Web 2.5 is Here - How Am I Going to Explain this to my Dad?
Let’s See How Long It Takes Boomers to Learn Web 3.0!
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Executive Summary
With payments and privacy baked into “version 3.0” of the internet, opportunity will be ever abundant.
Owning your data will provide passive income, and can be attractive to the future of existing ad networks (Google, etc.)
When trust and speed increase in economic networks, prosperity and growth also increase (ie opportunity abundance)
Access to Web 3.0 will help economic opportunity flourish across the globe
Inspirations
Using the @Brave browser and their Basic Attention Token (the crypto that backs their network)
Ethereum and DeFi
Intro
Let’s start with some historical parallels, as history doesn’t repeat, but it tends to rhyme.
The year was 1998 and under the Christmas tree on Christmas morning was a Rio PMP300. It was the first ‘digital MP3 player’, three years before the iPod. It held a whopping 32MB of songs, so basically 10 songs. That was if you were lucky and all 10 songs were compressed MP3s at 128kbps or less. (shoutout to my fellow audiophiles).
While my friends were busy burning songs to their CDs using Roxio, I was chasing that elusive, “truly skip-free” playing of music while on the go. My CD players claimed ‘skip protection’ yet I couldn’t jump on my trampoline and listen to music without it skipping :)
This player allowed me to listen to songs I downloaded from the internet (usually one song took hours to download), and listen to them on the go, skip-free. Little did I know that my desire for skip-free music led me down a weird internet path that I would, in retrospect, coin as “Web 1.5”, where search engines started to become the staple of the internet.
For those who may be unfamiliar, here is the unreliable and time-consuming process I had to follow to download songs and get them on my MP3 player:
Search on Lycos or Yahoo for “Green Day mp3” (yes this was before Napster and Shawn Fanning)
Download the MP3 from a weird source, which would take hours to download at dial-up modem speeds of 56kbps, with many downloads failing
If completed, I’d check the file on my Winamp music player on my computer
Install the Rio software on my computer
The Rio PMP300 player came with a port that hooked up to my PC’s printer port to transfer data from PC to device
Voila!
Body
Where am I going with this? I believe crypto has ushered in an era of “Web 2.5”. Many believe that Web 3.0 will be decentralized and one with economics baked in. The backbone of this is blockchain and crypto. Per Tim Berners-Lee, the inventor of the World Wide Web, Web 3.0 was originally called the Semantic Web, and was aimed at being a more autonomous, intelligent, and open internet.
One must go down the dark alleys of the internet to duct-tape together a world that enables the promises of Web 3.0, but this involves many twists and turns with less than desirable user experiences (much I had to duct-tape my Mp3 experience in 1998).
So what are Web 1.0 and 2.0, and how do those relate to 3.0?
Part One - Owning Your Data
Google has dominated Web 2.0 with its search engine and invasive data tracking to prime its $147 billion advertising engine. Apple has started to position itself as the anti-Google when it comes to privacy, though I’m skeptical Apple would ever truly want you to own your data and keep it private, as it could limit Apple’s ability to somehow monetize it for ‘less-evil’ ad business.
One move Apple could make to double-down on its privacy stance, if it truly cared about disrupting Google’s ad model, would be to buy the Brave browser, which has started to see exponential growth. Or, Apple could revamp Safari to be a Brave competitor. Brave provides a more anonymous web experience (less cookies, trackers, etc.), but also is building its own ad network. Ads are served to you based solely off of browsing history, NOT cookies. As of May 2021, Brave reported 32 million users and 11 million daily active users.
Benefits for companies - Create new ad experiences, as more users try to hide today’s disruptive ads.
Instead of cluttering web pages that you seek out, a potential tradeoff could be, more ways to access potential buyers (ie notifications, partner with brands to add their flyers to your e-commerce orders, etc.). Users are speaking with their use of VPNs, incognito windows, DuckDuckGo searches, and their voices. A 2019 Edelman study found that three out of four consumers avoid ads. In fact, 47% said they have changed their media habits to see fewer ads while others use ad blockers to prevent them altogether.
Some might say this is likely lower ROI for brands. Sure, but it could also be a more helpful signal. Browsers like Brave allow you to auto-contribute back to the ad network, thus reducing companies potentially CPC.
Potentially more symbiotic relationship between companies and consumers. The trick will be getting users to contribute their ‘attention dollars’ back to the network. As of now, it’s largely based on ‘affinity’ for brands who are being less invasive.
Benefits for users/consumers - Vote with their wallets, and not their web traffic. Earn passive income.
An ad network where customers/users share common beliefs can lead to strong movements and loyalty. In other words, users will want to purchase more from those brands that respect privacy.
What’s great about the Brave ad network, is users can also contribute back to network to ensure it remains robust, even if they aren’t purchasing products from advertisers. I think the trick to getting users to contribute back to the network is the users being willing to give away so much data, and the data companies want, that you could charge a premium for access and earn a passive income. In theory, for this model to win, overall ad spend would need to flatline/decrease, but ROI to skyrocket. Global ad spend quickly approaching $1 Trillion, after jumping ~20% in 2021.
Another way for Brave and other browsers to add value for both advertisers and users would be to incentivize more studies and online surveys. The intent here would to capitalize on the mutual agreement of privacy on the network, but incentivize one time, deep user questionnaires that help brands/advertisers answer their most pressing consumer questions. Users would get paid more for their time/attention/divulgence of information, ie another source of income. Today, that money is made by the advertiser (1), Google, in the ‘advertising triangle’, paid by the brand (2), in hopes to influence the consumer (3). When the network is shared, and the middleman like Google is removed, money and incentives flow towards the consumer.
Part Two - Economics are the missing link in Web 2.0
Current Problem: Paypal and Stripe were pioneers in the Web 1.0 and Web 2.0 days, respectively, to help make commerce more seamless experience in the Web. Stripe in particular has enabled businesses to easily setup ecommerce and grow their brand beyond their current footprint. Wild stuff!
But the problem here is that even Paypal and Stripe rely on legacy networks, rails, and infrastructure of the current financial system. Obviously, these networks are tried, true, and trusted, but lack the full integration themselves into the Web.
Potential Solution: So how do we solve the ‘entire lifecycle of a purchase’ problem? We need an infrastructure native to the internet, and one potential solution would be Ethereum. Ethereum is a blockchain platform with its own cryptocurrency, called Ether (ETH) or Ethereum, and its own programming language, called Solidity. As a blockchain network, Ethereum is a decentralized public ledger for verifying and recording transactions. (read more here to learn more).
So maybe some of you are saying, “OK, no shit, Sherlock. People have been saying this for a few years. What’s your point?” Well, my point is that while that may be true, we are still in this world where Ethereum and the Web haven’t combined yet, but there are new promising use cases that prove that convergence is more attractive than divergence. Packy M’s recent article on the game ‘Axie’ is a peak into what a world where economics are baked in.
Part Three - Access to capital (and opportunity) across borders
Current Problem: Remittances and regulation impede us from solving the long tail of poverty. In 2020, annual remittances hit $650 billion, with expectations for this number to continue to increase. While there can be different types of remittances, a remittance is money sent to another party, usually one in another country. The sender is typically a foreign worker and the recipient a relative back home. Freely flowing capital across borders should be viewed as ways to spur prosperity and investment in third world countries. As you can tell from the chart below, within the current global financial system, lots of checks and balances. If someone in a third-world country doesn’t have access to the proper infrastructure, it’s near impossible for the to participate in the global economy.
Aside from remittance data, there is demand today to improve capital flow to countries with poor banking infrastructure or access to it. There are companies who help people get access to capital in Africa today working in “micro-funding”. They are trying to solve the lack of banking access to fund these ideas. Imagine a world where location and credit didn’t matter to who could send you capital? This is what crypto/Ethereum baked into a Web 3.0 could enable.
Capitalism has been the greatest ‘invention’ as it has dramatically reduced poverty. While it has its flaws, internet-driven capitalism in Web 3.0 will help prosperity reach parts of the world that remain shut out from the global economy.
Conclusion
With payments and privacy baked into this version of the internet, opportunity will be ever abundant.
Owning your data will provide passive income and much more
Trust and speed increases in economic networks drive prosperity and growth
Access to Web 3.0 will help economic opportunity flourish across the globe