This once-new technology initially made people nervous, but now virtually all businesses are reliant upon it, and it's set to become even more crucial to the way companies function.
New technology is almost always scary — whether it was switching from animal power to internal combustion or from handwritten letters to telephone calls — change requires a huge leap of faith. So, as Web 2.0 evolves and expands to Web 3.0 — a decentralized layer sitting atop the current web infrastructure — it’s worth thinking back more than 25 years ago to the early days of the Internet.
If you are old enough, you may recall the trepidation and skepticism we felt back then. We obviously saw the potential, but the idea of sending credit card information out into the unknown in the hope of receiving a book or some other product, or checking bank balances via the web, seemed almost crazy. Nowadays, we don’t think twice about it. Web 2.0 has become a crucial part of our lives and businesses, making administering both easier in ways we couldn’t have imagined.
Web 3.0, built on blockchain technology, will follow the same pattern. Web 2.0 engendered a number of centralized authority structures that we came to trust and rely on. But that centralized architecture ultimately resulted in the creation of an oligarchy of tech companies that monopolize the business world, making it extremely difficult for innovative ideas to break through. The blockchain lets us move beyond those constraining layers; the technology that underlies Web 3.0 will enable new ideas and business models to thrive. Web 3.0 democratizes the ability to build businesses that hold value, so entrepreneurs can offer services like finance, insurance and banking solutions that previously were only provided by large corporations. By disintermediating unreliable middlemen and allowing users to interact directly and trustlessly, Web 3.0 offers enterprises and consumers alike an entirely new surface for applications that simply cannot exist on its prior iteration.
For example, in an ideal world, users would be able to transfer funds to other individuals or businesses globally, without the delays and fees typically experienced when using banks. Web 3.0’s novel infrastructure will support frictionless payment solutions for enterprises, create more transparent and efficient transactions and keep verifiable and immutable records. Blockchain projects working to ease current points of friction are already under way, speeding and securing payments by removing third parties.
The same reasoning can be applied to supply chains; by enforcing transparency, blockchain can remove the added costs supply chains incur and improve coordination between partners. Products in the chain would also be more easily traceable, further improving its efficiency.
"Businesses can build applications whose logic is distributed across thousands of blockchain nodes"
The decentralized architecture of blockchain technology offers immense utility to businesses in the next generation of the web. Rather than having platforms or applications running on servers owned and managed by a single central authority, businesses can build applications whose logic is distributed across thousands of blockchain nodes, offering transparency and immutability.
Transparency and verifiability may not seem immediately relevant, but their presence solves many problems for businesses that entrepreneurs may be unaware of.
Full transparency means that changes to logic and data are visible to the network and traceable, so everyone knows exactly where they came from, that they are immutable, and that data accuracy and provenance can be easily verified. Most businesses depend on accurate financial reports, of course. In a traditional system, someone in the supply chain falsifying reports or making errors can have severe impacts. On the other hand, if the supply chain reporting were based on a blockchain, the responsible party could be easily identified and the process corrected.
The automotive industry in particular has seen extremely positive results since adopting this technology. By hosting supply chains on a blockchain, car manufacturers can easily locate inefficiencies and speed up production. And healthcare is ripe for blockchain technology to improve it, by providing tamper-proof patient records, increasing patient privacy and securing medical data. Another industry with increasingly interesting applications is insurance. By leveraging decentralized architectures and smart contracts, companies will be able to make the claims process more seamless and efficient.
This can be applied to parametric insurance, too; when an insurable event occurs and predetermined conditions are met, a smart contract can trigger the appropriate benefit automatically. For example, a traveler who books a flight and buys flight insurance will receive an automatic payment in the event the flight is cancelled. No filling out additional forms, and no delays — a simple smart contract solution that removes the complexities of typical claims processes.
"Decentralized applications will work together in Web 3.0 to provide integrated functionality that makes them more useful"
While detailing future use cases, it’s important to note that these applications, though they are housed on a blockchain, won’t be working in isolation. Just as in the current web, all of these decentralized applications will work together in Web 3.0 to provide integrated functionality that makes them more useful. For example, the insurance contract described above might receive data inputs from a healthcare application, and in turn send a signal to a supply chain management contract. In the same way that they function in Web 2.0, APIs will be the “glue” that connects these independent applications.
One key consideration: On the blockchain, off-chain web APIs have to be different. Because of the consensus mechanisms that are at the essence of Web 3.0, you can’t just insert external data without the network agreeing to it. That’s where oracles like API3 and Chainlink come in. But unlike traditional oracles, API3 bridges the gap in the simplest possible way by setting aside the one-size-fits-all solution used by third-party oracles and empowering API providers to offer their off-chain web APIs directly to the decentralized applications. These bridging solutions promise to open Web 3.0 to a new generation of blockchain applications.
At the end of the day, we’re not saying that Web 3.0 or blockchain is going to solve all of the world’s or even your business’s problems. You can go to Twitter for that. What we are saying is don’t be afraid of testing the waters with this new technology. The advantages it offers of increased transparency, verifiability, availability and trust will likely make it well worth your while. Ignoring Web 3.0 today is a mistake akin to failing to embrace the Internet 25 years ago.