What is Web 3.0?
In a nutshell, this is a decentralized Internet. There are, naturally, many more components to it. However, for our purposes, this is sufficient.
Two of the components to Web 3.0 are blockchain and cryptocurrency. They are linked together although not the same. Cryptocurrencies resides on blockchain yet the latter is much larger. It is the underlying network which can rum a great deal more than financial operations.
Ultimately, for Web 3.0 to be viable, it requires another innovation, artificial intelligence. This will come in many forms, as evidenced by the early adoption on Web 2.0.
The big question on everyone's mind is when do we get there? Many ask how long until mass adoption is reached?
We will dive into this idea a bit here.
True Web 3.0: The Crypto Economy
So far, the crypto economy is rather small. When we look at economic productivity tied to blockchains, or their applications, it is minimal.
This is something that much change before we can consider this a viable system.
At this point, most of the activity is related to markets, i.e. financial. Unfortunately, most of the transactions are around trading (swapping). This includes the move to and from fiat currency.
While this is important, it is nowhere near enough. If we look at national economies, FOREX activities are not really includes in there. Moving between currencies doesn't result in economic productivity.
Here is where Web 3.0 falls short.
In my view, the major problem is the lack of goods and services available. The screenshot of the article above is an interesting thought process. Someone came up with the idea of trying to travel the world only using stablecoins.
In it, the focus was upon Travala. This is a crypto based site that allows for the booking of things such as airline tickets. It is a stunning example of what is possible.
Unfortunately, the rest of the commercial applications are rather limited. This means the crypto economy is almost non-existent outside the financial sector.
A small project that is looking to change this is Distriator. This is a cashback type program that rewards people for making purchases using Lightning Network or with the Hive Backed Dollar (HBD) stablecoin.
The challenge here is the focus upon payments. While this is a necessary step, it is only a small piece of the proverbial puzzle.
Web 3.0 Businesses
Travala is a Web 3.0 reservation booking applications. This is similar to the Web 2.0 versions suck as Orbitz. It is a simple concept yet so profound.
Basically, an existing idea was taken and adapted for Web 3.0. In addition to crypto being accepted, there were tokenomics applied with the AVA token. Thus we have a new business structure in some form.
Businesses are the engines of economies. Essentially, it boils down to finding a market and serving it. This can be done in many forms, with competition seeking to leverage price, service, and location to gain market share.
Innovation is a key variable. Over time, newer entities replace the stagnant ones as entrepreneurs and business executives come up with new ideas. This is often tied to technological breakthroughs.
If we think about it, the entire concept of Web 3.0 is a technological innovation. Therefore, we are dealing with a completely new system, one that I do not believe was adequately leveraged.
It is why Web 3.0 is barely a blip on the map.
Until services that people require are fulfilled via Web 3.0, the adoption curve will be flat. Many will "invest" in crypto, but they will not utilize Web 3.0 for much outside basic financial activities.
The goal should be to build businesses, offering the goods and services people commonly utilize.
Funding and Investment
One of the keys to an economy is the funding and investment. These are mechanisms that, although financial in nature, have real world impact.
In this case investment does not refer to buying stocks, bonds, or Bitcoin. Instead, it applies to the application of a funding of businesses. It is more akin to foreign direct investment, the idea of outside money coming into a country. This can emerge via the building of factories and starting the production of a product.
For the crypto economy to truly grow, investment is required. Ideally, this is done in crypto, creating a circular effect that impacts the whole. Again, we are talking about more than someone making payment in crypto although simply investing fiat. It is an ecosystem tied around the use of crypto as the investment vehicle.
This is also one that moves away from the traditional venture capital firms. Coinbase, a crypto success story in the sense it is focused upon providing a service to the system, was funded via Silicon Valley VC firms. Since it is a centralized exchange, it is hard to call this part of the crypto economy. Coinbase is now a part of Wall Street.
Crypto investment is mostly limited to buy coin A and watch price go up. Perhaps there is some staking done in an effort to generate some yield. This is where returns are make.
Contrast this with the investment in a start up. We see a different terminology utilized. Instead of ROI, concerns such as market share, profitability, userbase, or new customers are the focus. These are business concepts, which are vastly different as compared to financial ones.
How often do you see this mentioned in the world of Web 3.0? Almost the entire conversation centers around market pricing.
The crypto economy is in dire need of funding and investing in those entities that are going to offer goods and services. This is where Web 3.0 will emerge.
At some point, market capitalization will not be the metric for the size of the industry. Instead, it will be economic activity.
After all, is the automotive industry judged by the market caps of the companies or is it based upon the number of vehicles sold (or revenues/profits generated)?
The answer is clear. Unfortunately, it also highlights how far off the path the crypto industry is. The single focus is upon market capitalization and what the price of digital assets are.