The advent of Web3 has ushered in a new era of technological innovations and possibilities. Building upon the foundations of Web1 and Web2, Web3 introduces several transformative concepts. In this article, Kyanon Digital will help you explore Web3 and its great potential to revolutionize the virtual world.
1. Decentralized governance
As opposed to the current Web2, Web3 envisions a decentralized and user-centric internet that aims to promote privacy, empower individuals with decentralized decision-making, and drive the expansion of non-fungible token economy.
1.1. Promote privacy
Web3 utilizes distributed ledger technology, commonly known as blockchain, to create a decentralized governance system, thus eliminating intermediaries of our online experiences. This means internet users no longer need to expose their data to intermediaries, such as financial institutions, payment processors, data aggregators, etc.
As stated in an NPR article:
“In a Web3 world, people control their own data and bounce around from social media to email to shopping using a single personalized account, creating a public record on the blockchain of all of that activity.”
Thus, Web3 is poised to safeguard user data and enhance privacy in cyberspace.
1.2. Decentralized decision-making
Decentralized Autonomous Organizations (DAOs) are an integral part of Web3. They leverage blockchain technology and smart contracts to facilitate transparent, democratic decision-making and autonomous operations without the need for traditional hierarchical management.
In a DAO, decision-making power is distributed among its members. These decisions can encompass various aspects, such as project funding, resource allocation, protocol upgrades, and even the direction and strategy of the organization itself. The decentralized nature of DAOs ensures that no single entity or authority can unilaterally control or manipulate the decision-making process.
A crucial aspect of DAOs is their financial autonomy. DAOs often operate with their native digital currencies or tokens, enabling financial transactions and value exchange within the organization and its ecosystem. Members can contribute funds to the DAO and receive proportional voting rights or rewards based on their contributions. This financial autonomy eliminates the need for intermediaries, such as banks or venture capitalists, and enables direct peer-to-peer interactions and value distribution.
DAOs have found applications across various domains, including decentralized finance (DeFi), decentralized governance of blockchain protocols, and community-driven projects. They provide a framework for collective decision-making, enabling stakeholders to actively participate in shaping the future and direction of projects or communities. However, it is important to note that DAOs are still a relatively new and evolving concept, facing challenges such as scalability, security vulnerabilities, and legal considerations.
1.3. Non-fungible token (NFT) economy
Operating on Web3 principles that leverage blockchain technology and smart contracts, the NFT economy has witnessed tremendous hype in recent years. NFTs are unique digital assets that can represent ownership or proof of authenticity for various types of digital and physical items. This has revolutionized the art world, gaming industry, and beyond. NFTs enable artists, creators, and collectors to tokenize and trade digital assets, including artwork, music, virtual real estate, and more. The NFT economy provides new revenue streams for creators, empowers artists with direct monetization opportunities, and offers collectors verifiable ownership of digital assets through blockchain-based provenance. Some of the highest-priced NFTs ever sold are The Merge at $91.8 million and Everydays: The First 5000 Days at $69.3 million.
Based on data compiled by NFTGo, the combined value of all collections listed on the platform reached its highest point in March 2022, with a market capitalization of $35 billion. However, the year-end number stood at $21 billion, indicating a decrease of 40%. Despite a slowdown in market momentum towards the end of 2022, the NFT market has experienced significant growth since the beginning of 2021, when the market capitalization was a mere $91 million. Given the concerns surrounding cybersecurity, crypto volatility, and market hype, the NFT economy is still expected to remain vibrant with much-needed efforts for a safer and more sustainable trading environment.
NFT market capitalization and trading volume on NFTGo Dec 2021 – Dec 2022
2. The integration of artificial intelligence (AI) and machine learning (ML) into Web3
As mentioned above, Web3 has many great potential abilities, especially in driving the NFT market. However, concerns exist, and AI and ML have come to play their role.
2.1. Enhanced data analysis
Sentiment analysis using AI and ML can be employed to analyze social media posts, forums, or other online discussions within the Web3 ecosystem. The overall sentiment (positive, negative, or neutral) towards specific cryptocurrencies, projects, or trends can be determined.
Besides, AI and ML models can be trained using historical price data and other relevant factors to predict market trends within the Web3 ecosystem. These models can analyze patterns, indicators, and market signals to provide insights and forecasts on the price movements of cryptocurrencies or NFT assets. Such analysis and predictions can assist traders, investors, and market participants in making informed trading decisions.
2.2. Fraud detection
AI and ML algorithms can analyze various data points, including transaction history, user behavior, network activity, and other relevant factors, to identify anomalies or unusual patterns. These models learn from normal behavior and can detect deviations that may indicate fraudulent activities or security breaches. These applications of AI and ML could be powerful tools to combat misleading behaviors in the NFT market, such as wash trading. This practice involves people repeatedly selling and buying their own NFTs in order to inflate their NFT prices.
Hopefully, the article has provided a useful overview of Web3 and its great potential. Kyanon Digital is a leading provider of AI and ML consulting services and solutions that strengthen businesses in their competitive landscape. If you want to leverage AI and ML for your business, contact us now for expert advice.