Wiser! #52 (Premium): Part 2 of the Web3 Series looks at the role of nascent decentralised technologies defining the next iteration of the Internet economy.
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DAOs, DApps and DeFi
Web3: Power to the People
In the vernacular of Web3, companies will be decentralised autonomous operations, communities will be tokenised, identity will be confirmed through your Web3 wallet, payments will be in cryptocurrency and digital assets will be minted as NFTs.
Say What!? If this sounds confusing, hang in there. I'm going to try and make sense of it for you. Because the way to think about Web3 is that it is the rebadging of the crypto economy. (BTW, remember that this is Part 2. Part 1 is here.)
To start with some definitions:
DeFi: short for Decentralised Finance, DeFi is an umbrella term for peer-to-peer financial services on public blockchains, primarily Ethereum.
DApps: DApps are decentralized apps. They are like normal apps, and offer similar functions, but the key difference is that they are run on blockchain networks.
DAOs: Decentralised Autonomous Organisations are companies that are run by computer code to operate autonomously. In the same way that a vending machine can sell you stuff, take your money and keep count of its inventory, DAOs are organisations that operate without (much) human intervention.
Tokenisation: A token is a piece of data that stands in for another, more valuable piece of information. Tokens have virtually no value on their own and are only useful because they represent something bigger (think poker chips in a casino).
NFTs: Non-fungible tokens are unique records of ownership and provenance to digital assets that are stored on a blockchain.
Blockchain: Blockchain is the underlyign technology to Bitcoin. It is a unique way of storing data in an open and transparent mechanism that is secured through cryptography.
The core narrative for Web3 is that this represents the next phase of the internet. Some even go as far as to say that Web3 will reshape many aspects of society. Meanwhile, others like Elon Musk thinks “Web3 is BS”.
I’m not with Elon on this and watching closely what Tim O´Reilly has to say (O´Reilly is the guy who coined the term "Web 2.0").
In a recent post, O´Reilly wrote this...
Whilst I’m guarded about claims of a re-engineered social cohesion and redefining capitalism, to me the fundamentals of Web3 are already in play. They are already demonstrating the promise of new ways of doing things that will impact many aspects of life as we know it today.
At the most basic level, Web3 refers to a decentralized online ecosystem based on the blockchain. Platforms and apps built on Web3 won’t be owned by a central gatekeeper, but rather by users, who will earn their ownership stake by helping to develop and maintain those services.
