User data and the Internet companies that monetize that data are transforming the global economy. As a recent Harvard Business Review article observes, rather than dominating individual industries, platform companies like Facebook, Google and Twitter use “competitive bottlenecks” to aggregate and harvest their users’ personal data. Acting as gatekeepers across a range of industries, these internet giants are now taxing and mediating the creation of value in the digital economy.
Fortunately, the Internet story does not end there. Beyond innovation bottlenecks imposed by entrenched data monopolies, new tools are emerging around Internet 3.0 that could allow people to own their data. Where Internet 1.0 introduces a new global platform for digital consumption, and Web 2.0 activated social networks and user comments, Internet 3.0 represents the rise of a distributed “smart” web rooted in blockchain technologies.
First invented in 2014 by Gavin Wood (co-founder of the Ethereum blockchain), “Web 3.0” is envisioned as an open and decentralized version of the Internet. Proponents of Web 3.0 often describe it as a “trustless” Internet, free from the domination of a handful of large corporations. The hope is that distributed ledger technologies (DLT) and blockchain storage will drive a data revolution.
Of course, not everyone likes the idea of Web 3.0. Last year, Twitter founder Jack Dorsey criticized the enthusiasm surrounding Web 3.0, suggesting that the real power brokers in the space are actually venture capitalists. Tech industry analysts were quick to respond that platform business models like Twitter and Facebook are precisely the type of business models that Web 3.0 companies are now looking to replace.
Most of the internet applications we use today are centralized, meaning they are owned and monetized by a very small number of platform companies. For example, when we use a cloud-based service like Google Docs, we explicitly give Google permission to access all of the information in our documents in order to monetize that information. For many critics of this model, Web 3.0 represents a different type of Internet. Rather than all users being connected to a central network or “server,” data could potentially be stored and managed locally, in a highly distributed data ecosystem.
One company that exemplifies the kinds of new tools emerging with Web 3.0 is US-based InfStones. Working as a bridge between blockchain technologies, InfStones simplifies the process of building, scaling, and securing decentralized web applications (DApps). By providing an API gateway and node-based infrastructure, InfStones technology supports tens of thousands of nodes on over 60 blockchain protocols. Already working with top names in the industry like Binance, Polygon, Circle, and Chainlink, InfStones recently closed a $66 million funding round led by SoftBank Vision Fund 2 and GGV Capital.
In fact, there is a wide range of entrepreneurial start-ups in the United States and around the world working to make Web 3.0 a reality. Venture capital firm Andreessen Horowitz (also known as A16z) is leading the financial effort to develop this new industry. The Silicon Valley-based VC has invested billions in blockchain companies to date and plans to raise $3.5 billion for its latest cryptocurrency venture fund. The company is also launching an industrial research lab that aims to solve major problems in the Web 3.0 space.
Could Web 3.0 enable the emergence of a highly distributed data infrastructure in which users own and control their own data? Many tech developers seem to think so. But doubts remain. Media coverage on cryptocurrencies and the blockchain space as a whole has deteriorated. Worries about a looming consumer recession are making tech companies much less attractive to investors. Nevertheless, technology companies are still among the wealthiest companies in the world. And many tech investors remain eager to fund new innovations.
Beyond Web 2.0, changes will come. Bridging technology and privacy, a truly distributed Internet could one day allow users to manage and monetize their personal data, while accessing an ocean of digital services through public blockchains. Maybe this third generation Internet services will be the catalyst for a new Internet, connecting data-driven technologies such as artificial intelligence and machine learning to fully distributed data ecosystems.
Of course, there is still a long way to go to develop a truly decentralized Internet. The architecture requirements for Web 3.0 alone are much more complex than the current Web 2.0 architecture. The number of nodes involved in developing a truly decentralized Web 3.0 infrastructure is difficult to fully appreciate. Nevertheless, VC funding for blockchain startups is expanding. In fact, venture capital funding hit $25.2 billion last year, up 713% from $3.1 billion in 2020. That’s good reason for hope.