February 15, 2022
February 15, 2022
Contributor: Jackie Wiles
Web3 won’t overtake Web 2.0 in the enterprise before the end of the decade, but you can start talking today about a world with less authority and more automated business execution.
The term Web3 was popularized by Gavin Wood, co-founder of Ethereum, who argues that centralization is not socially tenable long-term. Also called Web 3 and Web 3.0, Web3 eliminates the need for, and functions of, Web 2.0 central authorities and “gatekeepers,” such as major search engines and social media platforms.
“Web3 innovations will take the internet into new realms and give rise to applications not previously possible,” says Avivah Litan, Distinguished VP Analyst at Gartner. “But Web 2.0 still has advantages in terms of scale, customer service and customer protections. Potential Web3 risks include lack of customer protections, new security threats and a swing back to centralized control, so organizations will want to shore up governance and risk management before replacing Web 2.0 applications.”
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Web3 is attractive because it enables peer-to-peer interactions without centralized platforms and intermediaries.
“The idea behind the Web was to make publishing possible for anyone; the idea in Web 2.0 was that readers should be writers too,” says Whit Andrews, Distinguished VP Analyst at Gartner. “Web3 is intended to give any participant in the web their own autonomous power and control.”
Web3 uses a stack of technologies, based on decentralized blockchains, that enables new business and social models. Users own their data, identity, content and algorithms and participate as “shareholders” by owning the protocol’s tokens or cryptocurrencies. That ownership shifts power and money away from centralized Web 2.0 “gatekeepers,” such as big tech companies and governments.
Tokens and cryptocurrencies power the business models and economics of Web3, which supports new business opportunities in relation to, for example, the monetization of nonfungible tokens (NFTs) in new metaverse applications.
The terms “metaverse” and “Web3” are often conflated, but they actually describe distinct — yet related — concepts. Metaverse denotes an evolving vision of a digitally native world in which we will spend our time working, socializing and engaging in all types of activities. Web3 provides decentralized protocols and a technology stack that can be used to build parts of a metaverse and the new communities and economies that it will enable.
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Existing Web3 applications are limited in enterprises, but public applications are thriving. These include decentralized finance (DeFi), NFTs, play-to-earn games and community-organized decentralized autonomous organizations (DAOs). For example:
Examples of Web3 success in well-established industries are sparse, and large enterprises will likely be slow to cede governance, oversight and control of applications they use in conjunction with other digital ecosystem participants in order to move to Web3. Nevertheless, most organizations will ultimately want to implement applications and processes that benefit from trust-minimized computing and new business models and opportunities that only Web3 promises to enable.
Some Web3-adjacent and evolving value-adding protocols and technologies include:
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Aspect of protocol |
Web 2.0 |
Web3 |
Trust model |
Centralized services, servers and software Trust the companies behind them. |
Decentralized; peer-to-peer; no central authority; no single point of failure Trust is minimized — trust the decentralized protocol. |
Governance |
Power consolidated among digital giants |
Decentralized autonomous organizations (DAOs), where governance is distributed to stakeholders (governance token holders) |
Business model |
Digital giants and service providers own customer data, which is used to earn revenue. |
The blockchain network pays transaction validators for their work. Game theory is employed to maintain transaction integrity. |
Content |
Dynamic, user-generated Source content can be duplicated. |
User-owned and uncoupled from Web 2.0 services |
User participation models |
Free services in exchange for user data Payments made to intermediaries for running services and software |
Users own their data and content, and can monetize it. Payments made directly to blockchain transaction validators |
User interfaces |
Web Social networks Mobile apps |
Decentralized apps (dApps) Centralized marketplaces or services |
User authentication methods |
User IDs Passwords Other authentication |
Private key that unlocks access to owner’s records on a blockchain; the private key can be in a self-hosted wallet or a third-party wallet. |
Financial system |
Centrally managed by central banks and other financial institutions and networks |
Run by smart contracts (basically “if, then else” scripts) and blockchain protocols There is no centralized control and there are no intermediaries to pay. |
Currency |
Centrally managed, government-backed currency (e.g., currency managed by a bank or a stored-value account provider) |
Cryptocurrency built into decentralized blockchain Users act as their own bank, but can delegate to a centralized exchange. |
In short:
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Recommended resources for Gartner clients*:
Top Strategic Technology Trends for 2023
Quick Answer: What Is Web3?
Top Five Reasons CIOs Should Care About Blockchain
Quick Answer: What Is Blockchain?
Quick Answer: How to Protect and Secure the Use and Trading of NFTs
*Note that some documents may not be available to all Gartner clients.