The evolution of the internet depends on the advancement of the technologies that power it. The early days of the World Wide Web, or Web1, were characterized by static web pages, and digital identity was limited to usernames, passwords, and simple profile pages. In Web2, where social media and user-generated content thrive, tech giants like Facebook and Google came to dominate the digital landscape with their massive user bases, data mining, and targeted advertising.
As more people interact with Web2 with content creation and sharing, the more money these tech giants make. What do tech giants sell? Digital identities, which comprises all the data, behavior, personal information, transactions, and contributions that each individual consumer creates on the internet. Meanwhile, for businesses, conversion rates have been dropping due to consumer “ad blindness” and bots.
In comes Web3, a new type of internet that is built on a technology called blockchain. To interact in this New Internet, individuals will have Web3 IDs, a form of digital identity that remains in their control. This Web3 ID enhances privacy, is portable between systems, and allows people to carry their reputation and interactions seamlessly across the internet.
Web3 ID is built on the concept of self-sovereign identity—the notion that individuals are empowered to control their personal information and identity data. Imagine being able to prove age without revealing a birthdate, for example. A user can transact with anyone else on the New Internet without revealing personal identity attributes about themselves—unless they want to. Even businesses have Web3 IDs, which they can use to interact with other businesses in this ecosystem. Ultimately, this concept aligns with the principles of privacy, security, and user empowerment in the digital age, allowing everyone to navigate online interactions with greater autonomy and trust.
Utilizing Web3 IDs instead of the current model allows businesses to build trust with their customers, which leads to higher loyalty. Trust also brings in new customers, as permissioned content that individuals share will generate higher conversion rates. Furthermore, by not having to store customer data, businesses can cut down on security risks and the associated cost of data breaches.
Because businesses can have Web3 IDs as well, it allows them to monetize their digital assets after the initial sale and enables them to interact with one another in a secure manner. With the use of verifiable credentials, which show proof of something like a business license or insurance, businesses can simplify many of their contracting and supply chain processes. They can issue credentials in the form of loyalty programs, discounts, and tickets to their customers and employment credentials to their personnel. The ways that Web3 ID can benefit businesses and their customers are endless.
One of the key differentiators between Web3 and its predecessors is that its data is not managed on one centralized service or system, such as Amazon servers. This is why we hear terms like “decentralized” and “distributed.”
Digital information is like pieces of a puzzle. In the early Web, the completed puzzle is stored in servers. If someone hacks the server, they get all the pieces to the puzzle, and the owner of the puzzle has no control over who can see, use, or sell their puzzle. Whoever stored a copy of the puzzle could sell it to others who could exploit the complete data for any purpose, including unethical activity, with no gain to the original owner. Storing whole puzzles is both a security risk for the business and requires a large infrastructure to hold all that data.
In Web3, however, the puzzle pieces are scattered across different servers or computers. Only the owner of the puzzle has the key to collect the pieces. The owner can share the key to reveal parts or all of the puzzle, which means that the owner has control over it at all times.
As noted above, Web3 has a host of benefits and advantages for all stakeholders.
All of this is powered by Web3 IDs. The idea that users can remain relatively anonymous, while businesses can see enough detailed behavior habits to personalize their experience, is the essence of the New Internet.
With Web3 ID comes the ability for individuals (and brands) to truly own their data and any content that they create, be it behavioral data on a web site or a photo they post to share with family. Code contracts, commonly known as smart contracts, are a type of self-executing agreement that automatically performs and enforces the terms of the contract when certain pre-defined conditions are met. They are secure, transparent, and immutable.
Using these protocols allows all creators to prove ownership and provenance of the content they share, whether they are individuals or businesses. Royalty payments can be built into the contract, so that any time someone uses or sells that content, the original owner continues to derive value from it. An example is re-selling books, where the publisher continues to earn royalties each time the book is re-sold. This is a capability that became truly viable with Web3 technologies. Web3 and Web3 ID work together to ensure the ownership and attribution of digital assets, to enforce coded agreements such as payments, and to prevent fraud.
Web3 promises a new paradigm of decentralized, peer-to-peer networks and a reimagined digital economy. Digital identity, or Web3 ID, is the representation of an individual in this New Internet, including everything from personal data to content ownership. Web3 ID plays a crucial role in the effectiveness of the Web3 ecosystem. Both individuals and businesses can benefit from a transition into Web3 by leveraging the applications and tools available today and in the future.