How we can avoid the mistakes of Web2 when innovating around Web3

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The Internet has changed the way we connect, work and play. During the first phase of development on the World Wide Web (Web 1), we used content and information through static, simple websites. Years later, the web matured into Web2 and was reflected in user-created content through social media platforms, blogs and networks.

Today, we find ourselves on the edge of Web3. To reach this point, we’ve experienced purpose-built transitions to meet the evolving needs of users.

And while these transitions have been thrilling and have brought unimaginable benefits, there are inherent flaws and shortcomings in each phase.

Web2 in particular has some important lessons to teach us. This phase is dominated by a handful of extremely large technology companies that were initially operated and owned by venture capitalists and then fueled by public markets, expanding monetary policy, lax regulation and privacy concerns.

The future of the Internet is so close that we can touch it. But before we allow history to repeat itself with Web 3, we need to take a closer look and learn from some of Web 2’s biggest flaws.

Take a closer look at Web2

First, there is the basic business model, which is based on advertising revenue as the main incentive. This model is based on the ownership of personal data in exchange for revenue. For example, Waze has created its own navigation app, not for users, but to get data on driving habits and then sell information to advertisers. As a result, ownership of personal, behavioral data is controlled by certain central authorities and privacy is seriously compromised.

Another problem is the big tech monopoly. Solutions owned by companies like Apple, Google, Facebook and others motivate clients to live in their walled gardens, on the platforms of these providers. The risk is shared between the participants, but not the return. Web2 is run by organizations that have the most data and can easily monetize the information they hold. Facebook may have been created as a social networking tool, but today Meta is essentially the top global data powerhouse. Web2 companies are trying to stick to this business model.

And then there’s cyber security, which is why Web2 has its drawbacks. This Universal access to applications has created security risks. For example, the control of private data by individual companies has increased the risk of hacking by bad artists. One-size-fits-all hacking can cost millions of dollars. And indeed there have been countless examples of such attacks in the last 10 to 15 years.

The rear view is 20/20, but could these and other errors have been prevented? Maybe. Think of it this way, Web2 didn’t have the technology where it needed to be measured for one-to-one relationships and true ownership of data. Technology morphed to fit the feed, vs. The other way around it. And we’re already seeing a lot of repetition of this behavior in Web3.

Where Web3 is heading

For example, Web3 enthusiasts and participants are doubling their preferred cryptocurrency between Bitcoin and Ether. These have already earned a reputation as the protocol of choice, and many standalone protocol investments, partnerships and ecosystems are being built by private market funds from venture capitalists and market participants.

Also, the user experience bar is being set too low. Projects focus on speed and capability, with little focus on the actual user experience. Or, they focus on solving a specific problem – such as transaction throughput, smart contracts, etc. – but not on how to solve the problem with a horizontally integrated approach.

Given the single protocol approach for crypto, it is impossible for anyone to learn, use and master every decentralized finance (DeFi) application in all protocols. Big central executives, meanwhile, are fighting hard to keep up their business.

In one of the most recent developments in crypto, the US Securities and Exchange Commission (SEC) in February accused BlockFi Landing (BlockFi) of failing to register offers and sales of its retail crypto credit product. The SEC also accused BlockFi of violating the registration provisions of the Investment Companies Act of 1940.

To settle the charges, BlockFi agreed to pay a 50 million penalty, stop selling its unregistered offers and credit products, blockFi interest accounts and try to bring its business within the provisions of the Investment Companies Act within 60 days. According to the SEC, this is the first case of its kind about crypto lending platforms.

It’s not too late to fix issues with Web3. Experts believe that with the multiple protocols needed for long-term success, we are moving towards a centralized and decentralized hybrid world. Web3 has the power to democratize data and assets. More importantly, it can help people maximize their financial returns.

Where are we going from here?

Here are some things to keep in mind when trying to address these issues:

  • A multi-asset, non-custodial wallet (allowing users to own and control the private key of their cryptocurrency), is important for Web3 adoption.
  • The new pattern is real ownership in the network. Most big-name centralized platforms do not actually enable users to own their assets. They are rebuilding the IOU system that works today on well-known custodian platforms such as Fidelity and Schwab. This is a big problem “not owning your property”. Many Web3 users do not realize that they do not actually own their digital assets.
  • Network / project ownership tells users realistic about how they are managed. This new form will require tools to facilitate ownership and return.
  • We need a platform and technology to facilitate that, providing a user experience that is consistent, reliable and spreads across multiple protocols.

Fortunately, technology now exists in Web3 to turn the model around, and consumers can actually “own” the data and monetize it as they see fit.

It will take a lot of integrated work. But when it comes to the phases of the internet, it seems like there could be a third time charm.

Tim Tully is the CEO of Zelcore,

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