WEB 3 Ongoing – Breakdown, Integrate, and Rebirth
By Wu Xiao
The integration of Web 2 and Web 3,
is irreversible and inevitable.
There will be an infinitely incremental market born in the metaverse,
while the scramble for rights to set rules, standards, and power of discourse,
will be the main battle field in this integration.
Chaos will be the ladder,
and blockchain entrepreneurs have reached the last window of opportunity.
1. Breakdown of the Web 2 World
The world of Web 2 is in a red ocean phase, competing to burn cash, provide subsidies,grabbing new customers, as well as internet traffic, which end users have suffered greatly for.In the absence of new incremental markets, more and more Internet giants are entering into an incandescent battle.
In the past decade of boom in the internet industry, Web 2 has reshaped the physical world. Be it e-commerce, mobile payments or social media, Web 2 influenced the boundary of lives as well as mankind’s ways of socialization in both the cyberspace and physical space.
However, it is also because of the interaction and integration with the physical world that an increasing number of Internet companies are going against traditional industries and regulators. For traditional industries, the influence brought by the Internet is negotiable. Most of them compete for employment and quantifiable resources, such as Uber and taxis across the region, and Amazon and supermarket franchises of different countries. Additionally, in search of new incremental markets, more traditional companies are attracted into Web 2.
The incremental market behind this lies in the fact that the global market has never evenly developed the skill tree of Web 2. Most firms that master Internet technologies and standards are established in tech-powers, while most countries’ services and technological supports are provided by a few multinational internet companies. As a result, these dot-com corporates could grasp the entire global market easily.
The friction between Internet companies and regulators of different countries has become increasingly prominent, and this friction mainly stems from the right of discourse and the interpretation of rules. Whether it is the GDPR in Europe, which started to better protect user privacy and data, or the Antitrust Law of the United States for Internet companies; regulators have a deeper understanding of data, platform and Artificial Intelligence. Since the pandemic, a global economic crisis has been brewing for a long time. Besides a few regions that are still growing, most countries on earth today are in deep economic crisis.
In the post-pandemic era, countless of businesses have been wiped out and many industries have collapsed. Traditional giants in Web 2 are facing unprecedented challenges, be it from the pressure of traditional industries, the maturity of regulatory authorities, or the contraction of incremental markets. All of these dimensions are squeezing the living space of Web 2. In such a chaotic and brutal period, we see that the entire Web 2 world has been cast a shadow of death.
While on the other hand, a blockchain-driven cyberspace city is sailing on top of the gravestones of millions of Internet companies.
2. Reshaping Codes and Laws in Cyberspace
“There has never been a technology that could gather consensus in the whole world, compile and then execute.”
The Internet is not such a technology, because the giants have built a siege with the formulation of rules and control of data. Today, any developer who wants to release their software and games on iPhone needs to apply for Apple's D-U-N-S number first. Every app that hits the shelves has to be approved by Apple, and every stream that passes through it has to be paid a hefty fee.
However, the birth of blockchain technologies have led all the pioneers in Web 3 to complete the Exodus.
Today, there are over 10,000 nodes in Ethereum worldwide, providing a solid guarantee for all on-chain applications, users' assets and critical data. It forced countless Web 2 companies to accept the rules of Web 3, allowing all developers to freely program and develop on Ethereum.
The 2019 article "Blockchain — the Antinomy between Future and Reality” explained that the core value of blockchain is to define rules in cyberspace. If the Web 2 world is a giant's game of setting rules, then the Web 3 world breaks all of these rules, and releases the productivity of developers from all over the world, ushering in the self-growth and self-evolution of Web 3 ecosystem.
As the order of cyberspace is reshaped, we would observe a chain reaction of growth and drive.
Due to the open-source nature of verified contracts on blockchains, the reuse rates of codes have reached an unprecedented level. For cryptographic art, formalized and validated contracts like ERC721 and ERC1155 have helped countless creators who don't understand code. For DeFi, the standardized security contract library allows countless projects to happily build the "LEGO of codes" and focus on their areas of expertise. The countless times of repeated construction of the wheels in Web 2, and even the acclaimed "independent original" projects that have gone through numerous changes from open-source to close source, are systematic marginal costs.
Due to the code rules on blockchain being unified, ecological innovation and re-creation have endless possibilities. Native and innovative projects on Web 3 can be dynamically linked together. While every cooperation between Web 2 companies will incur great costs, the access of user data and the change of rules are obstacles are even harder to overcome. On the other hand, Web 3 projects can be co-opted regardless of any rule.
That’s right, even if the competition is in Web 3, it can break through all barriers. From Looks’ Airdrops to OpenSea users, to the higher liquidity and APR provided by Yield Aggregator for different DeFis, competition and collaboration in the Web 3 world is evolving in ways that have never been seen in the history of business. This is exactly how Web 3 provides the best soil for ecological innovation and re-creation. Community and ecosystems are able to come up with project proposals to add more functions at any time. They can also start a fork at any time and go on a completely different path.
The integration of the Web 2 and Web 3 worlds is being redefined because smart contracts can design rules. The differences between a mere picture and an NFT, CeFi and DeFi, and games and blockchain games is behind the re-division of the sphere of influence of Web 2 and Web 3 worlds. When Web 2 enterprises actively embrace Web 3, they will find that native blockchain users are already fully familiar with Metamask, are used to buying all kinds of NFTs with crypto assets, and they love different cryptographic and computing arts. Such communities are actively guiding more Web 2 users into this world, and have formed a thriving organization.
3. Dance Along with Web 3
There are an increasing number of companies embracing Web 3, with master-competitors from Web 2 joining in the huge project of building the cyberspace city.
In the arts sector, the State Hermitage Museum, the largest art gallery in the world today, is minting NFTs, and trying to bring their collections online. The British Museum, the world’s largest museum, has already been officially selling NFTs collection to the public. Venice Biennale, one of the three major exhibitions in the art world, launched its first crypto exhibition this year.
An era of art works are created by a generation’s understanding of art and the cohesion of their consensus. To put it more radically, all works of art in the physical world are in the process of going back to zero. Both Vincent Van Gogh’s Sunflowers, and Qi Baishi’s Chinese paintings are the consensus of arts in that era.
Today, millennials grew up playing Honour of Kings and TikTok. Lesser people are learning oil painting and traditional Chinese painting, which also leads to the dispersion of understanding and consensus on traditional art.
Capital always gather at places of attention. These art pieces might still be valuable in the future, but their values lie in archaeology rather than art. For example, while Ancient Egyptian murals such as The Banks of the Nile have thousands of years of history, however their values today are more fully reflected archaeologically, making it difficult for them to influence the global art world artistically.
With the context that the the world is about to be awash in Web 3 waves; crypto art, cyberpunk and programmable art are increasingly winning a bigger voice.
In the finance sector, we see an increasing number of countries legalizing cryptocurrencies ,with more organizations, universities and funds accepting donations in the form of cryptocurrencies. Additionally, numerous businesses, institutions, and even funds from sovereign states are also buying crypto assets.
It is difficult for sovereign countries to choose the real estate of other sovereign countries for their asset allocation. However, increasingly sovereign countries are naturally choosing crypto assets, because they are gaining a better understanding that behind the code is the law, and it is the financial liquidity is worldwide.
Hence, for our dear friends in the Web 3 world, how do we take advantage of the integration in Web 2 and Web 3?
Personally, I think it's still the continuous exploration of the original world of blockchain to improve my recognition and understanding of original blockchain innovations. Web 3 projects are naturally linked together. A single project may stand alone, but countless Web 3 projects will naturally form a starry sky.
In the future, Web3 users will be able to see all their assets on the chain in one interface as long as they log into their wallet. You can use any of your own NFT to play in different games. Open a chatroom for easy access to your NFT community. Any song on demand that you randomly play could be paid with any type of token. Ordering the latest song at random can be recommended to more interesting videos based on on-chain data, such as Azuki's group drama or Uniswap's history. All Web3 services could be enjoyed with the automatically accumulated member credits. User-created NFTs can be automatically recommended to many interested collectors and quickly converted into Web 2 or Web 3 currency.
All these scenarios must require the integration of Web 2 and Web 3, which will bring a new life experience of cyberspace to global users. After all, no one wants to register on different platforms repeatedly, constantly provide their personal information, log in and out countless of times to switch memberships, have plenty but unusable membership points and grind for hundreds of hours in exchange for in-game assets that don't even belong to them at all, or deal with big data discriminatory pricing with leaked personal privacy.
We do not have a choice in the world of Internet, but this time, in the blockchain-driven Web 3 revolution, we are riding the wave.
4. A “Butterfly take-off” in Chaos
The establishment of the Web 3 dream is by no means an easy route. To be fair, growing up in the Web 3 world is a more brutal form of evolution compared to that of the Web 2 world.
Web 2 users lose their data and privacy in exchange for security and stability. For an average user who is used to losing his bank password and resetting it with his mobile phone, just stepping into the dark forest of Web 3 with one foot is his most dangerous moment. He may never understand that losing his private key or authorizing a phishing DApp in MetaMask could mean losing all of his assets.
In other words, while we choose to believe that "code is the law", we also need to be solely responsible for all our assets. When we agree that a project chooses to fair launch, it also means that we acknowledge a state where “Scientist First” is possible. Also, while Web 3 is an equitable world, it is not a world of equality. It is virtually impossible for everyone to be a geek who understands code, yet those with top technical skills can do whatever they want in the world of Web 3.
However, because everything is at an early stage, we see a blue ocean with more opportunities in Web 3. These opportunities come from a steady stream of incremental migration from the Web 2 world. When Facebook, Twitter and Instagram all choose to accept NFT verification and become all-able players, we will see Internet users around the world gradually meet some unique users. When more than 1 billion users in the world without access to banking services open MetaMask, we will see a wave of new users joining the world of Web 3.
In such a big wave of integration, it is crucial to guide huge firms to understand blockchain, learn the rules of Web 3, and turn them into productive forces for Web 3 building. Just like the Internet firms who accept NFT verifications, they are helping us promote Web 3 products all the time and attracting more users to experience, use and support the Web 3 revolution. Just like the invention of electricity and the Internet, the awakening of global end users is inseparable from the large-scale application of technology. With more builders and innovative applications that cannot be produced in Web 2; Internet giants will surrender, and accept the standards and rules of Web 3, integrating into our side.
WAGMI means We All Gonna Make It. The word “all” here does not refer to the pioneers of blockchain, but the entire Web 2 world today, including all users around the globe. Sparks of fire could light up an entire grassland. Blockchain should not become the hype for a few, but a revolutionary technology that moves the world forward.
This is a period of technical and cognitive barriers, but we are still at an advantage. It is the best time to educate and guide traditional science and technology firms. The big guys in the Internet industry have already seen the opportunities in it. If we miss this chance, the big guys will still explore by themselves; and develop their own understanding and new standards, incapsulating users, blocking information, to stop the emergence of the Web 3 world.
Today, Web 3 is nowhere comparable with Web 2 in terms of market value or ecosystem. The sum of all crypto assets combined may not be as much as the market value of a single company in Web 2. What we can do is to use the accumulated knowledge, technology and rules to overpower from another dimension, while transforming the power of Web 2 in batches, and connecting all Web3 applications through the fundamental layers of blockchain.
There are still a lot of gaps and thus huge opportunities today. I have experienced the full NFT cycle, providing technical and ecological support to dozens of top-end projects. Here are a few areas that I think have great potential:
1. NFT and digital collections would be a good opportunity for users outside the circle to get acquainted with Web 3
Compared with financial infrastructure such as DeFi, understanding NFTs and digital collections is easier for the average people. As most people don't understand smart contracts and the computing principles behind DeFi, it's difficult for average users outside the community to directly experience a DeFi.
NFTs are much more intuitive. Even the most basic images and shapes will have a good or bad rating. Moreover, the price and styles are different, which makes the purchasing experience very similar to shopping. Buying an opened NFT is like buying clothes, while buying an unopened NFT is like buying a mystery box. The overall experience is very suitable for simple advancements, and compared to many luxury goods, NFTs may have better liquidity and value preservation. Today, there are not many occasions to carry a Hermès bag, and it is also hard to tell whether it is authentic. However, Tweeting with a rare NFT will not only attract people of similar interests, but also greatly expand your influence, and at the same time highlight your social status and taste just like luxury goods. As a result, all brands will either issue their own NFTs, or get eliminated in the Web 3 wave.
2. Establishment of the infrastructure and overall environment for the integration of Web 2 and Web 3 presents a huge opportunity to lower the bar for newcomers.
For example, Flow, which leads this wave of NFT, fully supports US Dollars and credit card deposit. Therefore, it has also established a complete ecosystem for users outside the circle to experience NFT. This is not only a payment solution, but an overall environment change in lowering the bar of entry. The general users on Flow are quite different from those on ETH. Maybe crypto doesn't have many OGS, and more are used to logging in by email. However, the new traffic of credit card payment is onboarding them to the Web 3 world through Flow. Opportunities like these are everywhere. The king of niches is still a king.
3. There will be a systematic dividend if the projects of the integration of Web 2 and Web 3 are implemented quickly.
Whether it’s Adidas and the BAYC community launching NFTs that are causing waves in the Web 3 world, or Nike’s acquisition of RTFKT, Web 2 giants see systemic opportunities in this. The collision of the fan base on both sides and the rarity of NFTs is even more dramatic. In the future, many projects that integrate Web 2 and Web 3 will start with NFT before building or connecting to the blockchain-driven metaverse, sweeping the world off its feet. In the world of Web 3, all metaverses can read one another's NFTs and circulate naturally. With the user's will as the core and as long as the user agrees, their assets, roles and data can seamlessly traverse any world. When an infinite number of such metaverses are born, there is bound to be systematic dividends.
From this cycle to the next, we are still facing a chaotic and nascent Web 3 world. It may need another cycle to build this vision, but the wheels of fate have been turned, and all blockchain entrepreneurs need to fly high in this chaos.
5. Death or Rebirth
Success or failure, the next cycle will see the death or rebirth of Web3. Web3 is never guaranteed to succeed. The bottle line lies in whether the awakened builders can persist. When too many traders make money and leave; when builders cannot survive because low quality tokens drives out the quality ones; when the pioneers of Web 3 give up their faith and surrender to the power of Web 2; Web 3 will then become a bubble and dream that can never be realized, just like numerous idealisms that dissipated in time. People will also choose to go back to the existing Internet services and automatically click "I have read the above terms”, signing up for different platforms and products over and over again.
However, since the birth of Ethereum, we have seen an unprecedented path. A base layer that could connect developers all around the world. A technology that could openly and transparently connect hundreds and billions of assets and data. An ecosystem that allows developers to freely develop on it even though it is not a company. Just like today, which is three years after, I can still recall the first afternoon that I deployed a smart contract onto Ethereum. With surprise, excitement, and a trace of joy, I noted “Aha, this is how you can mint an NFT.”
As the pioneers looked up, they see a starry Web 3 night sky.