Web3.0: solving the development bottleneck impacting the digital economy
In this guest post co-founder of Conflux Network, YuanJie Zhang details the obstacles ahead of Web3 growth and its future potential
Developed through the principles of decentralisation, user ownership and enhancing the online community experience, Web3 sets a new paradigm for revolutionising the internet. For decades online users have faced universal challenges underpinned by centralised systems and regulations set by powerful internet giants.
Web3 technology has emerged to challenge the status quo through the innovative capabilities of blockchain technology. Its vast potential creates a brand new opportunity for users to truly own their data and break free from the development bottleneck of web2.
No matter where you are situated in the world, universal developmental challenges impact the digital economy. Large technologies companies, including Apple, Facebook and Tencent, have capitalised on their power and acted as corporate gatekeepers against start-ups trying to introduce new technologies to users. For example, just last month, Coinbase revealed that Apple is demanding a 30% cut of NFT gas fees before allowing the digital wallet update. There is also the issue of whether users are free to interact through their own interface, and this major challenge affects all digital start-ups regardless of whether they’re Web3, NFTs or AI.
Despite such obstacles, blockchain technology provides a clear path to break free from centralised institutions that inhibit full data ownership. Web2’s strength lies with the internet giants to grant permissions and the use of their APIs. However, in Web3, if a user owns an NFT in Aetherium, Polygon or a startup software such as Conflux, all developers can read the data from the full nodes of this blockchain. This level of data ownership transfers power from the company level to the individual level. It mitigates the need for Google ads and brand advertisements, creating a whole new internet ecosystem which we like to refer to as the Web3 spirit.
Blockchain gaming and the crypto winter
Blockchain technology used by crypto startups has become a double-edged sword for the gaming industry. There are two main factors to consider where crypto has helped the gaming industry to grow but also contain its development in the bear markets. The first is utilising crypto tokens within game systems, as demonstrated by Five Projects, who adopt this approach to engage new users and encourage the proliferation of current user engagement. Within boom markets, as the crypto goes up, the NFT assets of the game increase, creating a culture of early adopters who feel invested in the community and growth of the game system. However, if the user base is only playing the game to win crypto tokens, these users will drop off significantly when the price of these crypto tokens decrease.
There needs to be a fundamental shift from playing-to-earn to focusing on the quality of the game. Historically, developers focused more on tokens and play-to-earn models rather than on simply making good games. While this may seem attractive initially, it ultimately ends up being the bottom line of why many games won’t succeed. You want to attract people who genuinely love your game as your core user base who will evangelise the game and grow the fan base further . This is a crucial first step that will determine the growth of your community and define whether you sink or swim in the gaming landscape.
De-mystifying Web 3.0
One of the most significant barriers Web3 startups currently face is breaking the stigma around blockchain and encouraging people to recognise the massive potential of emerging technologies. This starts by addressing the payment infrastructure that has traditionally acted as a barrier to access. There needs to be a clear path to managing and segregating accounts into several addresses in a way that feels accessible and safe to new users. As the infrastructure gradually becomes more mature, it mitigates that entry barrier to Web3.
Additionally, the Web3 ecosystem must move past the financialisaton of every innovation. Only some people come to the internet to invest or to speculate. Pushing this rhetoric undermines the power of the technology and its potential outside of Bitcoin theory and price. For Web3 to succeed, it needs to understand audience motivations for using the internet, which extend outside trading purposes. Recent activity by corporate giant Starbucks and social platform Reddit demonstrates the use of NFTs to increase customer loyalty and build a community based on the love of a digital product. These types of mainstream interventions offer a solid direction towards mass adoption. Once the barrier to entry is broken and the technology is demystified, users become exposed to a level of intrigue and excitement about the ownership of assets which fuels the magic of Web3.
Blockchain is crucial to digital services and digital ownership. Whether you’re building a virtual model or establishing AI architecture, blockchain technology is the economic backbone of it. As Web3 continues to offer new possibilities to the digital environment, game developers should pivot focus from earned value to building social innovation, which allows users to make friends and be part of a community. The social aspect of the game needs to be a higher priority – this is where games will honour the essence of Web3, grow their user base and break free from developmental challenges in 2023.