In 2021, the global Web 3.0 market size reached USD 3.2 billion and is expected to reach $81.5 billion in 2030, according to a recent report by Emergen Research.
With a promising future, China is looking to ride this Web 3.0 wave. In 2019, Chinese President Xi Jinping endorsed blockchain technology and laid out a bold plan to blockchain development.
Web 3.0 is defined as a collection of open technologies and protocols that support decentralized data usage and storage. Based on blockchain technology, the Internet 3.0 The ecosystem includes cryptocurrencies, non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), decentralized finance (DeFi), and more.
The Internet was invented in 1989 by British scientist Tim Berners-Lee and was originally developed to share information between scientists at universities around the world.
Between 1991 and 2004, the first generation of the Internet, also called Internet 1.0, consisted of readable links and homepages. The majority of its participants were content consumers, while the creators were mainly web developers who developed websites with textual and visual content.
Around 2004, the Internet transitioned to Web 2.0, allowing individuals to not only read content, but also create their own for posting to blogs and social networks. It was during this stage of web development that data became increasingly controlled by a small group of companies that eventually became tech giants, including Amazon and Facebook.
As users across the internet ecosystem grew concerned about how their personal data was collected and used, their calls for more privacy, ownership and control of their personal information grew.
This is one of the main reasons that led to the development of Web 3.0, reflecting a paradigm shift towards the development of a Internet more democratizedaccording to crypto market intelligence firm Messari.
Decentralization: a myth?
First invented by Ethereum co-founder Gavin Wood, Web 3.0 was envisioned as a decentralized version of the internetfree from the domination of big technologies.
Web 3.0 was created to facilitate the development of open, autonomous and decentralized technologies within Internet ecosystems, enabling trustless infrastructure and removing central monopolies. This stage in the evolution of web technology was to give individual users power over their data, identity, digital assets, security and transactions.
But some observers have raised questions about whether Web 3.0 is really bringing decentralization. According to a recent report from the US Defense Advanced Research Projects Agency (DARPA), cryptocurrency, a key Web 3.0 asset, is more centralized than expected due to âunintended centralities in distributed ledgers.â
A good example is bitcoin. While the cryptocurrency network was originally planned to be fully decentralized, it has become highly centralized today, with its system dominated by large and concentrated players, including bitcoin miners and owners.
According to a study by the National Bureau of Economic Research, the top 10,000 individual investors in control of bitcoin around a third of cryptocurrency in circulation. At the same time, the top 10% miners control 90% of the bitcoin mining capacity, and only 0.1% control 50% of the mining capacity.
The launch of ApeCoin, the native token of the Bored Ape Yacht Club (BAYC) ecosystem built around a collection of NFTs on the Ethereum blockchain, also underscored that cryptocurrencies may not be as decentralized as one might think. claims so.
In March this year, ApeCoin tokens worth $380 million were distributed to founders, executives and early backers of Yuga Labs, including investors from venture capital firm Andreessen Horowitz. In particular, there is a striking similarity between the centralized ownership of ApeCoin and the funding structure of conventional companies backed by traditional venture capitalists.
As blockchain technologies decentralize forces, the crypto industry is highly centralized. Crypto exchanges are dominated by large platforms such as Binance, one of the world’s leading cryptocurrency exchanges, which has captured 30% market share in spot volume in March of this year.
Meanwhile, MetaMask and OpenSea, two of the most used applications in Web3, are user blocking based on their location, which goes against the decentralization philosophy of Web 3.0.
Another vision of Web 3.0
Decentralization appears as a ideological foundation of power and not a technical property of the Web 3.0 system, according to a recent study of bitcoin’s early years. It remains to be seen whether Web 3.0 can truly decentralize ownership and decision-making, and empower its users worldwide.
Meanwhile, China has come up with a different vision of Web 3.0, including a tightly controlled and state-directed setup of the blockchain. The Chinese government promotes a specific type of Web 3.0 with a combination of centralized and decentralized functionality.
A good example is the sovereignty of China digital yuan (e-CNY) which is blockchain-based. The digital currency was developed with the aim of advancing the growth of China’s digital economy, improving transaction efficiency, combating illicit activities, and facilitating online payments.
While the digital yuan can provide a high degree of financial inclusion for users, using fintech to reduce the cost of providing financial services, the technology is highly centralized, with the country’s central bank controlling all aspects.
The Chinese government has also endorsed blockchain technology and invested significantly in its development, although it has imposed a crypto ban. In September 2021, China made headlines around the world by prohibits all cryptocurrency transactions reduce financial crime and prevent economic instability.
While cryptocurrencies have been banned in China, companies working in Web 3.0, including DeFi and NFT, are not banned outright in the country. A new class of Web 3.0 native companies has emerged in various sectors of the economy, including social media, games, and extended reality, such as metaverses.
Still bullish on blockchain technology, the country has implemented a decentralized Web 3.0 infrastructure which is expected to be the next big tech goal for the country. Earlier this year, Yao Qian, director of the Science and Technology Supervision Office of the China Securities Regulatory Commission, endorsed Web 3.0 as the key to the the future of chinese internet.
To accelerate the development of its version of Web 3.0, China’s state-backed Blockchain Service Network (BSN) will launch its first major international product in August this year. New unencrypted blockchainâBSN Spartan Networkâwill facilitate the deployment of blockchain technology for businesses in international markets and will not involve cryptocurrencies such as bitcoin or ethereum.
BSN was founded by Red Date Technology, headquartered in Hong Kong, and supported by the State Information Center (SIC) under the National Development and Reform Commission (NDRC) of China, as well as China Mobile, a telecommunications company owned by the state.
Intended for companies operating a cloud computing infrastructure, BSN presents itself as a one stop shop to deploy blockchain applications in the cloud, a typically costly and time-consuming process. Another benefit is that applications built through the BSN infrastructure would be interoperable as the company links different blockchains and protocols.
Acknowledging the challenge of going global with the support of the Chinese government, Red Date Technology CEO Yifan He said that the international version of the platform will be open-sourceallowing public domain participants to inspect the code for any potential backdoors.
Unlike “traditional” blockchains which are decentralized and transparent, most blockchains in China are consortium blockchainsalso known as authorized blockchains, which are centrally controlled and are able to limit who can participate in the network. Although ambitious and with government support, it remains to be seen whether China’s vision of Web 3.0 will be universally used and accepted.