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Tired of what the internet has become? Well, there’s an alternative brewing, and it’s called Web3. Web3 is a tricky thing to define because it is a concept that is still in its infancy, but it is a decentralized version of the internet we know today. It incorporates blockchain technology, such as cryptocurrencies and non-fungible tokens (NFTs), to “give users back their data” via ownership. But does Web3 empower the little guy? Let’s discuss what it is and the effect it would have if implemented.
Web1 and Web2
To understand what Web3 is, you must understand what Web1 and Web2 are. Web1 was the first version of the World Wide Web to exist. It was “static” with “close to zero interaction between users,” and written with simple HTML. This was between 1990 to 2004. Web2 is the current state of the internet, starting in 2004 it is defined by the advent of social media platforms. This allowed people to create and share content as well as interact with each other. Web2 also created an “advertising-driven revenue model.”
Now, with Web1 already passed on, what is the downside of Web2? Well, its biggest problem is data-driven. With social media companies such as Meta and search engines like Google, your data is not your own. Big corporations control every inch of your online footprint. They use this data to create ultra-personalized ads targeted directly to you. In a way, this removes some of your freedom as an individual because you have no privacy.
A Deeper Dive into Web3
Web3 is the proposed alternative to Web2. It is an alternative version of the internet where, instead of a large corporate entity hosting your information, anyone can own their data, and everyone can be a part of the system via blockchain technology. According to IBM, a blockchain is a “shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.” In addition to everyone owning their data, decentralized autonomous organizations (DAOs) act as an alternative to mega-corporations and store data collectively. The difference between a corporation and a DAO is that a DAO is an organization with no leader, and everyone who is part of it gets a token-weighted vote toward whatever direction the blockchain should go in. The benefit of having these DAOs is that they bring a democratic element to the table, and they are transparent since every decision they make is public information. They are also accessible, as anyone in the world with a computer and an internet connection can potentially join one. The end goal is to have every company owned by a DAO, instead of a corporation.
The goal of Web3 is to lead to a new kind of internet based on digital ownership and a lack of censorship and to make things more distributed and democratic. Decentralized Finance (DeFi) is also an element of Web3, in which every interaction between users and the internet is commodified by them being rewarded cryptocurrency as an incentive to participate in the system. Web3 is supposed to empower the community of internet users, but does it?
Web3 and Marketing
Marketing in Web3 will be different than the traditional marketing you see today. The way brands interact with people will evolve just like the internet. This is partly due to the introduction of the Semantic Web, an extension of the current web that allows computers to understand the meaning of web pages. This will change the way we interact with web pages and help create more accurate search engine results because computers will better understand how we use the internet.
Ubiquity is an essential tenet in the philosophy of Web3 as well. This is the end goal of Web3; to give everyone everywhere access to it. This means Web3 will be fully compatible with every computer and device. With this, people worldwide will be able to connect and interact with the new internet.
With Web3, your marketing strategy must be adaptable. For starters, you should take advantage of the immense popularity of NFTs by creating your own. Make them unique and stand out from the crowd; you want people to remember your brand for a long time to come. You may also want to make them collectible to incentivize users even more. An NFT (non-fungible tokens) is a potential for an entirely new line of revenue that will not infringe upon the revenue brought in by your other products, so feel free to explore this option.
Virtual influencers are another terrific way to reach a large audience. You can use them to promote your products or services on social media and other online platforms, the Metaverse. They may be an avatar of a real person or an AI. Either way, they can be immensely helpful in getting your message out there.
You also will want to obtain some 3D models. You can use them to make advertisements in the Metaverse, as well as for other purposes such as the creation of virtual stores. While not everyone will have a virtual reality (VR) headset, it is only a matter of time before they become widespread.
Lastly, you want to build a community around your brand. Without the accessibility of personal data and the ability to track users, it will be difficult to create targeted ads. However, if you can find your community, you will have to work less hard with your advertisements because they will already be dedicated to brands like yours. In this case, you will be less likely to accidentally target people outside of your intended audience and more likely to get your message across.
What are the downsides?
While a new, decentralized internet that empowers the little guy sounds ideal, there are many issues with Web3. The first issue is with DAOs. While the idea is democratic in theory, the people with the most tokens are the ones who have the most power over votes. This means that most DAOs are run by venture capitalists (VCs), and not average people. Additionally, there is the concept of pre-mining, in which VCs are awarded cryptocurrency tokens before the currency is even released, giving them a monopoly over the market. When specific VCs are the ones running things, the organization stops being decentralized and becomes centralized, thus eliminating the entire point of Web3. If a VC gets 50% of the votes, they can decide the direction that the blockchain will go in. If your business is owned by a DAO in the future, this has the potential to happen.
Additionally, there are quite a few safety concerns. Blockchain technology is not very secure, there is nothing like two-factor authentication or questions to validate your identity. A person’s password can be obtained as easily as on Web2 through things like phishing and other types of scams. Additionally, ransomware can be added to the code of a blockchain very easily. In the second quarter of 2022, over $718 million was lost to Web3-related hacks and schemes, and 79.2% of attacks occurred in the DeFi domain.
These safety concerns are not limited to hacking. With a decentralized internet, whatever is posted is not moderated. This means things like illegal content can be posted and shared without any ability to remove it. Content can easily be stolen as well. Also, the blockchain is pseudonymous, meaning if someone can identify you and officially names you as the owner of a set of data, then your data will be public information. Think about every purchase, every website you browse--people will be able to see that.
Additionally, blockchain technology requires a lot of power. It is extremely inefficient in its electricity consumption and releases staggering amounts of CO2 into the air. It is estimated that 120 million tons of CO2 are released into the air in a year because of crypto mining.
Critics such as Tesla and SpaceX founder Elon Musk have called Web3 a “marketing buzzword.” Jack Dorsey, founder of Twitter said in a tweet that the people do not own the Web and that the true owners are VCs. He also said that Web3 was a “centralized entity with a different label.” Molly White, who is a software engineer notable for editing Wikipedia, even has a website called Web3 is Going Just Great, where she documents various frauds and hacks related to Web3 and blockchain technology. It is safe to say that Web3 is not without its critics.
In terms of marketing, there are several downsides as well. The first downside is the barrier to entry. Very few people even know what Web3 is. And of those who do know what it is, the complexity of the subject means that even fewer people understand the technology behind it. As well, there is also the fact that not everyone owns a smart device or computer. And those who do may not own one powerful enough to run Web3. So, in terms of ubiquity, we are extremely far from reaching that goal.
Also, going back to the subject of advertising to a community, it will be exceedingly difficult to find your niche. If you can find them, that is fantastic, but on the way there you might spend more than you need to on advertising for groups that are not your target, making it more difficult than it needs to be to connect to an audience.
Lastly, it’s an idea that a lot of people just don’t like. Web3 has amassed a lot of controversies, regarding privacy and hacking concerns. 77% of people believe that the Metaverse alone can cause “serious harm to society.” Marketing on Web3 as a result, may harm your brand’s credibility rather than boost it.
Final thoughts
Web3 isn’t for everyone, and it may or may not be the future of the internet. There are as many negatives as there are positives to this kind of technology. Regardless of where you stand on Web3, it is incredibly important to be informed about what it is and the direction that it is going in. People thought we couldn’t put a man on the moon, and we did. So as far away and futuristic as Web3 sounds, it is possible that it truly is what is to come.
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