Back in what the kids today call “Web 1.0,” then Netscape CEO Jim Barksdale famously posited, “There’s only two ways I know of to make money: bundling and unbundling.” In his retelling, the ’90s World Wide Web audaciously unbundled the walled gardens of Microsoft and AOL in favor of open-source software and protocols. The giants of Web 2.0, led by Facebook, Google, and Netflix, overwhelmingly succeeded in rebundling our online lives a decade later. But now the technologies underpinning “Web3“—blockchains, smart contracts, and tokens, to name just a few—promise to decentralize the internet all over again by transforming users into creator-economy owners while upending business as usual in the process.
“Web3 is the next version of the internet, and crypto is enabling this next wave of the Web—one that’s user-owned and community-governed,” says David Grider, head of research at Grayscale Investments, a leader in digital currency investing. New protocols and incentives will yield new types of digital assets and new forms of organizations to make and distribute them—leading to entirely new business models in the process.
Nowhere will this be more evident than in the dawning landscape of the Metaverse, posing an open alternative to the ultimate walled garden Meta’s Mark Zuckerberg has in mind. Grayscale projects this virtual marketplace for digital goods and services will soon be worth $1 trillion. “We’ve just scratched the surface on the kind of transformational experiences these technologies are going to deliver,” promises Grayscale CEO Michael Sonnenshein.
So, what will those experiences look like, exactly? And how will they transform our concepts of ownership, status, community, and loyalty? Here’s what business leaders need to know about the next phase of the internet in the making.
USER OWNED AND OPERATED
The fundamental premise of Web3 is that users rather than platforms own digital property. This is what blockchains record in their immutable ledgers. It’s what cryptocurrencies and nonfungible tokens are, regardless of dollar exchange rates and JPEGs. More than just currencies, Ethereum and its ilk are decentralized mechanisms for recognizing and governing the goods and services built atop them—whether a pair of digital Nike or Adidas sneakers or a plot of virtual land in Decentraland’s 3D Metaverse. This is why brands such as Samsung and JPMorgan Chase have chosen Decentraland for their Metaverse presence, and why the government of Barbados is opening an embassy there. “They’re open economies,” Grider explains, “and because they’re open, they’re also interoperable.”
This interoperability is key to unlocking Web3’s predicted trillion-dollar market. For example, virtual black markets have flourished in online games for nearly two decades despite bans on buying and selling items. Creating NFTs and other unique objects on chain rather than tethered to any one game will vastly increase their utility and desirability across the entire landscape. That’s why Microsoft paid $68.7 billion in January to purchase the “building blocks …….