How to avoid Web2’s mistakes when innovating around Web3

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The internet has changed the way we connect, work and play. During the early stages of development on the World Wide Web (Web1), we used content and information through static, simple websites. Years later, the Web grew into Web2 and featured user-created content across social media platforms, blogs, and networks.

Today we are on the edge of Web3. To get to this point, we’ve been through transitions built specifically to meet the evolving needs of users.

And while these transitions have been exciting and brought unimaginable benefits, there have been inherent flaws and flaws at every stage.

Web2 in particular can teach us some important lessons. This phase was dominated by a handful of extremely large tech companies that were initially driven and owned by venture capitalists and then massively fueled by public markets, expansive monetary policy, lax regulation and privacy issues.

The future of the internet is so close we can touch it. But before we allow history to repeat itself with Web3, we need to scrutinize and learn from some of Web2’s biggest flaws.

A Closer Look at Web2

First, there is the core business model, which is based on ad revenue as the main incentive. This model is based on ownership of personal data in exchange for revenue. For example, Waze built its navigation app, not for users, but to capture data about driving behavior and then sell that information to advertisers. As a result, the ownership of personal, behavioral data is controlled by a few central authorities and privacy is seriously compromised.

Another problem is the monopoly of Big Tech. Proprietary solutions from companies such as Apple, Google, Facebook and others have pushed customers to stay on these providers’ platforms, within their walled gardens. The risk is shared among the participants, but not the return. Web2 is powered by the entities that have the most data and can easily monetize the information they contain. Facebook may have been built as a social networking tool, but today Meta is essentially the biggest global data powerhouse. Web2 companies are trying to stick to this business model.

And then there’s cybersecurity, for which Web2 has had its flaws. Universal access to applications has created security risks. For example, having private data controlled by individual companies has led to an increased risk of hacking by malicious parties. A major hack could result in millions of dollars being lost in compromised data. Indeed, there have been countless examples of such attacks over the past 10 to 15 years.

In hindsight is 20/20, but could these and other mistakes have been prevented? Perhaps. Think of it this way: The technology in Web2 wasn’t where it needed to be to scale for a one-to-one relationship and true data ownership. The technology changed to fit the feed, versus the other way around. And we already see a lot of this behavior repeating itself in Web3.

Where Web3 is going

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

In addition, the bar for the user experience is set too low. Projects focus on speed and capacity, with little regard for the actual user experience. Or they focus on solving a particular problem – such as transaction throughput, smart contracts, etc. – but not on how to solve the problem with a horizontally integrated approach.

Given crypto’s single protocol approach, it would be impossible for anyone to learn, use and master every decentralized financial (DeFi) application across all protocols. Major central authorities, meanwhile, are fighting hard to keep their businesses.

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

To pay the fees, BlockFi agreed to pay a $50 million fine, cease its unrecorded offerings and sales of the loan product, BlockFi Interest Accounts, and attempt to operate its business within 60 days within the terms of the Investment. Company Act. This is the first case of its kind on crypto lending platforms, according to the SEC.

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

Where do we go from here?

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

A multi-asset, non-custodial wallet (which allows users to own and manage their cryptocurrency’s private keys) is critical to Web3 adoption. The new paradigm is real ownership in the network. Most of the big name centralized platforms don’t really allow users to own their assets. They are recreating the IOU system in place today at well-known custodial platforms such as Fidelity and Schwab. This “not owning your assets” is a big problem. Many Web3 users don’t realize that they don’t actually own their digital assets. Ownership of the network/project gives users a real say in how they are managed. Tools are needed to facilitate this new form of ownership and return. We need a platform and technology to facilitate that, with a user experience that is consistent, trusted, and spans multiple protocols.

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

It will take a lot of coordinated work. But when it comes to internet stages, it seems the third time is the charm.

Tim Tully is the CEO of Zelcore.

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