Web3 is a correction to economic disparities. Image: Unsplash/Shubham Dhage
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- Amid other social and economic inequalities, access to the internet is still relatively universal.
- Reliance on brick-and-mortar services is reaching a point of diminishing returns.
- Web3 will make user owners of their data and other technological assets and present a great economic correction.
Roiled by a return of war in Europe, forgotten crises such as Afghanistan, two years of the COVID-19 pandemic and unchecked climate change, the world’s institutions, countries and companies, including those with fortress balance sheets, look decidedly enfeebled.
However, there is a silver lining among these dark clouds in the form of Web3. That is the third generation of the internet.
What is Web3 and why care?
Web3 is not only a new foundational layer of the world wide web, it is a fundamentally new approach to corporate governance, value creation and stakeholder participation with pari passu interests. It presents an opportunity where people are not merely products or beneficiaries of technology-powered business models but builders and owners of digitally unique assets.
The COVID-19 pandemic, for example, exposed pre-existing societal vulnerabilities while technology and universal access to the internet offered a semblance of continuity, which amounted to nothing short of a Great Correction. Like past global crises, whether anthropogenic or naturally occurring, post-pandemic recovery will require reformulating institutional and international norms.
Technology and how it is harnessed, especially with the emergence of an open internet of value, is the technological contest of our times. This reality is especially true and urgent since the provision of even basic services riding on brick and mortar or fixed lines has reached a point of diminishing returns.
Technology and how it is harnessed, especially with the emergence of an open internet of value, is the technological contest of our times.”
When coupled with record low rates of institutional trust, replenishing the wellspring that irrigates societal beliefs in democracy, peace, equity and equal access to prosperity requires more than false promises and analogue infrastructure. It requires delivery and results, meeting billions of people on the margins but who otherwise enjoy access to low-cost, device-centric internet connectivity.
The perimeter of peace and prosperity cannot be stretched any further with institutions designed hundreds of years ago, riding on 50-year-old technologies, and led by risk-averse leaders incentivized with preserving the status quo ante.
The economic creative destructive cycle that has created an embarrassment of riches in the world’s advanced economies is borne from the minds of entrepreneurial challengers and a concerted transition from the agricultural age to the industrial revolution to the shift from services to an always-on internet economy.
Whereas the entanglements of Web1 and Web2 made people products by monetizing their data and socializing losses, Web3 strives for equilibrium, enabling people to read, write and own their digital bread crumbs.
Reaching Web3's potential
After the sun and human aspiration, the world’s most abundant resource is data and Web3 gives us a new way to compartmentalize and monetize it.
The instinct to shut down the Web3 revolution for short-lived failures conforming with institutional norms across banking, traditional corporate governance, regulations and political inclinations should be dismissed. Following that inclination would put us on the wrong side of history and ignores the deeply democratic tendencies of Web3, as well as the fact that amid otherwise anaemic or sclerotic growth in traditional sectors, Web3 is powering trillions in economic activity and we are only nearing the starting line.
Of course, technology alone is not a panacea but as with all emerging models of competition, it often shows where incumbents, their policies and regulatory frameworks have fallen short. How, for example, will the world attain the first of the United Nations’ Sustainable Development Goals of eradicating extreme poverty with so many billions of people out of the reach of the brick-and-mortar banking system that is the gateway to the formal economy?
And how will these gates to the bottom rung of the ladder of economic mobility be opened for the billion people who are functionally born in the shadows with no portable identity that is minimally acceptable to entering the formal economy?
How is the World Economic Forum promoting the responsible use of blockchain?
Left unchecked, this state of economic inequity is a greater source of global risk than millions of people establishing peer-to-peer economic relationships with each other powered by public blockchains and Web3. In Thomas Friedman’s hot, flat and crowded world, we no longer send cross-border mail as the internet tore down national boundaries, creating trust-based, frictionless information exchange. In the future, will we still send cross-border payments? Or will we be able to freely engage (in a compliant, trusted, and privacy-preserving manner) in the frictionless exchange of economic value?
More than 200 million people and counting all over the world are taking the long bet on device-centric banking, payments and digital assets, while institutional adoption of Web3 has triggered nothing short of a pecuniary space race. Who wins, how winning is construed, if this is a zero-sum race at all and which value systems are enshrined in conduct, code, bits and bytes, will be as deterministic to our future as arresting war, climate change, pandemics and institutional mistrust.
Rising to the technological contest of our times is about spurring more equitable economic growth, making people owners rather than technological serfs and harnessing otherwise stranded assets and aspirations. Like all economic corrections and cycles, progress comes with externalities. The carbon-hungry economic model of the Robber Barons of the industrial age accelerated man-made climate change, just like the data-hungry Tech Titans have amplified cyber risk and societal misinformation.
Web3 is a correction to these challenges but it must also be rules-based and accountable for its full potential to be unlocked. The countries, companies and institutions who embrace this technological opportunity will advance their competitiveness and help shape an always-on, economically equitable future.
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The views expressed in this article are those of the author alone and not the World Economic Forum.
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