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Innovation is at the center of all disruptive ideas and technologies that have seen mass adoption on a global scale. The progression of the internet represents a relationship between such innovation and persistent dedication to a seemingly unfathomable future. In order to truly define the world of tomorrow and prepare companies, applications and organizations to begin scaling what is known as Web3, we first must understand the history of the internet and web and its natural evolution toward a future built on verifiability, trust-free services and decentralized protocols.
A brief history
For decades, the internet served as an “abstract” concept with limited usability by government organizations and universities enabling multiple computers to communicate with each other on a single network. It was not until the early 80s that the emergence of communication protocols (TCP) and normalized systems (DNS) laid the foundation of the internet that we know today.
Nearly a decade later, the online world took a more recognizable form with the advent of transfer protocols (HTTP) powering the world wide web — an invention credited to several scientists, engineers and programmers dedicated to providing an “information superhighway” for users.
In its initial form, the web-enabled public use of accessing data powered by the internet. Web1, or the read-only web, is characterized by clickable hyperlinks that linked content and information with limited interaction. Technologies powered by Web1.0 like Google and Yahoo still serve critical use cases to the global internet we know today.
By the early 2000s, the emergence of various web protocols enabled read-and-write interactions, which have the ability to link programs to content. In its current iteration, and likely the version of the web most familiar to readers, Web2 allows users to both consume and produce their own content. Blogs, internet forums and marketplaces sprang up following its autonomy in content creation, which also sparked the age of social networks.
While Web2 has undoubtedly provided tremendous benefits for users, rent-seeking centralized entities have capitalized on this free flow of information to monetize user data and behaviors. A breach of trust assumptions, user exploitation and data-locking have led to the need for a web truly owned by builders and users.
The hope of a decentralized future
Web3 aims to do what the internet has failed to do until this point: promote open services powered by decentralized protocols instead of centralized applications controlled by tech behemoths. Web3 can be seen as the “read/write/own” version of the internet — users can link programs and content directly, bypassing central intermediaries. Open services built on Web3 promote permissionless entry, optimize value and guarantee verifiability. These services are far more resilient, fair and ethical.
Rather than accessing tech platforms in exchange for monthly fees and personal data, users participate in the governance and operation of the protocols themselves. Participants are true network stakeholders rather than just customers or products exploited by economic pressures.
In this environment, tokens or cryptocurrencies represent accessibility, governance and ownership of decentralized networks. Whereas in Web2 you are the product, in Web3 you are the owner.
The future landscape of Web3: DAOs
Many mainstream giants in both tech and payments are transitioning to a variety of Web3 programs. NFTs (non-fungible tokens) are at the forefront of this adoption, and DAOs (decentralized autonomous organizations) will spur the next wave of user adoption in Web3, collective ownership and accessibility.
Broadly speaking, DAOs are organizations run by a group of individuals who establish their own governance and make decisions executed by smart contracts on the blockchain. DAOs remove the need for any central entity or single point of control — with the core objective of bringing together a community of users with similar interests to work together toward a common goal. Being established on an open blockchain supports the principles of Web3 with all contracts, decisions and transactions publicly viewable and verifiable — and individuals remain the owners.
In the context of NFTs, DAOs can be leveraged to support collective ownership. Built-in treasuries are accessible only with the approval of members and decisions are made through group votes during specified periods of time. AS NFT prices have soared, a negative consequence is that it has made many collections relatively inaccessible to individual users. DAOs such as PleasrDAO enable members to collectively share the cost and ownership of individual NFTs, equalizing the playing field and reinforcing the decentralization ethos of accessibility and inclusion.
From social media DAOs like Friends with Benefits to governance DAOs within the play-to-earn gaming space, DAOs also provide a governance structure for Web3 that boosts participation and reduces the risk of corruption or censorship. DAOs will continue to thrive as they become more popular and trickle down into nonprofit organizations, decentralized finance and NFT collections. Additionally, instead of being slowed down by hierarchical structures, DAOs allow decisions to be made in an instant, once consensus is reached by all participating members.
Charitable organizations are a prime example of businesses that stand to benefit greatly from the DAO structure. Often, the amount of money and time that is spent on administrative tasks and decisions on fund allocations surpasses the amount of time spent completing charitable activities. Through DAO implementations, funds can be distributed to the proper channels quickly and effectively. The result: charities unlocking higher impact of their end causes.
DAOs can also serve as a direct avenue for investments and the accelerated adoption of DeFi (decentralized finance). DAOs utilizing cryptocurrencies allow for low costs and near-instantaneous peer-to-peer transactions that are not subject to stipulations of traditional finance institutions. Through lending or transaction fees, members are able to generate better returns compared to those they would receive if they had held assets in a traditional financial institution. This space is rapidly growing with no signs of any slowdown in the near future.
With this generation’s heavy focus on social media and content creation, NFTs and the adoption of DAOs to purchase and store these digital assets further enable the creator economy. Creators directly benefit from their works of art since the value of their product is tied to their brand, fan base and organization.
In the future, we can expect that DAOs will enable users to easily enter into Web3, just as so many large organizations and corporations are doing so.
Anthony Georgiades is cofounder of Pastel Network.