This is third and final installation of a 3-part blog series on a Futurist’s perspectives on some buzzy terms and technology trends.
I’m responsible for looking at the future of human-machine interaction, where many buzzy terms and trends are being bandied about. In this blog series’s first and second installations, I defined some key concepts and shared my first three unpopular opinions about Web3, the Metaverse, and decentralization.
TL;DR on my first three opinions:
- The Metaverse will be more potent as an augmented experience than a virtual one.
- There are two types of Metaverses: Open and Closed.
- The entire internet will not be decentralized.
So let’s move right into my last three unpopular opinions…
Most people won’t care about the ethics of a decentralized Internet.
Web3 is, in part, a movement to democratize the internet, but the desire for decentralization isn’t just about removing centralized control over data, money, and more. Supporters of the Web3 movement have been strongly motivated by a lack of trust.
- Trust in institutions has fractured — especially in the United States.
- Decentralized currency appeals to international investors who do business in certain volatile, unpredictable economies.
- Many believe Wall Street has gated wealth. As such, non-traditional investors often seek alternative paths to generate wealth.
A fierce, vocal, passionate group of people are the ones leading the decentralization movement. They highly value its autonomy and advocate for decentralization on behalf of the Greater Good.
Today, the number of purists who care about the ethics of decentralization is relatively small, yet it represents a critical component in seeing the future of decentralization. Early adopters are more likely to care about transparency and the value of a democratized Wall Street than the average user. The middle of the bell curve will need persuading that Web3’s incentives — like lower transaction fees vs. a central bank (someday) or getting paid to allow a company to use your personal data — validate engaging in something new and unknown. Even some early adopters are getting hit by thieves who are faster to take advantage of security loopholes in today’s burgeoning Web3.
Overcoming the ambivalence of the many will be critical to Web3’s adoption, and that’s not only related to why Web2 isn’t trustworthy. It’s also critical because for Web3 to succeed, we may have to change how we pay to use the Internet, leading to my next unpopular opinion.
Convincing users to pay for Web3’s Creator Economy remains a challenge.
The Creator Economy is the movement of individuals creating internet content and media that is consumed, and it plays a significant role in driving Web3 forward. This Creator Economy is driving engagement, but millions of creators also seek to monetize their creativity. Increasingly, we are seeing creators charging for their experiences, sometimes in novel ways. It’s easier than ever to do that on Web3, where your crypto wallet can easily tap into the sites you visit, and cryptocurrency micropayments should be easy to make.
But consumers aren’t used to paying for engagement. We get tons of the internet for free today, but it comes at a cost: our personal data. This harkens back to Redditor blue beetle’s famous quote in an August 2010 thread:
“If you are not paying for it, you’re not the customer; you’re the product being sold.”– Andrew Lewis, aka blue beetle on Reddit
With the centralized Web2 economy, the questionable use of personal data has been widely publicized and criticized, evidenced by the backlash against Google and Facebook over the past few years. That said, user data collection has long been the currency companies use in exchange for free experiences. Consider social media platforms like TikTok. Or collaboration tools like Google Docs. Or news sites like CNN.com.
User data collection drives the effective ad targeting these companies use to drive their advertising revenue. This is what allows them to forego subscription costs. Thus, to build Web3 business models, decentralized applications (dapps) will likely do one of the following:
- Require users to opt-in to data collection (like we see in Web2), but with transparent user data on the blockchain. This would allow users to verify what is happening with their data. Given that some understand what happens with their data, it will be interesting to see whether consumers are interested in having control of their data on the blockchain. This is also given the collaborative nature of the community.
- Reward users who opt-in to data collection with reduced or free site usage, charging higher fees to users who do not share their data.
- Reward users who opt-in to data collection with public-or-proprietary cryptocurrency or tokens they can use to pay for experiences or products.
- Create a business model that doesn’t rely on customer data, with enough substantial value that their site validates subscription usage fees, or uses publicly available data from the blockchain.
Selling, gamifying, tokenizing engagement
Selling within this new value model, and gamifying and tokenizing engagement is a critical step in bringing Web3 from the margins into the center of Internet interactions. Younger demographics have shown to be keener on expecting rewards for engaging with a brand. In fact, 78 percent of Millennials are more likely to select a brand with a loyalty/rewards program.* By the time Web3 truly emerges as a prominent aspect of the web, tokenized engagement might already be a larger portion of the actual economy.
However, Big Tech Web2 will still retain control of a portion of user data from those using their services. As long as they provide exceptional value, users will continue to pay by allowing them to retain their data on centralized servers.
This is why I believe Web2 will continue to have a strong presence in the Metaverse, among other consumer applications, even with the rise of Web3. Web2 represents the ability for companies to have more control over information. Information is money. And they will continue to build solutions that validate the value consumers get in exchange for the data they provide.
Now let’s look at how those companies engage in Web3, driving my next opinion…
The Internet of the Future isn’t as decentralized as many might hope.
The Metaverse’s democratic (or debatably, anarchic) roots have led many to characterize the Metaverse as “the Wild West.” That terminology has extended to Web3, crypto, and, more recently, NFTs, as they lack formal governance. But going back to the ethics of decentralization, that’s the point.
Decentralization offers freedom from central entities controlling the Internet. However, the tide is shifting toward a formal, transparent, democratized governance through establishing Decentralized Autonomous Organizations (DAOs).
Decentralized Autonomous Organizations (DAOs)
In DAOs, users partner in groups formally connected through blockchain-based contracts. They pool their crypto and vote on investments. Think of it as small, coordinated groups of people voting on rules and actions based on their own personal beliefs and preferences. It represents pockets of unified ethics developing around the type of experiences Web3 believers want to see. This collaborative DAO approach has extended into the Metaverse – and it is as close as we get to governance in both Web3 and the Metaverse.
Here is what is especially interesting to me, though. Although DAO investments are substantial enough to replace traditional VC investments in some areas, some see DAOs as a necessary evolution of VCs. But within that shift, entities — instead of individuals — will begin to insert themselves into Metaverse investments and experiences. It’s similar to how large shareholders can exert more pressure on publicly-traded companies than individual stakeholders. For instance, investors in the PleasrDAO include Andressen-Horowitz, a notable VC.
“There are a lot of people who have money to invest. They need some vision to throw money at.”
– James Grimmelmann, Cornell University Professor, Law and Technology
A DAO is at the mercy of its investors. Only if investors are willing to take risks and if their investment strategies align, can DAOs experiment dynamically and collaboratively, thus building Web3 and, by design, the open Metaverse. DAOs function just like stocks because investors purchase crypto tokens – like shares. The more crypto token investors own, the more power they have in their vote.
With an increasing presence of companies participating in DAOs, I expect well-resourced companies and VCs to exert more control than individuals in some decentralized investor pools. But when that happens, it will be interesting to see how they balance their interests without alienating or damaging the connected communities they are a part of.
“If we stay in the current paradigm, we will move further and further into a realm where a small handful of companies run by a small number of people run our experiences in cyberspace. And in that world, the problems of Big Tech are exacerbated.”
– Sam Williams, Founder of Arweave
Promises of human-machine interactions in the future
Let’s recap all six of my unpopular opinions.
- Metaverse will be more potent as an augmented experience than a virtual one.
- There are two types of Metaverses: Open and Closed.
- The entire internet will not be fully decentralized.
- Most people won’t care about the ethics of a decentralized Internet.
- There is still work to do in persuading users to pay for the Creator Economy that is constructing Web3.
- The Internet of the Future isn’t as much of a movement away from centralized control as many might hope.
These are my opinions as of now. However, in the next couple of months, I could learn new information that persuades me otherwise. That’s the beauty of learning. Our knowledge and opinions remain malleable as new developments evolve to impact them. I delight in keeping tabs on trends and watching them evolve, giving us runway to influence decisions. This leads to actionable outcomes, as my team and I are talking about adapting our customer experiences for this future, from tokenizing engagements to interacting virtually in the Internet of the Future.