By Daniel Keller, CEO & Co-founder, InFlux Technologies
In the early 2000s, Web2 emerged, offering people more capabilities than its predecessor, Web1. Now, Web3 is ushering in the next evolution of the internet—a version that’s moving away from the centralized control of Web2.
An Overview Of Web3
The term Web3 originates from computer scientist Gavin Wood. Web3 leverages decentralized networks and gives users more control over their data. DePINs (decentralized physical infrastructure networks) provide the crucial physical infrastructure layer for Web3, offering decentralized alternatives to traditional storage, computation and other infrastructure needs. Essentially, with Web3, the internet can become more open than now, akin to a public square rather than a curated, controlled space.
Two prominent applications of Web3 are decentralized finance (DeFi) and non-fungible tokens (NFTs). These applications, and others centered on Web3, emphasize personal identity, digital asset ownership and decentralized peer-to-peer networks. Web3 is a rapidly growing industry. According to Grand View Research, “The global Web 3.0 market size was valued at USD 2.25 billion in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 49.3% from 2024 to 2030.”
How Companies Can Benefit From Web3
Web3 won’t replace Web2. Instead, the two will exist side by side and complement each other.
Many company leaders have concerns about using Web3 and DePINs. Those concerns are understandable, given that these are relatively new technologies that aren’t yet widespread in the business world. But by leveraging Web3 and DePINs alongside Web2, companies can gain several key advantages.
First, on the IT side, companies want to ensure they’re protected from a single point of failure. If one of Web2’s centralized offerings has an issue, thousands of websites and applications can be taken down in a matter of seconds. By contrast, on Web3, an extensive network of individual entities provides power—if one goes down, others can step in. There is no single point of failure.
Additionally, if one entity does go down, the backups can start running automatically on Web3, with no human involvement required. Companies won’t have to take manual steps to, say, switch over to an alternate server after a node goes down. Because of the automatic nature of the backups, executives won’t have to worry about their critical operations suddenly seizing and scrambling to get everything up and running again.
Another benefit of Web3 is lower costs in terms of redundancy. While Web3 can have high implementation and integration costs, in the long term, it can help companies save on building redundancy measures. In a centralized environment, it’s extremely expensive for companies to build in redundancy measures themselves.
How Companies Should Navigate Implementing Web3
In strategizing to implement Web3, executives should first ask themselves if it makes sense to do so for their businesses. There are some use cases that warrant implementing Web3 and others that don’t. For instance, in healthcare and supply chain management, Web3 can be advantageous, as it can help secure medical records and transactions, respectively. But for other types of companies, such as local retail stores and construction firms, leveraging Web3 isn’t necessarily a pressing need, and it’s likely not worth the time and effort required to pursue it.
If executives decide that implementing Web3 makes sense for their companies, they should learn as much as they can about it and the different solutions out there—and how they can weave those solutions into their business processes.
From there, executives should plan to implement Web3 incrementally. I tell every business leader I speak with not to move all their infrastructure to Web3 on day one. Web2 and Web3 should work together symbiotically, and leaders should balance their infrastructure between Web2 and Web3.
Why? Web3 has come a long way, but the technology has not yet reached its full potential. The future of Web3 and DePINs depends on interoperability, particularly between blockchains. Instead of being siloed, networks need to be better bridged and communicating with each other. With a hybrid approach that leverages current Web2 infrastructure while implementing new Web3 infrastructure, companies can gradually shift to this new technology, getting the benefits of decentralization while maintaining their continuity plans and getting their employees and customers up to speed.
Ultimately, if they have use cases that call for it, by gradually implementing Web3, companies can start gaining more control of their data now, enhance redundancy and be better prepared to adapt and continue leveraging benefits as the technology matures.