Web3 is set to have some significant differences from its predecessor, Web2. Users will no longer require separate logins for every site they visit but can use a centralized identity, likely their crypto wallet, to store their information. Additionally, users will have more control over the sites they visit as they earn or purchase tokens that grant them the power to vote on decisions or unlock additional functionality.
Although it remains to be seen whether Web3 can deliver on its promises, some projects have already achieved considerable success. The Bored Ape Yacht Club, NBA Top Shot, and Dapper Labs have built thriving NFT communities, while clearinghouses like Coinbase and OpenSea have paved the way for non-tech-savvy individuals to enter the Web3 space.
Web3 At the Moment
While companies like Microsoft, PayPal, and Overstock have accepted cryptocurrencies for years, NFTs have recently emerged as the primary way brands experiment with Web3. NFTs function as a deed, certificate of authenticity, or membership card and confer ownership of digital art or rights/access to a group. They can operate on a smaller scale than coins, creating their ecosystems and requiring only a community of individuals who find value in the project.
Traditional companies' most successful Web3 projects have been creating communities or plugging into existing ones. For example, NBA Top Shot allowed fans to buy and trade "moments" clips, creating a new community space for fans collecting basketball cards. Similarly, Nike, Adidas, and Under Armour added a digital layer to their existing collector communities, offering NFTs that can find use in the virtual world or confer rights to products or exclusive streetwear drops in the real world.
The Bored Ape Yacht Club has been the most successful NFT project, offering access to real-life parties and online spaces and usage rights to the ape's image. One lesson from these efforts is that on-ramps matter less when the community is more committed. Top Shot does not require a crypto wallet, enabling interested users new to NFTs to plug in their credit cards and participate. On the other hand, BAYC was initially a niche interest, but its success catalyzed people to create wallets and drove interest in OpenSea.
There are Still Some Issues
However, some companies have needed help with NFT projects and crypto features, such as Discord and MeUndies, which faced backlash from customers about their carbon footprint. Even successful projects, like Nike, have encountered challenges, with the company currently fighting to have unauthorized NFTs "destroyed" and OpenSea full of knockoffs and imitators.
Given that blockchain is immutable, companies face novel legal questions about how to handle these issues. Furthermore, the market for NFTs currently needs to grow.
Companies considering entering the Web3 space must remember that it is a polarizing environment with no guarantees. The primary divide is between those who believe in Web3's potential and those who criticize the issues plaguing it currently.
Visions of the Future
Businesses are beginning to recognize the value of Web3 in providing greater freedom for online interactions to attract web consumers and businesses. Web3 advocates for user control and complete data ownership through Blockchain technology. This allows individuals to have control over their online identities and personal information.
According to research conducted by Bain & Company, nearly half of tech leaders believe that Web3 will significantly impact their industries. Companies can benefit from Web3 by leveraging potential future developments in biometrics and two-factor authentication to improve user data security, scalability, and privacy. This change can be particularly valuable for large technology companies seeking to protect against cyber attacks and enhance personal and employment data privacy.
As noted by Matthew Moynahan, CEO of OneSpan, in a recent Technology Magazine article, continuous authentication, and identity verification methods are necessary to keep pace with Web3. More than simply relying on multi-factor authentication (MFA) is required. Ultimately, organizations that embrace Web3 are likely to fare better in the long run.
Stay in the Know with EH-3!
Jump in and dive into Web3; each month covers two new concepts within this exciting new space. For more information, go to the EH-3 website now!