. First came the web – a widespread collection of open source information. Then came Web 2.0, in which companies like Google organized information and helped users interact online while building walls around data. Technical giants have amassed trillions of dollars of market value and now dominate the US stock market. Only five companies represent more than a fifth of the S&P 500 index according to market capitalization.

Web3 provides the setback for this concentration of power. It is proposed as a decentralized system built on the blockchain in which companies no longer act as gatekeepers. User information will move freely over the internet. Instead of platforms making content decisions, users will be self-moderating. Tokens will be generated as rewards and everything will be on public blockchains, making the web transparent and secure.

That’s the theory anyway. Most of these do not yet exist. But the idea gained momentum with the boom in new fashionable non-fungible tokens (NFTs), digital ownership of online ephemerals and decentralized financing projects running on public blockchains.

Venture capitalists are already using Web3 as a focal point for investing in cryptocurrency projects. New VC fund Paradigm One Raised $ 2.5bn in November to focus on applications running on ethereum. Its token eater now has a market capitalization of more than $ 500 billion, more than $ 68 billion a year ago. A planned upgrade from energy-intensive proof-of-work – solving a maths problem – verification to proof-of-play will further enhance ethereum’s profile.

Yet the end of Big Tech’s hegemony seems unlikely. The ethereum blockchain has restrictions on transactions and many of the public remain wary of digital tokens.

Moreover, these rich companies also have no plans to hand over control. Social media platform Twitter has announced a dedicated crypto team. Facebook’s name change to Meta and plans to become a “metaverse company” are linked to the idea of ​​a future in which digital assets can be safely moved over the internet. These early investments suggest that new walls are being built before Web3 becomes a reality.

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