Don’t Let Crypto’s Implosion Stifle Innovation with Web3
by Allie Dietzek, Head of Growth, Siberia
Many leaders across the design, product, and marketing disciplines are trying to wrap their heads around Web3 and understand what it means for their brands.
Some have been reluctant to embrace Web3 due to its connections with cryptocurrency, fearing that troubles for the latter spell doom for the former. But, there are important differences between Web3 and crypto.
At the risk of stating the obvious for those more familiar with the space, a few quick definitions might be helpful here.
Web3 is an evolution of the internet that seeks to promote decentralization, transparency, and user ownership. It can help to think about Web3 as an outcome of our decisions as we build things on the internet rather than as an input.
Cryptocurrency is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it.
A Blockchain (or, blockchain technology) is a digitally distributed, decentralized, public ledger of information and transactions. It is the underpinning of both Web3 and cryptocurrencies, as it is the mechanism that enables many of their fundamental, defining characteristics — like decentralization.
Though both rely on blockchain technology, Web3 and crypto are stuck in a perceived codependent relationship. Removing the association may allow business leaders to view the potential of Web3 from a new perspective and embrace both the technology and the passionate community behind it.
Here are a few of the very real differences between crypto and Web3, and what they mean for designers, product leaders and marketers.
Web3 Isn’t Tied to Crypto’s Destiny
Many brands have gotten swept up into the Web3 space through crypto market hype, and the potential profits that crypto often promises. Cryptocurrency, like any economy, relies heavily on supply and demand. New tokens must prove their value (which can be challenging in a largely unregulated space with relatively low adoption) or create perceived opportunity by painting a vision of the future in which their token is in demand.
As adoption grows, crypto does have the potential to generate meaningful profits, and decentralized currency does have the potential to create seismic shifts across economies and society at large. With thousands of cryptocurrencies out there, who’s to say which of those virtual tokens will be dominant (or even still in existence) years from now? Moreover, the last several months have demonstrated how volatile the crypto market can truly be. The good news is that the price of entry into Web3 doesn’t require a new currency.
Newcomers can shake off that nervous feeling they get when they read a headline about the value of cryptocurrencies tanking. The rise and fall of crypto isn’t linked to the promise of Web3 any more than a newly announced enforcement action against a bank is related to a local infrastructure project, or the price of avocados.
Web3 Is About Decentralization, Innovation and Community – Crypto Is About a New Economy
When we look past the crypto hype, we can recognize the real, proven value of Web3 and the blockchain technology that underpins it: the ability to promote connection, innovation and community-building. Since Web3 is not controlled by any single entity or organization, it promotes connection and innovation because it allows users to interact with each other directly without the need for intermediaries.
Decentralization also encourages community-building. Web3 platforms give users ownership of their data and assets, which creates a shared sense of responsibility for the platform and its success. Many Web3 platforms are governed by their communities, with decisions being made through consensus. This governance structure promotes community-building by giving users a voice in the development and evolution of the platform. Web3 ideas and platforms can thrive irrespective of crypto market performance.
Focusing on Crypto’s Performance Could Cut You Off from Web3’s Diversity and Inclusivity
While crypto has a growing fanbase, it’s hardly universal or accurately reflects our diverse world. Current users are primarily young, white, and male, with women and other demographics vastly underrepresented. Web3 is built around community and the democratization of information, allowing anyone to participate in the platform, regardless of their location or background. Web3, underpinned by blockchain technology, also enables users to access financial services without the need for traditional banking systems. Individual token performance aside, this provides greater financial inclusion for underserved populations, such as those in developing countries or low-income communities.
Lastly, Web3’s governance structure promotes diversity and inclusivity by giving users a voice in the development and evolution of the platform, regardless of their background or level of expertise. Imagine the new and innovative ways that brands could strengthen their relationships with customers by leveraging Web3 technology — particularly when it comes to things like product design and loyalty programs.
By distancing Web3’s potential to create value from products designed to create wealth (crypto), brands will inherently experiment in virtual spaces that welcome a more diverse community.
The Bottom Line
While they may seem like shades of gray to some, the nuances between crypto and Web3 are quite significant in both technical definition and cultural application. Much of what customers already expect and wish for from brands will be made ever more feasible and viable by Web3. Brands that don’t dig into the details now will leave meaningful Web3 innovations off the table and risk irrelevance as this technology continues to proliferate and change.