Web3 might sound like a buzzword, but it’s far from it.
Few have grappled with the enormous implications web3, also known as Web 3.0, will have on our lives in the years ahead. The next era of the internet promises to be every bit as groundbreaking and destabilizing as the dawn of the internet (Web 1.0) in the late 1990s.
What is web3, anyway? Put simply, it refers to a decentralized internet that will run on public blockchain technology. In contrast to Web 2.0, which became dominated by big, centralized tech firms like Google
web3 stands to make the web more democratic and permission-less, pulling control of individuals’ data away from Silicon Valley and into a decentralized cloud. It will also require a bigger role for artificial intelligence technology to connect and manage this ownerless data.
It’s natural to wonder why this really matters. After all, as of now, it appears that most of our data is firmly under the control of large tech companies, banks, health-care providers and other entities that have pledged — to varying success — to secure it on our behalf.
Yet consumers, more and more frustrated by big tech firms profiting off their data and undermining their privacy, will increasingly opt to pull their information into the blockchain. Web3 offers people the ability to use decentralized apps that are easy to customize and device-agnostic — therefore giving them more control over their personal information.
While this would appear to be a welcome and empowering change, it comes with incredible risks. Now that more data will be encrypted and ownerless, it will be harder for someone to piece it together and glean valuable information from it. But then again, if no one entity has control over anyone’s data, then it becomes less clear who is responsible for securing it.
Take the health-care sector. Doctors stand to gain from having easier access to data anytime, anywhere. But this will also raise questions over who will have access to the data and how the data is secured. If an AI system is responsible for deciding how the data should be released, who is responsible if the algorithm makes a mistake? Or what if a malicious hacker gains access to an entire data cluster?
Such a system can also be prone to fraud. To appreciate the gravity of the risk, one need look no further than the Africrypt heist in South Africa last summer. Amid an uncertain regulatory environment, two brothers stole $3.6 billion in bitcoin and promptly disappeared, with investors left holding the bag and with limited legal recourse to recover their cryptocurrency.
Cybersecurity will also need to be rethought. Current security practices are based on putting wrappers around systems and data, but that becomes much more difficult in an environment that is designed to be open and to empower users. Consumers will likely pay the price if cybersecurity practices aren’t able to keep up.
Of course, web3 promises to offer enormous advantages. For example, in the near future, it may enable an American to choose among lending offers from banks in Finland or Australia — no longer limited to just U.S. institutions.
Positives such as these only emphasize why such hard work is required to pave new and secure web3 structures. Industry sectors need to come together to discuss the challenges and move to standardize data types in order to more easily exchange data on blockchain protocols.
In addition, governments and international regimes will need to rewrite regulations around data privacy to reflect the new paradigm. Data privacy frameworks like Europe’s GDPR will likely need to be adapted to address the coming challenges.
Perhaps most importantly, we all will need to rethink how we view privacy. Control of information will shift from an oligopoly to a structured anarchy. That will create some benefits for us all, but are we willing to endure the risks required to achieve them?
Raj Patel is a partner and leader of the cybersecurity practice at Plante Moran.