Web 3 has led to numerous innovations and a number of real-world problem-solving solutions. However, their true potential cannot be realised until the new technology is fully integrated into the web infrastructure.
Says Dileep Seinberg, founder and CEO of MuffinPay, a crypto fintech platform, “We are now entering the third era of the internet, also used in the tech buzzword web 3. This is primarily possible because of its decentralised nature, community-driven aspect, and data ownership by people instead of a few companies. It will combine four technologies: IoT (Internet of things), artificial intelligence/machine learning, data science and blockchain, and 5G telecom capabilities.”
India has been one of the early proponents of Web3 technology. It was also ranked first in terms of global crypto adoption, according to a survey conducted by Finder, a global research platform, in July 2022. Additionally, according to the Cryptotech Industry in India 2021 report by NASSCOM and WazirX, India is home to more than 230 Web 3 start-ups already.
“India has been a frontrunner in IT & Software, and right now, global investors are investing huge capital in Indian-made crypto and blockchain ventures. I believe India will be a significant player in building the future of the Internet though some caution on the policy side will be required. Web3 in India can simultaneously flourish with the right people (founders), investments and the policy,” says Seinberg.
But the new technology comes with its pros and cons.
Faster And Fairer: As more people invest in cryptocurrency, they would want to use it for the full range of transactions that fiat currently allows, such as lending and borrowing, investing in assets, and making payments.
In June 2022, Chainanalysis, a blockchain data firm, released The Chainalysis State of Web 3 report which mentioned that web 3 will enable faster and more convenient transactions. For instance, in today's world, borrowers must go through a time-consuming mortgage application process that heavily relies on human judgement. In a web 3 world, this process becomes faster and fairer. Borrowers can simply link their wallets and an algorithm could instantly give them a “yes or no” based solely on their financial profile and transaction history as represented on a blockchain.
Direct Relationship Between Sellers And Customers: Web 3 technology can also eliminate middlemen, allowing sellers and customers to interact directly. For example, consumers can now easily connect with artists or creators via social media platforms.
NFTs are already enabling much of this, largely in static digital art, but the arrangement could easily be replicated in music, films, and other mediums.
Decentralisation: Web 3 has the potential to decentralise the business world by allowing community ownership of companies as opposed to the current norm of hierarchical corporate control. We see this happening now with decentralised autonomous organisations also known as DAOs, where all buyers have a stake in decision-making.
Kavya Prasad, founder of Lumos Labs, an innovation management firm, says, “The decentralised structure is the staple of Web 3 technology. It allows users, innovators, and others exploring the space to avoid middlemen, red tape, tedious documentation, and other administrative processes. It also allows for direct channels of communication, learning, earning, and even governance. It is steadily moving towards the DAO infrastructure where the users of the community hold the governing power in terms of voting rights, decision-making power, etc, for the web 3 firm.”
Rise In Cyber Crimes: According to some experts, regulating Web 3 would be difficult. They further claim that decentralisation can bring new types of cyber-crime in the picture. It might lead to an increase in cyber-crime and online abuse, among other things.
Cryptocurrency-based crime remains a significant issue to address, especially given that rising overall transaction volumes mean the value of illicit transactions is increasing. DeFi specifically appears to be going through similar growing pains.
Regulatory Ambiguities: The Web3 and crypto industries are still navigating the regulatory space which is not cemented as of yet. Prasad added that the Government of India, with the introduction of tax reforms, has recognized the industry as a mainstream sector which is positive development for the sector but a clear regulatory framework for it is still awaited. On a global scale too, many countries are yet to warm up to space and have clearly defined protocols for it.
Requirement For A Stronger Platform: Web 3 will be inaccessible to less advanced gadgets. “Web 3 will require a faster processing unit. Web 3 will be incompatible with older devices. You’ll need upgraded devices with above-average specs. Existing businesses based on apps and websites will need to adapt to Web 3, and investment will be required to be relevant in the competitive markets. It can be challenging for newcomers to understand and use Web 3,” says Seinberg.
