This Is What Content Creators and Entrepreneurs Need to Know About Web3 When it comes to building online services, many individuals have forgotten that there is an alternative to centralized platforms.
By Nicholas Resendez Edited by Amanda Breen
Opinions expressed by Entrepreneur contributors are their own.
Creator economies and NFTs are huge human-potential unlockers. It doesn't matter whether some assets are in a short-term bubble or not; we're on an inexorable path toward individuals over institutions.
As more and more individuals gain control over their own economic well-being and the potential to generate riches, we're on the verge of a creative explosion. Individuals will be able to develop and scale increasingly complicated initiatives and businesses with the help of powerful technical and financial instruments. Within the next two decades, we'll see numerous publicly traded companies with just one full-time employee, the founder, making billions of dollars in profits.
Those who go it alone or let the market determine the value of their skills are beginning to make excellent livings as part of the creator economy. It's becoming easier for people to make a living doing what they're good at because of the globalization of the talent market.
Earlier web iterations merge for more opportunity
Web1 was all about decentralized and community-governed open protocols. There was a lot of value generated by the network's users and developers. The Web2 era was all about centralized, corporate-run services. A small number of corporations, such as Google, Apple, Amazon and Facebook, reaped the bulk of the benefits from user data and content. As we enter the Web3 age, the decentralized, community-governed philosophy of Web1 is merged with the enhanced, modern capabilities of Web2 to create a new paradigm for the internet. Web3 is a token-based internet that is controlled by and built by its users.
The life cycle of a centralized platform is predictable. First, it does everything it can to attract users and third-party complements like developers, producers and companies. This is necessary to increase the power of its collective influence. A platform's control over users and third parties expands steadily as the adoption S-curve increases. S-curve relationships evolve from positive to negative sum, and in order to keep expanding, the platform must get data from its customers and compete with (former) partners for that data.
There is a sense of bait-and-switch for third parties as the move from collaboration to competition occurs. Entrepreneurs, developers and investors who have made it in the business know better than to rely on centralized platforms for their work. Thus, new ideas have been repressed. Decentralization of ownership and control is a hallmark of the Web3. Non-fungible tokens (NFTs) let users and developers own bits of internet services. The capacity to own a piece of the internet is granted to users through the usage of tokens.
Related: NFTs: The New Bedrock Of The Virtual Economy
Users can own a piece of the internet
It is possible to own anything you can think of in the form of NFTs — from art to code to music to gaming items to access cards. NFTs are built on top of blockchains, a decentralized global computer that is owned and operated by its users. Everyone has the ability to use blockchains, but no one person solely owns or controls the blockchain; it's distributed.
We can use Ethereum as an example. Ether (ETH) is the system's currency, used to reward the actual machines that power it. The native currency of the system, such as NFT purchases, is ETH. Fungible tokens and non-fungible tokens can be obtained in a variety of ways. If you don't want to pay for them, there are ways to earn them such as doing tasks on freelance sites. Early adopters of Uniswap's governance tokens were famously given a 15% airdrop. In Web3, community grants like this are becoming more prevalent as a method to generate goodwill and encourage adoption of these new technologies.
Tokens can also be earned through creative and entrepreneurial endeavors. It is estimated that people are making around $100 million in ETH every day by selling NFTs. There is a shared aim for network participants to work toward, which is to increase network size and token value. Other crypto participants are looking towards decentralized finance (DeFi), to earn passive income through staking their crypto coins and earning rewards based on locking their coins in protocols like liquidity mining and crypto farming.
For instance, Marco Di Maggio, Harvard Business School professor and advisor of Sperax, notes how stablecoins in DeFi can be algorithmic and earn yield in a safe way. "The Sperax protocol allows exactly for that dynamic…allows for a starting point where most of it 95 percent is collateralized and then as the scale goes up you are going to end up being more and more algorithmic over time." He goes on to explain how crypto users can use Sperax as an arbitrage opportunity to keep the stablecoin at a tight peg. These are powerful concepts that crypto users utilize every day, all thanks to Web3.
Centralized networks have a fundamental flaw: Value is concentrated in the hands of a single corporation, which leads to conflict with its own customers and partners. In the absence of Web3, consumers and developers were forced to make a trade-off between Web1's restricted capabilities and Web2's corporate, central paradigm.
Related: Users Need a Strict, Impartial and Godless Search Algorithm
Moving toward more value
It's possible to blend the best characteristics of earlier periods with Web3. This movement is only getting started, so now is an excellent moment to engage with it. Because of these radical technologies replacing Web1 and Web2 protocols, events in our everyday lives are shifting. Meetings and administrative expenditures will become increasingly visible and unneeded as this software becomes more frictionless. When humans do interact with each other to develop something outside of the usual framework of a corporation, the blockchain opens up new options for cutting transaction costs.
There isn't a magic bullet for the internet's ills, and decentralized networks aren't there. But they do provide an excellent alternative. As another example, have a look at network governance. Many crucial governance choices are now made by anonymous groups of online members all sharing the same vision, including how material is sorted and filtered, which users get promoted and which ones get banned. When it comes to decentralized autonomous organizations' (DAOs) governance, these decisions are decided by the community through open and transparent processes. Democracies aren't flawless, as we've seen in the real world, but they're a lot better than the alternatives.
Related: Company With No CEO, Employees or Mission May Raise $200 Million
When it comes to building online services, many individuals have forgotten that there is an alternative to centralized platforms. Third-party developers, producers and enterprises benefit from decentralized autonomous organizations (DAOs) because they enable the creation of community-owned networks. In the early days of the internet, we saw the benefits of decentralized systems. Perhaps we'll see it again in the future.
