What Is Web3: The Benefits For Businesses Establishing A Web3 Presence

As it stands, a handful of companies, known as ‘big tech companies’, have a monopoly on the internet in its current form. Most essential web services are offered by just a few providers, leaving little room for other businesses to compete. This so-called domination also raises security issues, but it’s hoped that Web3 will offer a competitive edge for other companies, as well as improved security and a myriad of other benefits that could help businesses thrive.

What is Web3?

Let’s start with the basics of what Web3 is. A lot of people and businesses use the internet without ever really thinking about its evolution. We know that what we can do online now is vastly different to what we could do 15 years ago, but we never tend to give these distinct eras of internet evolution names. Well, somewhere along the way, someone did, and as it stands, we’re now due to enter the third generation of the internet – Web 3.0 – the term coined by Gavin Wood in 2014.

For a brief summary, Web1 was the first generation of the internet and refers to the rise of the static information portal. Web2 started in 2005 and is what we’re currently using. Web2 saw the rise of big data, user-generated content and online advertisements, with its main draw being social media. Both Web1 and Web2 run on centralised servers, but Web3 won’t.

It’s still very much in its infancy and so the precise remits of Web3 aren’t fully known, but the general consensus is that due to data not being processed via centralised servers that are managed by a handful of companies, there’s more room for increased user personalisation and privacy – both of which are key issues that currently stand at the forefront of Web2.

How does Web3 affect users and why is it important?

So, what exactly does this third generation of the internet offer users, beyond a decentralised server? One of the main differences is that it’s set to be far more private, due to the fact it will run on blockchain technology. This means external companies and organisations cannot interrupt or slow down online interactions, and it offers more room for privacy. At the moment, IP addresses can be tracked and the big tech companies that own the centralised servers can see who has posted, downloaded, and purchased what on the internet, even if the action was supposedly performed anonymously. 

There are growing concerns from internet users about their online footprint and the idea that at almost every stage, someone or something is watching everything you do, leaving you with nowhere to go. Nothing is truly secret on Web2, but Web3 hopes to tackle this issue and give users more privacy overall. It should be noted that in some cases, such as those where laws have been broken, it’s incredibly important to know where to find the person responsible online, but for the average internet user, their identity doesn’t necessarily need to be known. How does this relate back to your business, though?

“Web3 is expected to bring about a major shift in how the internet is used, with a greater emphasis on decentralisation and privacy. As more businesses adopt these technologies, they will be better positioned to appeal to users who are seeking greater control over their data. In turn, this could lead to a more secure and fairer internet for all”

• Viktor Bakardzhiev, lead programmer at The Brains

In addition to the added privacy and anonymity offered by Web3, it also appears to offer benefits like:

 

1. Fewer permissions required to use online services
2. Enhanced AI and deep learning for advanced algorithms
3. An increase in the number of people using virtual spaces

How does Web3 affect your business and why should you adopt it?

The consumerism era of Web2 brought around many of the technologies we rely on today, including the likes of Netflix, Apple, and Microsoft, and it allowed more people to become part of the internet and create their own content instead of just consuming what was already there (as with Web1). The issue is, a lot of the companies that now dominate the online space, such as Meta, require users to wilfully hand over their personal data in order to access their services. There’s a lot of money in data and for years this has allowed the big corps to be competitive; but the tide is changing, and it’s in favour of other businesses. 

Data protection and improved user trust

According to a KPMG survey, around 86% of users reported feeling increasingly concerned about data privacy, with a further 78% feeling uneasy about how much data is collected. On top of this, 47% of those surveyed said they had concerns about hackers accessing their data, and 51% were concerned about their data being sold. This feeds directly into 40% of people saying they don’t have any trust in companies to use their data in an ethical way. From these numbers, it’s easy to see that users are becoming more concerned about data collection and data being sold, with growing numbers becoming unwilling to share data at all. 

In fact, 30% of people in the KPMG survey said they wouldn’t share any data with businesses, and it’s likely that that number will rise. With this in mind, jumping ahead of the curve and making use of the blockchain technology offered by Web3 could be an effective way to attract users to your business. If you make it clear that data isn’t being harvested and is increasingly inaccessible to hackers (and less likely to be breached), more consumers may place trust in your platform. In an ever-competitive web world where it’s difficult to make yourself unique, this could give you a competitive advantage. 

More efficient user journey 

A lot of services are offered online these days and this means people are signing up to hundreds, if not thousands, of services on the internet, resulting in a chaotic collection of logins. Using the same login for every service is an option, but if the centralised server that stores login data gets hacked or breached, access to every websites the user visits is practically handed over on a plate. Where transactions are concerned, this can lead to huge issues with unauthorised purchases. Away from purchases, conversations, search history, and other confidential information can also be accessed, and this can have catastrophic effects off the web. 

You might think the logical solution is to use a different login for every service, but with the sheer number of services being used online, that’s not feasible. One-click logins are great, and Google and Facebook already use this method (you can use your Google or Facebook login to login into lots of other sites), but in order to do so, your data is stored, meaning the scenarios outlined above can definitely happen. 

If your business adopts Web3, you could potentially solve this problem. Users could login to your site and services using one login, but their data isn’t stored, so users can rest assured that their data is safe and secure. This not only promotes trust, but it makes accessing your site a lot easier, therefore improving the customer experience overall. 

Improved customer engagement 

As it stands, a lot of businesses collect data from users to an extent that isn’t necessarily known about. Most users will agree to share their data, but they do so without truly knowing what’s being collected and how it’s being used. This is part of the reason lots of users no longer feel comfortable sharing their data. The issue is, businesses rely on data. Without it, you would struggle to know key metrics such as your user demographics, their online behaviours, what they interact with and therefore might also be interested in, and how to market to them effectively. Without this data, you risk employing the wrong marketing strategies and wasting valuable money and resources on campaigns that don’t work. But if users no longer want to give you their data, how can your online campaigns ever be successful?

The answer to this lies in the fact that, with Web3, you’re giving the power back to users. They have a choice over what data they share and how it’s used. This choice makes them more inclined to be open and transparent with you – if that’s what you’re being with them. Users generally will try and help businesses if they feel it’s warranted, such as permitting phone calls to be recorded for training purposes. The same concept applies online, but giving them the choice is what counts. 

Businesses that shift to the blockchain, user-generated approach of Web3 may well find that they are able to source data on their users and make compelling, informed marketing decisions, but it will be based on voluntarily given information. If a user is willing to give you their feedback or data, they’re likely engaged with your business, and this is a core goal of any company looking to be sustainable and successful.

Fairer pricing across the board 

The issue with monopolised services is that there is little wriggle room where pricing is concerned. As a result of only a handful of big tech companies dominating the landscape, the price for things like advertising and referrals is pretty much non-negotiable, and there’s not really anywhere for you to shop around to get a better deal. 

Web3 can potentially help with this because it aims to remove the power from large corps and evenly distribute it. Inevitably, this will lead to fairer pricing through enhanced bargaining power. It also means more providers can come to the forefront, potentially increasing the quality of services offered, too.

Final thoughts on Web3

Moving away from Web2 and into Web3 is undoubtedly a big decision because it goes against the grain of what we’ve been used to since 2005, but the benefits of doing so are worth considering. It’s important for businesses to stay innovative where tech is concerned, and Web3 is a great chance to get ahead of your competitors early on. Redefining your entire approach won’t be easy, and the loss of informative data is certainly a risk given its prevalence and importance at this stage, but listening to consumers is the only way businesses can survive, and at present, consumers aren’t all too happy. 

It’ll be a good while before Web2 comes to an end, so there’s certainly no rush to adopt Web3 technologies right now, but if your business is going to survive beyond the next 10 years on the internet, it’s not a bad idea to start giving it some thought. You could start small by being more transparent about the data you collect from your users and how it’s used, then putting the feelers out to see how they react. Transparency isn’t difficult, but it could set the wheels in motion for the move away from Web2.