NFTs, the Metaverse, and Everything Web 3.0

Chapter 1. What Is Web 3.0?

Web 3.0, blockchain, NFTs, the metaverse—what a great time to be alive. That is how John Hargrave, my coauthor on two previous O’Reilly reports and the book, Blockchain Success Stories, starts many of his presentations.

These emerging technologies are bringing remarkable changes, but technology is only part of the story. These are also human stories, because it is the people and the communities and ecosystems that they build who bring meaning and value to these technologies.

Let’s begin by providing workable definitions for each of these key terms so that we may understand how they interrelate, starting with the generations of the internet, or webs.

In the beginning of the internet, there was Web 1.0. This was as a static or read-only web. There were a limited number of content creators—basically, those who could code on the internet and build their own web pages. Most of the people who “surfed” the Net could peruse information of interest, but they had no interaction with or ability to alter the content. If they enjoyed a website, they could sign up to receive emails, but they had no input into the content. They also had no interaction with others who enjoyed the website or signed up for the newsletter. Although it was fun to learn that there were others who shared your interests, surfing was generally a solitary experience with no sense of community for anyone outside of the content creator. This was the internet of the 1990s and early 2000s.

Web 1.0: The first generation of the internet characterized by users having read-only access to web content.

Then Web 2.0 began around 2004; the term was popularized at an O’Reilly conference held in October of that year. Whereas Web 1.0 was static or read-only, Web 2.0 was dynamic and enabled both read and write functionalities. Consumers of content found it easier to also be content creators. As a result, the internet became social and participatory. With the launch of Facebook in 2004 and Twitter in 2006, communities and ecosystems began to emerge. Wikipedia appeared as an open source, permissionless document to which anyone could contribute. As fan clubs and other online interactive groups formed around websites, instead of a central authority controlling all content creation, now fans could comment, like, or share content, or write their own blogs. They could now reach out and connect to others both within and outside of the website.

Web 2.0: The second generation of the internet characterized by read and write functionalities for users both consuming and creating content and building participatory social networks that are centrally owned and controlled.

As these communities grew, a potential to monetize them was recognized. This was due to the power of network effects.

Network effects: The more people join a community, the more valuable it becomes.

As more users are added, the value of the network (as measured by connections among the users) grows at a quadratic rate as modeled with Metcalfe’s law.

Metcalfe’s law: The formula n(n – 1) ÷ 2, in which n represents the number of participants, such as users connecting through their computers (nodes), models the quadratic increase in connections as more users (nodes) are added to a network (see Figure 1-1). Envision a series of triangular numbers, 1, 3, 6, 10, 15, 21, 28..., in which the additional number that is added for the next iteration in the series increases by one each time, such as adding another row of bowling pins with each iteration (as in Wii Bowling). In the case of blockchain (more to come in the next chapter), as each node (computer on the system) is added, the system becomes more stable and secure.

Figure 1-1. A visual representation of the connections among nodes as more nodes are added. As more people join the network, it becomes more valuable for everyone who joins.

These network effects explain why many social networking projects have unusually high valuations long before they are profitable. Network effects allow for significant first-mover advantages due to barriers to entry, switching costs, and time to build networks that grow at increasing rates; however, superior content, utility, and user experiences must ultimately be delivered. That is why MySpace lost its initial lead over rival Facebook.

On the surface, Web 3.0 may not appear significantly different from Web 2.0. The primary difference is philosophical and has led to changes in ownership, governance, and control. The original internet was built on the idea of being free, public, open, and borderless. This was largely true of the Web 1.0 era. This changed with Web 2.0 as major corporations gained complete control of all user information and then used it for their own advantage and profit. Remember, you don’t actually own your Yahoo Mail account, your Google photos, or your Facebook account. They can be shut down and taken from you at any time. Nor do you benefit in any way when YouTube or Amazon sells your information to advertisers.

But now imagine if changes in technology allowed you, the user, to own your own data, which you could then sell to advertisers you approved of. What if you had the opportunity to weigh in on governance decisions concerning a website’s operational policies? Or if content deemed inappropriate could be removed only with a majority vote of the entire user community?

Although there are many ways to describe these scenarios, in my opinion, Web 3.0 can be described by one word—decentralization—the distribution of function and power away from a central authority.

Web 3.0: The third generation of the internet characterized by reading, writing, controlling, and owning web content through decentralization of decision-making authority.

We started with read-only in Web 1.0 and then proceeded to read-write with Web 2.0. Now, what short, simple word should we add for Web 3.0? I could not think of a verb, but I found a noun that describes what I consider to be the essence of this next step—equity.

Equity: Justice according to natural law or right.

By right, you, as an individual user or participant in a larger community, should own your data and control access to it. You should benefit from your efforts. That is natural law—a rule that applies universally to all people who possess reason and free will, everywhere, and in all situations—and that is the essence of the Web 3.0 vision.

Building a Web 3.0 Community

In the end, you’re offering a relationship with your community—make sure your vision of how they can thrive as part of your Web3 world is clear and inspiring. And oh yes, then deliver on that vision for them.

—Dave Iseminger, CEO, Upheaval Corporation

Remember, despite the focus on technology, Web 3.0 is still about building communities and then finding ways to monetize them. Here are best practices for building your Web 3.0 community with the latest research of industry-leading best practices from Media Shower:¹

• Have a passion for your project and lead by example—enthusiasm is contagious.

• In choosing the best community platform, understand where your people are and how best to reach them. Think of Twitter as the billboard and Discord as the party.²

• For a community of 20,000 followers, Lisa Loveland of Lynx Club NFT recommends:

  • One to two community managers to manage the platform

  • Three to five moderators to answer questions and facilitate desired interactions

  • Two social media members to drive content

  • One marketing manager (or agency)

• Promote a safe and welcoming culture. Welcome new members and support their introduction by keeping community members engaged with interactive events and giveaways. Building trust is the best way to ensure ongoing engagement.

• Use an agile and incremental development approach. Build a minimum viable product (MVP) to test your community and respond to its feedback to ensure the right product market fit before deciding to scale. Utilize both qualitative feedback as well as quantitative key performance indicators (KPIs), as illustrated in Table 1-1.

Table 1-1. Popular Web 3 platforms, their uses, and performance indicators

Platform	Best practice	Key metrics
Twitter	Update your community	Followers, posts, likes, shares, and retweets
Reddit	Learn about your community’s opinions	Subreddit members, posts, comments
Discord	Real-time conversations: perception is trendier and for younger audiences	Members, messages, channels
Discourse	Message forums, governance proposals, protocol improvements, and voting	Members, messages
Telegram	Real-time conversation: perception is more private and exclusive	Members, messages

Web 3.0: The Road Ahead

So, if we have accurately captured the essence of Web 3.0, then what will Web 4.0 be like?

Let’s apply a thought progression to determine the next iteration of the Web:

• Web 1.0: read (only)

• Web 2.0: read – write

• Web 3.0: read – write – equity

• Web 4.0: read – write – equity –_______

After spending weeks pondering many possible words, I have arrived at meta-evolve.

Note

Hoping I had coined a new term, an internet search revealed a book by David Hunter Tow titled, The Future of Life: Meta-Evolution (Xlibris, 2000). Although the author uses the term differently, I am still not the originator.

In reading predictions from futurists and technology experts about the next Web phase, themes of human and technological symbiosis consistently emerge. I am not talking about the Borg from Star Trek or a dystopian future of cyborgs who have lost their humanity. Combining the definition of meta as a reflection upon itself, with the standard definition of evolution, I see Web 4.0 growing with self-reinforcement of the Web 3.0 vision of decentralization and equity by incorporating emerging technologies like AI, IoT, 3D printing, biometrics, and quantum computing so that web participants will receive an optimal experience that meets their individualized needs.

The result will be a web that is introspective and can grow in a self-directed manner to fulfill its purpose. Imagine how a 4D being can utilize the higher dimension to accomplish tasks that would appear impossible to a 3D being. In Web 4.0, the exponential growth through the convergence of multiple technologies and the network effects among them (also called exonomics),³ will create a world with efficiencies and potentialities derived from “shortcuts” through the Web 4.0 platform, such as human-computer interfaces, that would appear magical to us today.

Exonomics: The science of exponential change through the convergence of multiple emerging technologies, resulting in exponential (not quadratic) growth.

So, now that we have defined Web 3.0, how can we best implement it? Although not essential for Web 3.0, one emerging technology that shares many attributes that are supportive of and consistent with the Web 3.0 philosophy is blockchain.

¹ See the article “Best Practices for Building Web3 Communities”.

² Lisa Loveland, cofounder of Lynx Club NFT.

³ Peter H. Diamandis and Steven Kotler, The Future Is Faster Than You Think (Simon & Schuster, 2020).