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Web 3.0 can repair the attention-driven digital economy

·7-min read

From imbalanced creator economics and poor security, to centralized control and disgruntled communities — Web 2.0’s flaws have been on full display these past couple of months.

First, former Facebook product manager Frances Haugen testified to Congress last month that the social media giant "chooses profits over safety." Then, as if on cue, Facebook’s centralized services went down worldwide. The outage was so widespread that Facebook couldn’t even access the servers itself.

Then, a disgruntled anonymous hacker released a massive trove of internal data from Twitch, the popular streaming service owned by Amazon. Alongside source code and payout information for top creators, the hacker urged improvements, calling the community a "disgusting toxic cesspool" in an attempt to "foster more disruption and competition in the online video streaming space."

It’s never been more evident that the old guard has gotten many things wrong despite these platforms’ growth, reach and profitability. The centralized version of Web 2.0, which was all about network effects, massive scale and winner-takes-all economics, is no longer working for society.

It’s time to make a change. As Web 3.0 entrepreneurs building an open infrastructure that fosters a more collaborative, creative and user-centric internet, it’s on us to solve the fundamental flaws of the last generation of technology.

Here’s how Web 3.0 fixes some of the most glaring problems of our current digital economy.

Poor security and data controls

Twitch continues to be plagued with pranks, such as this one, which replaced backgrounds with photos of Jeff Bezos, the billionaire founder of Amazon. Apparently, these security issues were endemic, as former employees reported poor security practices at the streaming giant.

We’ve all come to realize that any data we share with a centralized entity is at risk. Years of private information leaks from banks, retailers and social platforms show that you shouldn’t expect anything on the internet to remain truly private.

Since Web 3.0 is built on cryptographic primitives and often features open source code, anyone can contribute to the project by reviewing code. This boosts security for users and turns transparency into a competitive advantage. The gains are not simply privacy-based but actually result in user value being protected. Security researcher @samczsun has identified potential exploits across protocols like 0x, Livepeer, Kyber, Nexus Mutual, Aragon, Curve and more, saving billions of dollars in potentially lost value.

Interoperable standards mean that ERC-721-based NFTs can trade and be viewed on a litany of different front-end applications, and ERC-20 tokens can access an entire ecosystem of competitive financial products competing for attention and value. This agency increases the stakes for platforms, which may trigger a user exodus after security breaches.

Toxicity and platform accountability

The Twitch hackers, despite acting illegally and immorally, were right in one respect: Streaming platforms are increasingly toxic, and large tech companies have struggled to respond in a way that meets the enormity of the problem. Yet, in the Web 2.0 world, streamers don't have viable alternatives. They could move to YouTube or Facebook Live, but they would be trading one toxic, attention-economy platform for another.

These realities exist amidst an environment where creators have more power than ever before. Fans will follow their favorite creators to whichever platform they choose, which gives them tremendous leverage. To escape toxicity, creators need Web 3.0 tools to step outside the walled gardens and control their destiny via direct relationships with their communities.

Web 3.0 also re-balances power dynamics between users and platforms, putting users in control of their data. With interoperability and portability provided by data management platforms like Spruce, Web 3.0 platforms can make it easier for users to "vote with their feet" and move from one platform to another.

As companies like Conflux and Moralis make it easier to scale across blockchains and standards, competitors can take swift action whenever an opportunity arises. For instance, when users discovered that NFT trading platform OpenSea may have been insider trading based on knowledge of which NFTs would be featured, alternative platforms such as Artion emerged to rectify some of the perceived grievances of the NFT market. Such rapid reactions to market dynamics just don’t exist in the traditional Web 2.0 ecosystem, which relies on scale and closed access to suffocate new entrants.

However, Web 3.0 goes well beyond direct user relationships. These platforms are user owned and community-driven, so the incentives are aligned for the communities to moderate themselves. In the video streaming case, surely no community wants hate raids to force its valued members elsewhere.

In the Web 2.0 world, users need to wait for the platform to take action. In the Web 3.0 world, they can act via in-built governance and moderation mechanisms. On the Mirror blogging platform, users vote on who can write and publish each week. On the Web 3.0 index, listed projects have control over the addition and removal of subsequent projects, ensuring healthy growth of the ecosystem.

The Facebook whistleblower also revealed that Facebook has a two-tier justice system, which treats celebrities differently than everyday users. While a regular account may be penalized for violating the terms of service, one with many followers could get away with the same behavior.

Web 3.0 fixes this, too, with greater transparency and censorship resistance thanks to the blockchain’s immutability. Decisions are made in the open via tools like Snapshot and are driven by the broader community. Governance happens on-chain, for everyone to see. There are no backroom deals or two-tiered justice systems (unless voted on, of course). It’s all community-driven, so participants can simply move on if they disagree with the direction or level of transparency.

Imbalanced creator economics

The Twitch leak revealed a wide disparity between the economics of the top performers and the everyday creator. These dynamics align incentives between the platform and just a sliver of its creators. When a few creators make most of the money, the platform will push attention toward the most significant influencers.

The Web 3.0 paradigm addresses these misaligned incentives by democratizing access and dissolving silos between creators and fans. Web 3.0’s monetization mechanisms for creators, like NFTs, digital payments, tokens and crowdfunding level the playing field in a creator-friendly way. Artists using platforms like glass.xyz have found that they can monetize their content through NFTs accompanied by an engaging live stream far better than they can by simply selling via a Web 2.0 model.

In Web 3.0, users can also own their platforms, often coordinated through tokens. As they benefit directly through the growth of the platforms, they have the incentive to provide critical services like moderation, for example.

Users can also purchase fan tokens, further committing to their favorite creators and building a positive feedback loop that nurtures healthy fan communities built around a shared passion. Platforms like Rally, Socios (built on Chiliz) and Roll give creators the tools to directly monetize their reputation, authority and creativity without intermediaries. This further aligns incentives, as the creator is the platform. The creator can define the rules of engagement and do what needs to be done to maintain a healthy community, without interference by a disinterested third party.

An internet upgrade is good for society

Without a doubt, it’s damaging to have so much of society’s social fabric and economic structures reliant on infrastructure controlled by a few private companies. The damage is further compounded when those companies avoid accountability, offering promises to change that seem to fall by the wayside once attention fades.

But it’s less about doing away with Web 2.0 completely and more about giving society the internet upgrade it needs so badly. The Web 2.0 tools themselves have enormous positive impact, but there are tradeoffs, too: Web 2.0’s structural incentives have led to unaccountable and inflexible Big Tech monopolies. Web 3.0 evolves the internet to take the good from its predecessor and improve upon it through aligning economics and incentives amongst all users — and thus avoid the negative effects of ad-supported models.

When it comes down to culture and control, decentralized services have a significant advantage over centralized gatekeepers. Web 3.0 proposes an entirely new way to nurture community, empowering users with data portability and interoperability, and re-centering incentives that support self-moderating communities.

Haugen has it right: "It’s not about breaking up Facebook. The path forward is about transparency and governance." We all deserve better, and the services, platforms and products that prioritize transparency and community governance will be the ones to thrive in the next era of the digital economy.

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