- Michael Jones
What is Web 3.0?
You may have heard about Web 3.0 (or web3) recently and wondered, what is Web 3.0 and how is it different from Web 1.0 and Web 2.0?
A broad definition of Web 1.0 is simply the initial iteration of the World Wide Web in the late 1980’s and early 1990’s. “Web 1.0 is the term used for the earliest version of the Internet as it emerged from its origins with Defense Advanced Research Projects Agency (DARPA),” writes Kuntal Chakraborty for Techopedia. “Experts refer to it as the ‘read-only’ web—a web that was not interactive in any significant sense.”
From those early static web pages, a platform model of computing soon evolved that would become Web 2.0 or the ‘social web.’ Here, interaction with growing web applications and platforms drove e-commerce and the expansion of the Internet, allowing large providers to aggregate and control much of the shared data. This is the Internet we know today.
“Web 2.0’s business model relies on user participation to create fresh content and profile data to be sold to third parties for marketing purposes,” writes Charles Silver in a recent Forbes article. “Indeed, the internet has become a massive app store, dominated by centralized apps from Google, Facebook and Amazon, where everyone is trying to build an audience, collect data and monetize that data through targeted advertising. In my opinion, the centralization and exploitation of data, and the use of it without users’ meaningful consent, is built into Web 2.0’s business model.”
The dream of Web 3.0, however, is to break the centralization of information and democratize the Internet more to the vision of its earliest founders. “Web3, ” claims Chris Dixon from Andreesen Horowitz in a recent article in The Economist, “combines the decentralized, community-governed ethos of web1 with the advanced, modern functionality of web2.”
The Web 3.0 “will be based on the convergence of emerging technologies like blockchain, artificial intelligence (AI), machine learning and augmented reality,” note Neeti Aggarwal and Dandreb Salangsang in The Asian Banker. “It will be characterized by decentralized data, a more transparent and secure environment, machine cognitive intelligence and three-dimensional design.”
“The rise of technologies such as distributed ledgers and storage on blockchain will allow for data decentralization and create a transparent and secure environment, overtaking Web 2.0’s centralization, surveillance and exploitative advertising,” continues Silver. “Indeed, one of the most significant implications of decentralization and blockchain technology is in the area of data ownership and compensation… Web 3.0 will bring us a fairer internet by enabling the individual to be a sovereign.”
Web 3.0 isn’t just championed by iconoclasts and trustbusters—Alphabet CEO, Sundar Pichai, recently shared on a quarterly earnings call, “On Web3, we are definitely looking at blockchain, and such an interesting and powerful technology with broad applications so much broader again than any one application. So as a company, we are looking at how we might contribute to the ecosystem and add value.”
As such, even the biggest players in Web 2.0 are looking to adopt Web 3.0 technologies and strategies as they continue their evolution.
Financial Services on Web 3.0
“Think about all the financial instruments we use today—currency, loans, insurance, bonds, credit cards, stocks, futures, options, interest bearing accounts—being converted to a new model,” asks Thomson Reuters. “One that doesn’t require a traditional banking institution.”
For financial service organizations, adopting emerging technologies has historically been a slow, prove-it-before-you-move-it endeavor. With the boom in fintech the past ten years, however, financial service organizations from accounting firms, to banks, credit unions, and credit-card companies, to finance companies and managers, insurance companies, investment funds, notaries, payment providers, stock brokerages, and conglomerates have all moved faster to adopt new technologies and gain a competitive advantage in serving customers.
“Fintech refers to the latest software developments in the financial services sector,” explains a recent Finextra article. “Using technologies such as artificial intelligence, biometrics, payments, crypto and others, banks are increasingly able to offer their customers more convenient, streamlined services.”
With Web 3.0, however, it may be a case of many financial institutions pushed into new technologies by customers, rather than pulled in the hunt for larger margins and higher profits, as what sets web3 apart from web2 is ownership and control of data.
Already, “a few banks are using blockchain to power real-time transactions,” writes Emily McCormick for Bank Director. Meanwhile, “Fintechs competing with banks are also taking advantage of the disintermediation trends promised by a Web3 economy.”
Today, cryptocurrencies and decentralized finance (DeFi) platforms challenge traditional banking for services and control of consumer monetary systems. But while cryptocurrencies provide an exciting alternative to the constraints of fractional-reserve banking, financial services providers need not abandon central bank currencies to adopt Web 3.0 strategies. The distributed ledger technology of blockchains can also support financial service applications above-and-beyond cryptocurrencies.
Future Technologies for Financial Services
As most financial service providers engage Web 2.0 technologies, the opportunity for early adopters to leap ahead to Web 3.0 becomes clear.
“Over the next decade, we believe blockchain will become the dominant operating infrastructure of the financial system and look forward to helping our network of regulated banks, brokers and fintechs develop the competency and dexterity to be early adopters of this transformational technology,” said Ryan Zacharia, general partner at JAM Special Opportunity Ventures (JSOV), an affiliate of Jacobs Asset Management (JAM) and FINTOP Capital.
“Unlike the cryptocurrency market, for example—which is built on a digitally native system—Vikram Pandit, CEO of The Orogen Group and former Citigroup Inc. CEO, said that innovations in the traditional banking sector are based on applying new technology to improve old architecture, citing the use of distributed ledger technology in cross-border payments as an example,” notes a recent S&P Global Market Intelligence report.
Payments are another area ready for Web 3.0 transformation. “In the past, when you transferred money to someone online, you needed a trusted service like PayPal or a bank to make the transfer,” cites an Algorand post. “With blockchain networks, you can now transfer money directly to anyone with an Internet connection on a peer-to-peer basis.”
Further, securing digital transactions and the digital chain-of-custody are critical for financial organizations. Even as some financial assets move to the metaverse—NFTs are an early example—a technology that immutably tracks and reports the provenance of assets is necessary to ensure ownership and enforce agreements across transactions and holdings.
“Issues of trust, transparency, privacy, and user control lie at the heart of Web 3.0,” writes MakerDAO, and “on the back of the blockchain promises to shift the balance of power back in favor of the user.”
Blockchain, built for zero-trust environments, is the ideal architecture for tracking and storing digital transactions and documentation, and another way Web 3.0 technologies support evolving financial services.
ZorroSign and Web 3.0
And here is where ZorroSign shines! We have built our digital platform from the ground up using blockchain technology. Launched with Hyperledger Fabric, our multi-chain platform now supports the public Provenance Blockchain as well, giving our users an entirely new world of decentralized digital transactions.
At ZorroSign, we deliver digital signature solutions built on blockchain for greater privacy and security.
Our Web 3.0 technology platform also provides identity-as-a-service (IDaaS) capabilities through a patented Z-Forensics token plus fraud prevention, user authentication, and document verification. Web 3.0 features such as artificial intelligence (AI) and machine learning (ML) allow us to automate form completion for digital documents, and can improve regulatory compliance across global standards for legally enforceable digital signatures.
Paired with Provenance Blockchain—which reduces the need for third-party intermediation, drastically reducing costs and freeing up capital in financial transactions—ZorroSign’s platform promotes greater transparency and liquidity for financial service organizations, and allows for new kinds of financial engineering and business opportunities.
To learn more about Web 3.0 and how ZorroSign can help your financial service organization meet the future needs of your customers, contact us today!