Curious how the blockchain will accelerate business? Wondering what types of transactions will be possible in Web3?
In this article, you’ll discover how trust works in Web3 and how it will unlock the future of business and commerce.
How Web3 Solves the Web2 Trust Problem
Web2 has presented us with great innovations and opportunities for business growth. Over time, it’s also eroded trust among creators, users, and platforms—partly because it’s so easy for bad actors to engage in unethical activity.
For example, music, movies, books, games, and other creative works are illegally reproduced and downloaded every day, which means the artists and creators who produce that work don’t see a penny of compensation.
Thus creators don’t trust users because they steal from them. And creators don’t trust platforms because platforms make it easy for creative works to be stolen, duplicated, and proliferated.
There’s no record to definitively show where and from whom a creative work originated.
Distrust has also grown between users and platforms, thanks in large part to extractive business models.
When you sign up for any platform, you’re required to create an account on that platform. That platform now owns all of the data and content associated with your account. You can leave that platform but you can’t take your account, content, or data with you.
The distrust among each of these three parties continues to deepen because Web2 doesn’t have the technology to combat it.
However, Web3 does have the technology: blockchain.
Blockchain technology enables a Web3 system that doesn't require trust among parties to function. Therefore, it’s a trustless system.
The system validates and records data and transactions safely, securely, transparently, and immutably, directly onto the blockchain via a network of computers or nodes, rather than relying on intermediaries.
What does this trustless system make possible?
First, creators have a clear, enforceable record of origination and ownership over their work.
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Second, users have full custody/ownership of their identity and data.
The deepest effect, though, will be seen in commerce.
Transactions on Web2 are reliant on “trusted” third-party intermediaries such as banks, credit card companies, government and financial institutions, retail outlets, and so on.
Thanks to blockchain technology, there’s no need for these middlemen—no wholesaler, retailer, or app store between the person who wants to sell something and the person who wants to buy it.
With no middlemen, the fees and costs associated with commerce are greatly reduced. This means:
- App developers won’t have to pay 30% of sales to sell through Apple’s App Store.
- Product makers won’t have to give a cut of sales to Amazon or pay for end-cap placement in brick-and-mortar stores.
- Musicians won’t need streaming platforms such as Spotify to make a living.
- Consumers won’t have to contend with markup, which makes goods more affordable.
The flow of commerce will be unencumbered to move faster and freer than it ever has.
4 Web3 Apps and Protocols Improving Commerce
#1: Lens Protocol: Decentralized Social Media
Lens Protocol is an open, decentralized social graph that improves the user experience on two fronts by putting privacy and power back in the user’s hands.
When you log into an app that uses the Lens Protocol, you don’t create a platform-based account. You log in by connecting your digital wallet. You no longer have to share personal details such as your email, phone number, or address.
Lens only sees what it needs to see to verify your identity. When you disconnect your wallet, you remove Lens’ ability to see anything. You retain complete control and custody of your identity.
Now, think about all of the content you create on Web2 social media every day.
You create text posts, upload images and videos, like and comment on others’ content, and more. But not one piece of that presence is actually yours.
Whichever social media platform you're engaging on owns every bit of that content and can remove it or your profile at any time. That’s problematic if your business model relies on your social media presence.
When you engage on an app powered by the Lens protocol, all of your content and engagement is turned into an NFT.
If you post a photo, that post becomes an on-chain NFT. When you follow somebody, the relationship between you becomes an NFT. If you like a piece of content or comment on something, that engagement becomes an NFT.
Every one of those NFTs is owned by you and housed in your wallet, and you decide who has access to your content and data. If, in the future, you don’t want a specific piece of content to be available to anyone, you can block access to it.
#2: Gitcoin: Decentralized Project Funding
Gitcoin is a public good funding platform. Here’s a hypothetical example of how it works…
Imagine that Walmart partners with the NBA to build 20 basketball courts in communities across America.
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To fund the project, Walmart establishes a $1M matching grant on Gitcoin, lists all 20 communities, and then invites anyone to donate their own money toward the community of their choice.
At the end of the grant cycle, Gitcoin bases its distribution of the $1M on quadratic funding and awards funds to the community with the highest number of donors, not the community with the highest amount of donations.
Then, because all of the individual donations to the project were made on-chain, Walmart can give each of the donors a role in governance of the new court. Each donor will have a say in how the court is managed, which days are dedicated to kids’ leagues and which are dedicated to adults’ leagues, and other decisions.
And because Gitcoin uses blockchain, there’s no doubt as to whether Walmart actually funds the projects. Once it funds the grant, smart contracts enforce the project funding. Donors never have to wonder if Walmart held up their end of the bargain in full.
#3: Audius: Decentralized Music Streaming
In general, most music is owned by three major labels. You’ve probably heard how Taylor Swift doesn't own her masters, right?
Artists who publish their music on Audius not only retain ownership of their music, they receive royalties based on listens.
In contrast to Spotify’s $0.003-$0.005 per stream/listen, Audius pays its artists 90% of the revenue generated by streams of their music. Musicians can make much more from a smaller audience, which is great news for independent artists.
#4: Meme Lab: Decentralized Meme-Creation
Remember the beginning of this article where we talked about the problem with proving where and with whom a creative work originated?
Memes play a significant role in internet culture but it can be difficult—if not impossible—to trace the origins of a meme.
Memes Lab allows anybody to create a meme on-chain so we can verifiably say when a meme was created, who created that meme, and who used it after it was created.
Other Notes From This Episode
- Connect with Michael Stelzner @Stelzner on Instagram and @Mike_Stelzner on Twitter.
- Watch the interview and other exclusive content on the Web3 Business YouTube channel.
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