Today’s dominant internet platforms are built on aggregating users and user data. As these platforms have grown, so has their ability to provide value — thanks to the power of network effects — which has enabled them to stay ahead. For example, Facebook’s (now Meta’s) data on user behavior helped it fine-tune its algorithms to a point that its content feed and ad targeting were dramatically better than what competitors could offer. Amazon, meanwhile, has exploited its broad view into customer demand to both optimize delivery logistics and develop its own product lines. And YouTube has built a massive library of videos from a wide array of creators, enabling it to offer viewers content on almost any topic.
Why Build in Web3
It has the potential to unlock a more valuable internet for everyone.
May 16, 2022
Illustration: NFT artist Lukeabc
Summary.
A major change is coming to the internet. While today’s dominant platforms have guarded their troves of user data and maintained an advantage through network effects, new companies — working in what they’re calling a “Web3” model — are proposing a new value proposition to users. In Web3, instead of platforms having full control of the underlying data, users own whatever content they have created (such as posts or videos), as well as digital objects they have purchased, and these digital assets are typically portable. This new paradigm has a few important advantages: it’s easier for new companies to compete with established ones if they offer better user experience; the system is less zero-sum, because user lock-in isn’t the primary goal; and it can be easier to win users’ trust, as key operations can be encoded on the blockchain in “smart contracts” that are auditable and immutable. All of this means that it can be much easier to launch a product in Web3.