User data and the internet firms that monetize that data are transforming the global economy. As a recent article from Harvard Business Review observes, rather than dominating single industries, platform companies like Facebook, Google, and Twitter use “competitive bottlenecks” to aggregate and harvest the personal data of their users. By operating as gatekeepers across a range of industries, these internet giants now tax and mediate value creation in the digital economy.
Fortunately, the story of the internet does not end here. Beyond the innovation bottlenecks imposed by entrenched data monopolies, new tools are emerging around Web 3.0 that could enable people to own their data. Where Web 1.0 introduced a new global platform for digital consumption, and Web 2.0 enabled social networks and user-driven feedback, Web 3.0 represents the rise of a distributed “smart” Web rooted in blockchain technologies.
First coined in 2014 by Gavin Wood (co-founder of the Ethereum blockchain), “Web 3.0” is envisioned as an open and decentralized version of the internet. Proponents of Web 3.0 often describe it as a “trustless” internet— free from the domination of a handful of large firms. The hope is that distributed ledger technologies (DLTs) and storage on the blockchain will drive a data revolution.
Of course, not everyone loves the idea of Web 3.0. Last year, Twitter Founder, Jack Dorsey, criticized the enthusiasm surrounding Web 3.0, suggesting that the real power brokers in the space are in fact venture capital firms. Analysts within the tech sector have been quick to respond that platform business models like Twitter and Facebook are precisely the kinds of business models that Web 3.0 companies are now seeking to displace.
Most of the internet applications we use today are centralized— that is, they are owned and managed by a very small number of platform companies. For example, when we use a cloud-based service like Google Docs, we explicitly give Google permission to access all the information in our documents in order to monetize that information. For many critics of this model, Web 3.0 represents a different kind of internet. Rather than all users being connected to a central network or “server,” data could potentially be stored and managed locally, across a highly distributed data ecosystem.
One firm that illustrates the kinds of new tools emerging with Web 3.0 is US-based InfStones. Operating as a bridge between blockchain technologies, InfStones simplifies the process of building, scaling, and securing decentralized web applications (DApps). By providing an API Gateway and node-based infrastructure, InfStones technology supports tens of thousands of nodes on more than 60 blockchain protocols. Already working with prominent names in the industry like Binance, Polygon, Circle, and Chainlink, InfStones recently closed a $66 million funding round led by SoftBank Vision Fund 2 and GGV Capital.
In fact, there is a broad range of young entrepreneurial companies in the United States and around the world that are working to make Web 3.0 a reality. Leading the financial push to build out this new industry is venture capital firm Andreessen Horowitz (also known as A16z). The Silicon Valley-based VC has invested billions into blockchain companies to date and plans to raise $3.5 billion for its latest cryptocurrency venture fund. The firm is also launching an industrial research lab that aims to solve major problems in the Web 3.0 space.
Could Web 3.0 enable the emergence of a highly distributed data infrastructure in which users own and control their own data? Many technology developers seem to think so. But doubts remain. Media coverage on cryptocurrencies and the blockchain space as a whole have soured. Concerns about a looming consumer recession are making tech firms much less attractive to investors. Nonetheless, tech companies remain among the wealthiest firms in the world. And many tech investors are still eager to fund new innovation.
Beyond Web 2.0, changes will come. Bridging technology and personal privacy, a truly distributed internet may one day enable users t0 manage and monetize their personal data, all while accessing an ocean of digital services over public blockchains. Perhaps, this third generation of internet services will be the catalyst for a new internet, connecting data-driven technologies like artificial intelligence and machine learning to completely distributed data ecosystems.
Of course, there’s a long way to go to develop a truly decentralized internet. The architecture requirements for Web 3.0 alone are far more complex than the current Web 2.0 architecture. The sheer number of nodes involved in developing a truly decentralized Web 3.0 infrastructure is hard to fully appreciate. Nonetheless, VC funding for blockchain startups is expanding. In fact, venture funding last year reached $25.2 billion, up 713% from $3.1 billion in 2020. This is good reason for hope.