Web3 can solve real-world problems, just wait...

Understanding how we got here

A useful framework to understand the progression of the web has been nicely articulated by a16z founder Marc Andreessen. The first iteration of the internet, referred to as web1, wasn’t all that exciting. It was mainly just a bunch of stuff we could read on big, clunky computers. There was no interaction, no collaboration. That led us to web2, where the focus shifted to reading and writing. Sharing became our currency.

But centralized platforms still wield the most power and generate most of the financial value from all the sharing we do. Every time you scroll a timeline, click on an ad or share someone else’s post, you are creating value by training artificial intelligence (AI) to better understand social networks and consumer interests. But none of the monetary value you are creating through those actions accrues to you – centralized companies such as Facebook and Twitter reap a disproportionate amount of the financial benefits.

Now we’re at the beginning of web3, which, in theory, will take us from reading and writing to owning. In the metaverse, the overarching belief is that no one person (or group) will own it or shut it off. Each contributor will own the value they generate. The hope is that this will disrupt the centralization of power – and I believe this can be harnessed for good.

Learning from the mistakes of web2

Right now, a lot of web3 has been arguably overrun by the gold-rush mentality: everyone looking to make a quick buck on things that aren’t that valuable in the long term. It is also true that most platforms are decentralized in name only, and it is often the case that small groups of insiders benefit at the expense of latecomers.

At the start of web2, no one could have predicted how our increased level of connection in chat rooms and on message boards would eventually give rise to Facebook, Twitter, Reddit or WhatsApp, and later Instagram and TikTok. We quite literally couldn’t imagine all the possible ways the internet could serve us.

We can’t lose sight of the true value that has yet to be created. After all, Uber couldn’t exist without the iPhone, and the iPhone relied on the internet being in the palm of our hand (with the added benefit of GPS). We shouldn’t dismiss new technologies just because all the applications for them aren’t clear to us yet.

Why we need to pay attention to gaming

The promise of web3 can be seen in the form of gaming. Inherently, in any gaming experience, the players are the ones creating value. And most games have built-in reward mechanisms that allow you to access even more value as you rack up points.

The game Axie Infinity became a sensation in the Philippines for a period of time. The game is akin to PokemonGo, where you train your avatar to win battles. By doing so, you get access to a cryptocurrency that allows you to level up by purchasing a new sword or shield in an online marketplace. You can sell those things to another player at whatever price you choose because you own the items you accrue.

The game became so popular in the Philippines that people were quitting their jobs to play it because of the amount of money they were able to make in the virtual world. The game gave them access to a more stable currency than they had locally.

This, in a nutshell, is why crypto adoption is so high in developing countries – places where inflation and financial instability have made it harder for people to generate wealth. With Bitcoin, the government can’t dictate its value – the people do.

Preparing for the next wave

The next phase of gaming in web3 will require developers to create better games that are more useful to the outside world using token systems to incentivize people to add value. The value they own will be extremely powerful, especially for areas that are economically disenfranchised.

The people who add their data points own it and can later cash in on what those predictions may be worth. While the game may be fun for those placing their bets, the real-world output for, say, a farmer in Bolivia who needs help predicting upcoming rainfall to negotiate a better insurance contract is tangible.

If more game developers can focus on real-world benefits like these, we will begin to see web3’s true potential. Sure, there may be a lot of gimmicks right now, but it won’t be that way forever. The network effects and incentives we’re already seeing in the metaverse are the signals we need to keep going in order to positively impact the world.