Business

Web3 is based on participatory economics and that’s what’s missing – Participation

Web3 is hailed as a technology model driven by the creative economy and as the future, or rather the next evolution of the internet. As we draw evolutionary comparisons of the technology that underlies everything from information consumption to content creation, Web2 has contributed to unparalleled economic growth and represents an important era. important role in human evolution with new ways to work, consume information and progress in human civilization. So with the huge success of Web2, why is Web3 needed?

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As we rethink the internet, it relies heavily on a handful of centralized entities whose devices, communication channels provide social media, mobile apps, and provide points of connection. between service providers and seekers of these services, control over these channels provides custodians of this infrastructure not only with monopoly control but also an economic bottleneck.” too big to fail.” So, rethinking the internet, which was primarily designed to transform information and transform it into value and moving truth, is a fundamental shift in empowering creators and participants rather than participants. not just custodians on the infrastructure.

The driving forces behind this disruptive thinking are the excessive pricing and control of Web companies, the enforcement of censorship by controlling existing communication channels, and the rapid dissemination of information, which are the driving forces. as good as in knowledge transfer but has now been weaponized with the speed and truthfulness of information and the dissemination of bias, bias, and misinformation – making it difficult to distinguish between signal and noise. These drivers not only show the dawn of a new era but also show humanity’s creative nature to rethink, redesign and innovate, shaping our next evolutionary era. .

Related: What the hell is Web3?

The Commands of Web3

So how do we envision this new pattern to take shape? As Web3 moves towards the theoretical goal of the internet taking one step further towards self-sufficiency – leading to a whole new set of technological and protocol developments that will then form the basis of a creator-driven economy. create control, embark on information and value movement, and have clear channels with protocol-enabled built-in trust. Blockchain and decentralization are often seen as enabling foundational concepts that are considered necessary for the development of such a platform. But before we go into decentralized Kool-Aid, I think we should take a step back and reassess the success (and failure) of Web2 and more importantly, the transition to this new paradigm, because I suspect the challenges aren’t just technology-driving.

Related: Web3 could be crypto’s key to the mainstream

To enable a Web3-led creator economy that empowers creators and participants, we first need to understand the mandates of participatory economics, where the focus is on mainly driven by self-governance, efficiency, sustainability and the creation of a decentralized economic system established with strong incentives and protected by protocols that require social ownership associations, self-management works and accountability for results.

Participatory economics has its roots in the thinking and experimentation of the last century around the idea that people can manage their own lives with others (on the same network level) in an efficient manner. be cooperative and fair with rules embedded in an incentivized economy that rewards participation and punishes misbehavior and activity that the network considers unfair. In other words, for Web3 to work and deliver on its promises, we need engagement.

At a very basic level, participation, like in the real world, can come through the commitment of resources – such as systems, protocols, skills, knowledge capital, and specialized knowledge. subjects, etc. and the value created should be equally distributed among the different participants based on the basic principles of supply and demand to address the equity factor. The economic value created will then need to be realized, accounted for, disseminated and exchanged with other fungible and non-fungible assets to maintain balance in any economic network. economy – all of this without any central accounting system or authority – to solve the problem of self-governance and fair structure caused by the protocol.

Web3, in its current context, is starting to look like a state encrypted network. Where these crypto-networks attract not only capital, talent, and the technology that gives them a national status (with the economic structure and currency in the network) but also markets and laboratories. experience of co-creation between different projects. We are already starting to see these manifestations in various decentralized finance (DeFi) and non-terror token (NFT) projects, and they are literally creating synergistic synergies between networks are encrypted differently.

Related: How NFTs, DeFi and Web3 Come Together

To provide a true peer-to-peer multi-token network (it’s literally the metaverse) where projects and individuals can co-create and bring in the energy of their participation essentially the foundational infrastructure needed to fulfill the Web3 promise. While we have seen unprecedented growth in the token-based economy and exponential growth in the investment and valuation of these projects, I think many of them This does not represent Web3’s participation principles nor does the economic output conform to Web3’s principles. The basic ingredient missing here is – engagement.

Web3 Economy Evolution and Current Volatility

The two fundamental technological concepts that allow us to distinguish between data (for authentication and truth) and value transfer (for the participating economy) are the Semantic and Decentralized Web, which will shape the future. and facilitate the transition from the current rapidly growing Web2 to the newer ownership-driven Web3.

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The Semantic Web extends the concept of documents/information on the web into valuable data, enabling the information to become more meaningful (and valuable) when semantically linked to the data. The data is then transformed into something of value – leading to the monetization and accountability elements of Web3 principles.

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Decentralization, on the other hand, facilitates peer-to-peer networks like blockchain and allows us to move encrypted value – be it they are systematically generated (cryptocurrency) or generated (cryptocurrency). message represents value) – and protocol resolution and self-governance – create the equity elements of Web3 principles. At a very basic level, as we shape the various interdependent ecosystems that emerge on top of Web3 principles, it is fair to assume that their economies are linked. And as we built a solid foundation of Web3 with decentralized processing, connectivity, and storage as the basic building blocks, they resembled Web2 cloud infrastructure but with the same business architecture. economy and other control points.

Related: The DAO is the foundation of Web3, the creative economy and the future of work

As projects grow and evolve, these cryptographic values ​​will include the shared value of the underlying infrastructure, services, and talent layer. This interdependent ecosystem manifested in the natural system will thrive; and a successful ecosystem and economy will attract talent, capital and resources with the common good being preserved.

For example, a metaverse project that includes NFTs and liquid crypto-assets to be fungible would also be a source of success in terms of decentralized storage for artifacts, managed data models, etc. and analytics for its operation, decentralized processing, etc., upgrading all service ecosystem will include Web3 ecosystem.

Now that many of these services are centralized, the challenges of the current economic system also lurk in them, meaning they set out to deliver on the promise of Web3 but lack its principles. This is quite evident given the volatility of cryptocurrencies and the increasing supply of liquidity from traditional finance in the form of stablecoins or growth banks allowing the free flow of liquidity from traditional finance, thereby safeguarding not only growth but also existing financial system challenges. So, the link between volatility and stability of the cryptocurrency market is something that we have to discuss and the impact this has on volatility and what it means for financial systems. main parallels of profit and profit.

For example, high yields in the crypto market will attract liquidity, and while the risk-on-risk equation is working to attract capital and issue stablecoins, it also inherits the mechanics of the global macro. , which implies that any change in traditional finance, capital markets, interest rates, money supply, inflation, etc., which play an important role in the calculation that goes into asset valuations, initiate an impact. to the cryptocurrency market, in principle, means independence and disruption. What if we move towards self-sufficiency with truly liquid and fungible crypto-assets, while leaving the economic system functioning and self-regulating? I find this equation interesting and research-worthy, but also ironic.

This article does not contain investment advice or recommendations. Every investment and trading move involves risks and readers should do their own research when making decisions.

The views, thoughts and opinions expressed herein are the author’s own and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Nitin Gaur is the founder and director of the IBM Digital Asset Lab, where he lays out industry standards and use cases, and works towards making enterprise blockchain a reality. Previously, he served as chief technology officer of IBM World Wire and of IBM Mobile Payments and Enterprise Mobile Solutions, and he founded the IBM Blockchain Lab, where he led efforts to establish blockchain practices for businesses. Karma. Gaur is also a famous IBM engineer and IBM master inventor with an extensive patent portfolio. In addition, he is a researcher and portfolio manager for Portal Asset Management, a multi-manager fund specializing in digital assets and DeFi investment strategies.