Is Global Web3 Integration Imminent or Will Web2 Dominate Forever?

The late '90s marked an exhilarating period for the internet, heralding the dawn of the information age and a new era in technology and communication.

As the internet emerged, its potential applications were still being discovered, opening up a world of possibilities.

This dynamic period of digital evolution revolutionised our lives, transforming how we shop, consume content, communicate, and collaborate.

The current internet landscape, commonly known as Web2, has fundamentally transformed global communication, commerce, and entertainment.

Platforms like Meta, YouTube, and Amazon have become integral to our daily lives, enabling seamless content creation, sharing, and connectivity.

However, we find ourselves at a similar inflection point with the advent of Web3, a new internet paradigm promising even more exciting prospects for digital communication and collaboration.

Alas, much like the internet in its early days, Web3 is still in its nascent stages, grappling with fundamental challenges such as ease of use and infrastructure capabilities.

Without significant advancements in these areas, Web3 risks falling short of its transformative potential.

Significant Challenges Plague Web3

A16z forecasts that Web3 will reach one billion active users by 2031, mirroring the internet's 15-year trajectory to widespread adoption.

While it is true that Web3 holds immense promise, it remains in its early stages, encountering significant challenges.

Scalability is a major obstacle, as blockchain networks struggle to process large volumes of transactions efficiently.

CEO of GoMining, Mark Zalan, noted:

“Scalability is paramount for the widespread adoption of Web3 applications. Ensuring efficient and cost-effective transactions is imperative to democratise access to this technology."

User adoption is also hindered by the complexity of the technology, making it difficult for newcomers to engage.

Moreover, regulatory frameworks for decentralised applications and digital assets are still evolving, creating uncertainty for businesses and users alike.

A 2022 Harvard Business Review poll highlighted this issue, revealing that nearly 70 percent of respondents—comprising over 50,000 individuals—were unaware of Web3.

Source: Harvard Business Review

Many of Web3's initial issues remain unresolved, and its real-world applications that could benefit everyday users—not just industry enthusiasts—are still limited.

Currently, Web3 is often associated with financial aspects like non-fungible tokens (NFTs), marketplaces, and the metaverse.

As the hype around these elements fades, so does public interest, leading some to question Web3's relevance.

The pace of Web3 adoption is much slower than many industry proponents anticipated.

One major barrier is its complexity, both in terminology and user experience.

Ethereum co-founder Vitalik Buterin himself acknowledges that substantial improvements are needed to make the network more inclusive.

Additionally, Web3's dependence on Web2 infrastructure is more profound than commonly perceived.

The path to mass adoption for Web3 will depend heavily on learning from the successes and failures of previous technological advancements.

Web3 Does Not Appeal to Common Users

Web3's complexity and its failure to resonate with the average user are significant barriers to its growth.

Web3 enthusiasts, who are deeply committed to the technology, often exacerbate the problem.

Consider the simplicity of paying online with a bank card—whether through a payment card or Apple Pay, the process is seamless.

Users either enter a CVV or use facial recognition, and the transaction is complete.

This familiar and straightforward pattern is crucial for end-users.

For example, ChatGPT, despite being a complex AI technology, is accessible because it is presented in a familiar chat format.

Web3, however, lacks this kind of uniformity.

There is no standardised, user-friendly approach, making it difficult for people to engage with it.

Some Web3 advocates argue that simplifying the technology goes against its core principles, but this stance can come across as gatekeeping.

These same enthusiasts push for broader adoption, yet their actions often do not align with their words.

The perceived exclusivity and lack of transparency create significant barriers to wider acceptance.

Moreover, blockchain’s anonymity, while valuable, does not hold much appeal for the average person focused on daily responsibilities.

Security concerns, the risk of scams, and the potential loss of hard-earned money make Web3 unappealing to many.

Effective security cannot thrive under total anonymity, and until Web3 addresses these issues, it will struggle to achieve mainstream acceptance.

Despite Crypto Awareness, Many Unfamiliar with Concept of Web3

In collaboration with YouGov, ConsenSys conducted a global Web3 perception survey spanning 15 countries across all continents.

The survey revealed that 92% of respondents worldwide have heard of cryptocurrency, with the highest awareness in Nigeria, South Africa, and Brazil.

Despite this widespread recognition, only 8% of respondents consider themselves very familiar with the concept of Web3.

This gap highlights a significant disconnect between public understanding of Web3 and its potential to address critical issues such as privacy, identity, and digital ownership on the internet.

Source: ConsenSys' Global Web3 Perception Survey

A noticeable divide emerges when comparing behaviours across different countries.

European nations, along with Japan and South Korea, tend to exhibit greater scepticism toward cryptocurrency, often associating it with scams, money laundering, and speculative activity.

In contrast, countries in Southeast Asia, South America, and Africa generally display more enthusiasm for crypto and Web3.

In these regions, cryptocurrency is often linked to positive concepts such as the future of money, digital ownership, and alternatives to traditional financial systems.

Particularly in countries like Argentina and Nigeria, where local currencies are unstable, crypto is seen as a crucial tool for accessing global capital and protecting against inflation.

Globally, survey respondents show varying levels of familiarity with Web3 concepts.

The most well-known are the Metaverse (36%) and NFTs (34%).

However, Web3 itself remains the least familiar, with only 24% of respondents aware of the concept.

These findings highlight significant disparities in public awareness and understanding of emerging digital technologies.

Source: ConsenSys' Global Web3 Perception Survey

Consensys concluded in their survey:

“The results of the survey have revealed a promising shift in the prevailing attitudes towards a vision of the internet that grants individuals greater control over their shared online data and ensures fairer distribution of profits among creators. However, despite this positive trend, there remains a significant gap between awareness of cryptocurrencies and a practical understanding and utilisation of web3 technologies.”

Interest in Web3 Surged Since 2018

Interestingly, a McKinsey report highlights a notable surge in interest surrounding Web3 elements since 2018.

This growing fascination encompasses various domains, including equity investment, online searches, patent filings, scientific publications, job postings, and media coverage.

The financial-services sector, in particular, has been at the forefront of adopting Web3 technologies, with daily transaction volumes on decentralised-finance (DeFi) exchanges once exceeding $10 billion.

Additionally, increasing concerns about data privacy, platform dominance, and the rising power of tech giants have fuelled discussions about the need for a paradigm shift.

Source: McKinsey Report

Mark Zalan, CEO of GoMining, a company dedicated to democratising Bitcoin mining, offers valuable insights into these limitations:

"While Web2 has undoubtedly revolutionized the way we connect and consume information, it's crucial to acknowledge the power imbalance it has created. Users are often left with little control over their data and limited options when it comes to platform policies."

Web3 is not just the next iteration of the internet; it is a potential catalyst for societal transformation.

By placing power in the hands of users through decentralisation and ownership, Web3 offers a glimpse of a more democratised online landscape.

This shift has the potential to empower individuals and communities, especially those currently left behind by the centralised model.

Furthermore, Web3 technologies like blockchain hold the promise of enhanced transparency and security, tackling longstanding concerns about data privacy and trust in the digital age.

As our lives become increasingly intertwined with online interactions, these advancements hold profound implications for how we navigate the web, conduct business, and connect with each other.

Sarah Garcia, a blockchain technology researcher at MIT, elucidated:

"Web3 embodies a seismic shift towards a more inclusive and user-driven internet. By endowing users with ownership of their data and online identities, Web3 harbors the potential to forge a fairer and more fortified digital ecosystem."

According to "Web3 Statistics: Latest Data & Summary" updated on 23 April 2024, as of 2021, 26% of US adults have adopted blockchain technology, a foundational element of Web3, indicating substantial integration into various aspects of daily life.

This statistic underscores the technology's growing acceptance and the projected expansion of the blockchain market, which is expected to reach $39.7 billion by 2025.

Such growth is pivotal for the advancement of Web3, marking a significant milestone in its development and potential impact on future digital landscapes.

Real-World Use Cases & Making Things Simpler Might Be the Answer

Web3 already boasts numerous real-world applications.

Financial services stand out, encompassing peer-to-peer payments, micro-payments, and decentralised asset trading.

Beyond finance, Web3's influence extends to data storage and sharing, identity management, and the Internet of Things (IoT).

These innovations are driven by a user-incentivised framework that upholds the core principles of Web3.

In recent developments, Galxe introduced World ID to bolster human verification within Web3, aligning with its goal of expanding Web3 accessibility and fortifying digital privacy.

Meanwhile, Samsung made a strategic move in April, partnering with the metaverse game Wilder World.

This collaboration aims to integrate Web3 technologies while shielding users from digital asset volatility.

The Web3 landscape is still grappling with making its user experience resonate with everyday users, a challenge that Web2 has already mastered.

It is increasingly crucial for users to interact with Web3 seamlessly and reliably.

To bridge this gap, interfaces must be straightforward and intuitive, enabling users to navigate decentralised apps without lengthy manuals or troubleshooting through Discord and Twitter.

Additionally, companies must develop more practical use cases that make Web3 feel approachable.

Simplifying terminology is a crucial step—moving away from technical jargon like "keys" and "gas fees" can make the technology more inclusive.

In short, avoiding overly technical jargon is essential to prevent confusion and intimidation.

Customisable user experiences, where users can tailor features and settings to their preferences, will also enhance engagement.

While the infrastructure to fully support these improvements is still developing, progress is underway.

Lastly, developers must remain receptive to user feedback, as it provides valuable insights for refining tools and interfaces.

By prioritising ease of use, customisation, and active listening, developers can significantly improve the Web3 experience.

All in all, people seek tangible applications that integrate seamlessly into their daily lives.

Demonstrating genuine simplification and practicality is essential for broader adoption.

Without a commitment to inclusivity and usability, the Web3 community risks stagnation, hindering its potential for widespread growth and success.

Why is Web2 Better than Web3 (For Now)?

While the concept of a user-centric web through Web3 holds immense promise, there are significant obstacles on the horizon.

Achieving true interoperability, the seamless integration of various metaverses and blockchain technologies, remains a paramount challenge.

Without overcoming this hurdle, the full realisation of our vision for Web3 may remain out of reach and Web2 is likely to maintain its dominance for the foreseeable future.

So why is Web2 better than Web3 (for now)?

1) Maturity and Stability-

Established Infrastructure: Web2 has a robust and reliable infrastructure developed over decades. It offers stable and high-performance services that are trusted by billions of users worldwide.

User Familiarity: The vast majority of internet users are accustomed to Web2 interfaces and functionalities. Switching to a new paradigm requires significant learning and adaptation.

2) Scalability-

Efficient Transaction Processing: Web2 platforms can handle massive amounts of data and high transaction volumes with ease. Web3, particularly blockchain networks, struggles with scalability issues, often resulting in slower transactions and higher costs.

3) User Experience-

Ease of Use: Web2 applications are designed with user-friendly interfaces and seamless experiences in mind. In contrast, Web3 platforms are often complex and less intuitive, posing a barrier to widespread adoption.

4) Regulatory Clarity-

Well-Defined Legal Frameworks: Web2 operates within established regulatory frameworks, providing a clear legal environment for businesses and users. Web3 is still navigating regulatory uncertainties, which can deter both companies and users from fully embracing it.

Pitfalls of Global Web3 Integration

1) Scalability Issues-

Limited Throughput: Current blockchain technologies struggle to handle large-scale transaction volumes efficiently. This can lead to network congestion and increased transaction fees.

2) Complexity and Accessibility-

Technical Barriers: The complexity of setting up and using Web3 services, including managing private keys and understanding smart contracts, can be daunting for the average user.

Educational Gap: There is a significant lack of awareness and understanding of Web3 technologies among the general public.

3) Security Concerns-

Vulnerabilities: While blockchain is inherently secure, smart contracts and decentralised applications (dApps) can have vulnerabilities that are exploited by hackers.

Loss of Private Keys: In Web3, users are responsible for their own private keys. Losing a key can mean losing access to all associated assets permanently.

4) Regulatory Uncertainty-

Lack of Clear Guidelines: Governments around the world are still figuring out how to regulate decentralised technologies. This uncertainty can result in inconsistent policies and legal challenges.

Potential for Restrictive Regulations: Some countries might impose strict regulations that could stifle innovation and limit the growth of Web3.

5) Interoperability Issues:

Fragmented Ecosystem: The Web3 landscape is composed of multiple blockchain networks that do not always communicate well with each other. This lack of interoperability can hinder the seamless use of dApps different platforms.

6) Environmental Concerns-

High Energy Consumption: Some blockchain networks, especially those using proof-of-work (PoW) consensus mechanisms, consume significant amounts of energy, raising environmental concerns.

Web3's current limitations and challenges suggest that Web2 will continue to dominate for some time.

Addressing these pitfalls will be crucial for Web3 to achieve broader adoption and realise its full potential.