In the modern retelling of web history, we have now fully entered the third generation of the internet. From decentralized protocols (read-only content and email - web1), to centralized monopolistic platforms (user-generated social content - web2), we are now poised to move towards an era of decentralized blockchain based architectures (creator owned, crypto-based - web3).
With this current narrative, we will wrest power away from a few dominant web2 companies and give control back to the proletariat. The large mass of creators and builders will leverage next generation tools, co-opt themselves into self-governing organizations and participate in this new economy. This will eliminate disproportionate rents levied by large platforms and move us away from the business model of ad-based monetization of user-generated data that has become the hallmark of our modern digital economy.
It is easy to be sceptical about this. There is no shortage of jokes about crypto kitties and meme coins. There are serious questions on the scalability and sustainability of blockchain platforms. Usability by developers is an issue and there is significant confusion on scenarios appropriate for decentralized data and smart contracts. Lastly there is significant regulatory uncertainty.
In India, while the budget imposed a 30% tax on income from virtual assets and there are plans to launch a central bank digital currency, we are still waiting for comprehensive legislation that establishes India’s posture on crypto.
These are very good questions with few answers, highlighting the nascency of the web3 movement. While the sceptics have a point, it would be foolish to underestimate the generational energy, developer focus and venture capital (VC) funding going into web3. It seems very likely that this momentum will fuel the web away from its current avatar into a new paradigm. How fast this will move is anyone’s guess. But, for sure the movement is larger than kids on their parents’ couches trading crypto coins.
India: a billion avatars now
So what does this mean for India? Will we play a dominant role in the creation of this next generation of the Web? One could argue that our approach to web2 was largely passive. We allowed the big tech platforms to dominate our landscape. Search, ecommerce, ride hailing, grocery and social media models all ape western models.
Can we adopt a more active approach to shaping global web3? Will this time be different?