• Sun. Aug 14th, 2022

Forbes India – Cryptocurrency, NFT, Web3, Digital Currency: How Web3 Will Change Digital Economy Forever

The global nature of the digital economy created by Web3 will break down the international borders of trade creating new efficiencies, freeing up capital tied up in assets, and creating new winners and losers.

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Do you remember the first time you posted on Facebook? The first time you tweeted? And the first time you posted on LinkedIn? On Instagram? Think back – for the first ten years of the Internet, none of this was possible. The Internet was primarily a means of reading or gathering information, and the ability to create web pages was reserved for a select few.

Then came Web2. We’ve called it the “Reading and Writing Web”. It democratized content creation where anyone could post content. This user-generated content (UGC) today takes the form of blogs, tweets, posts, reviews, comments, and likes. Today’s biggest social media and e-commerce platforms are all built on the back of UGC.

Web3 is all about ownership

We are now in the middle of the Web3 revolution. Perhaps the best way to think of Web3 is to think of it as the “clean to read and write” Web. The core of Web3 is how it challenges the way we think about ownership.

In the physical world, we own the clothes we wear, the phone we use, the car we drive. But what do we have in the digital world?

Do you own your blog post? Your tweet? Your Instagram feed? At first, these questions seem weird. What does owning your blog or tweet mean? How can you own a blog post? Can you sell it? Who would like to buy it? Why?

Let’s start with why. The business model of some of the biggest social media platforms today is based on UGC. Twitter, Instagram, YouTube, TikTok all rely on content created by hundreds of thousands of users around the world. What if these users owned the content they created? What impact will this have on the distribution of revenues generated by these platforms? What new business models will emerge? Who will win and who will lose?

Time will tell, but there is no doubt that Web3 will change the digital economy by enabling ownership of digital content.

NFTs will be the backbone of Web3 commerce

How do you establish ownership of digital content? Fortunately, we can borrow a simple idea from the physical world: the landlord registry. For valuable assets such as houses and cars, we register their ownership in a government-run database (registry). Any transaction involving the transfer of ownership of these assets is recorded in the register and the new owner receives a document, such as a deed of sale or a gray card, as proof of ownership.

Web3 borrows the same ideas and implements them digitally. The underlying database or ledger in which ownership of any asset can be recorded is the blockchain. Instead of being maintained by the government, this database is maintained by a network of computers around the world and secured using cryptography. Any transaction involving the transfer of ownership of assets is recorded on the blockchain, with the new owner obtaining an NFT as proof of ownership.

The ability of NFTs to record ownership of any asset that can be digitally verified globally means the ability to trade those assets globally and be used as collateral for loans globally.

NFTs enabling globally verifiable ownership of assets is one of Web3’s core value propositions.

It will start with digital assets and…

Currently, Web3 developments focus on digital assets such as videos, movies, music, and digital art. It will revolutionize the way creators, artists and media companies are paid for the content they create. Unsurprisingly, social media platforms and OTT platforms are rapidly adopting Web3.

The full impact of digital assets and NFTs is still being uncovered. An unexpected impact has been the emergence of digital communities formed by fans of a creator, artist or brand. Unlike social media followers, membership in these digital communities comes at a cost: users must pay for NFTs issued by the creator. No wonder these communities are made up of the creator’s most loyal fans and supporters. Thus, creators, artists and brands can offer their most loyal fans and customers exclusive content or experiences.

Another emerging trend is NFTs representing physical assets. Real estate, cars, luxury watches are represented as digital assets which can then be verified, bought, sold and collateralized digitally. In less than a decade, expect every physical and digital asset to be represented as an NFT that can be bought and sold in real time around the world. Just as capital can flow seamlessly across international borders today, Web3 will allow any asset to be traded in real time across the globe.

The global nature of the digital economy created by Web3 will break down the international borders of trade creating new efficiencies, freeing up capital tied up in assets, and creating new winners and losers.

Are you ready?

The writer is the founder and CEO of KoineArth, the creator of the ngageN NFT platform.

The thoughts and opinions shared here are those of the author.

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