Introduction
Web3, the next iteration of the internet, and the blockchain technologies that underpin it will certainly be something to watch in 2023. It is a huge topic both from a technical and philosophical point of view and represents a massive shift in the way we use the internet.
What is Web3?
To understand Web3 it is useful to look at how the internet has developed over time and why some feel that it is time for a reset.
Web 1.0, the original internet of the 1990s was read only, a decentralised collection of static web pages with no real user interaction.
In the early 2000s, Web 2.0 evolved, becoming the more dynamic interactive and collaborative read/write environment that we know today, characterized by user-generated content, social media, and web applications. Unlike its predecessor, Web 2.0 is highly centralised, and users’ personal information and data is controlled by the massive billion-dollar corporations that essentially own the web. There is an argument that users have become productised and taken advantage of, with no say in how their data is used, and or abused, and no tangible reward offered for their contribution. So, it there a better way? …
Well maybe. Enter Web3, the ‘future of the internet’, a decentralised, blockchain based, read/write/own version of the web. The decentralised networks and blockchain technologies on which Web3 is built completely change how data and information is stored, secured, and shared, putting ownership firmly back in the hands of the user rather than large corporations or governments. Web3 rewards users with tokens, to be used as currency or as votes to influence how the web is run, how technologies develop and how profits or value are shared.
Sounds great, so when will it be ready? Well, Web3 is a work in progress and the technology is rapidly evolving and therefore hard to predict. A great deal of money, time, energy, and talent has been thrown at this reinvention of the web, but it is a massive project. There are technical, environmental, ethical, and regulatory issues with Blockchain and the cryptocurrencies, that are the bedrock of Web3 have had well documented major problems with energy consumption, scamming and fraud.
There is room for improvement in many areas; scalability, blockchain interoperability and user experience to name a few. 2023 should see some interesting developments. Let’s explore some of them.
Increased Creation and Use of Decentralized Applications (dApps)
Decentralized applications are built on blockchain platforms like Ethereum. They are owned and run by a network of users rather than a single corporate or entity. Users control their own data and personal information.
2023 will see more of these applications being developed across an increasing number of industries and use cases. Here are some areas we can expect to see growth in 2023 and examples of existing applications.
DeFi (Decentralized Finance) platforms: offer decentralised alternatives to traditional financial services, such as lending, borrowing, and trading. (Aave, Compound, Uniswap)
NFT (Non-Fungible Token) marketplaces: which facilitate buying, selling, and trading of unique digital assets, such as artwork and collectibles. (Rarible, SuperRare, and OpenSea)
Gaming dApps: where players participate in decentralized games and earn cryptocurrency rewards. (Axie Infinity, CryptoKitties, Splinterlands)
Social media dApps: decentralized social media platforms (Steemit, Minds, Hive)
Identity and authentication dApps: for identity verification and authentication (uPort, Civic, and SelfKey)
Supply chain management dApps: for tracking the movement of goods through a supply chain (VeChain and Waltonchain)
The Rise of Decentralized Finance (DeFi)
This is an area that has made great leaps forward and looks set to continue to grow in 2023. DeFi refers to financial applications and services that operate on a blockchain or other decentralized technology. Decentralisation of lending, borrowing, trading, and other financial activities allows for greater accessibility, transparency, and security and the use of smart contracts and other blockchain technology can enable new financial products and services that are not possible with traditional centralized systems.
Increasing interest in cryptocurrencies and the potential for high returns on investment like high yield savings accounts and lending platforms where users can earn interest on their assets are driving interest in DeFi. Here are some of the platforms and services that we can expect to hear more about in 2023.
Lending and borrowing platforms: (Aave, Compound, and MakerDAO) where users lend and borrow assets
Decentralized exchanges (DEXs): (Uniswap and SushiSwap) where cryptocurrencies are traded.
Stablecoins: (DAI, USDC,Tether) which are pegged to the value of a fiat currency and offer more stability than other cryptocurrencies.
Yield farming: lending or staking assets on a DeFi platform to earn interest or other rewards.
Decentralized prediction markets: (Augur, Gnosis) where users create and trade on predictions about future events.
Decentralized identity solutions: (uPort, Civic, SelfKey ) which allow users to control and secure their personal identity information.
Decentralized insurance platforms: (Nexus Mutual, VouchForMe)
Non-Fungible Tokens (NFTs) Become Mainstream
“Non-fungible” means that something is unique and can’t be replaced with something else. NFTs are digital assets that represent ownership of a unique item or piece of content such as a piece of art, a collectible, or a piece of music. They are stored on a blockchain, which allows for secure and transparent ownership and transfer. NFTs could revolutionise the way we think about ownership and value and not just in the digital world, they are also relevant in the real world opening new opportunities for creators, collectors, and consumers.
NFTs have become increasingly popular in recent years, and they are expected to become even more mainstream in 2023. Here are some examples of industries where we could see their more widespread use.
Gaming: to represent in-game items such as weapons, vehicles, and collectibles, allowing players to own and trade them on blockchain marketplaces.
Art and Collectibles: to authenticate and track ownership of digital artworks, as well as physical artworks that have been digitized.
Music: to represent ownership of individual songs, albums, or even concert tickets, allowing fans to collect and trade them on blockchain marketplaces.
Real Estate: to prove ownership of virtual properties such as virtual land, buildings, and even virtual cities.
Sports: to show ownership of virtual items such as player cards or limited-edition collectibles. They can also be used in fantasy sports, prediction markets, and collectible card games.
Finance: to represent stocks, bonds, and other financial assets.
Blockchain Interoperability – Better Together
Blockchain interoperability is the ability of different blockchain networks to communicate and transfer data and assets between each other, creating new business opportunities, reducing costs, and increasing efficiency. Improving interoperability also helps with one of the fundamental issues of blockchain technology currently which is scalability. Here are key projects to look out for in 2023.
Cosmos: An ecosystem of interconnected blockchains that allows for the transfer of data and value between different chains.
Polkadot: A multi-chain platform that enables interoperability between different blockchain networks.
ChainBridge: A cross-chain communication protocol that allows for the transfer of assets and data between different chains.
Wanchain: A blockchain platform that allows for the transfer of assets between different chains, including Ethereum and Bitcoin.
Aion: A multi-tier blockchain system designed to support interoperability between different chains, including public and private chains.
Icon: A blockchain platform that enables interoperability between different chains through its “loopchain” technology.
Ark: A blockchain ecosystem that aims to promote interoperability between different chains through its “SmartBridge” technology.
These are just a few of the technologies and applications shaping Web3. The internet is in a constant state of change and evolution, and these are exciting times. Web3 has the potential to be a major catalyst for change, and it will be exciting to see how it shapes the future of the Internet in 2023 and beyond.