How Next-Gen Entrepreneurs Leverage Web3 Business Models Using Gamefi & NFTs

How Next-Gen Entrepreneurs Leverage Web3 Business Models Using Gamefi & NFTs

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The modern internet has made tycoons of those clever enough to leverage the data unwittingly generated by its users. In fact, it’s created a whole new class of tech tycoon – the sort of all-powerful magnates that buy newspapers , control what we can and can’t say on social networks , and much else besides.

The recent avalanche of recent Web3 protocols promises to change that. These decentralised applications (dApps) effectively aim to overhaul long-standing Web2 business models by handing control back to the users that make their platforms tick.

Built using distributed ledger technology (DLT), Web3 protocols have, in a short space of time, highlighted their transformative potential by pioneering new modes of community management, innovative creator-centric business models, and even a parallel financial system that processes billions of dollars in volume each day. While it’s still possible to become extremely wealthy from leveraging Web3, the difference is that its architecture is open, transparent and user-owned. Web2 Models: Doomed to Extinction?

Web2 is the name given to the existing iteration of the internet – the one Web3 seeks to supplant. At one time, Web2 was viewed with the same sense of wonder and appreciation as many now view Web3, with users extolling its seemingly unlimited interconnectivity and information-sharing potential. Over time though, the internet’s evolution has attracted criticism due to the gross power imbalance between corporations/governments and end users.

While the earliest phase of the internet (Web1) saw it function largely as a publishing platform, a clumsy extension of businesses’ physical storefronts, Web2 introduced many of the features that power today’s internet: search engines and SEO; blogging; file sharing; digital advertising; video streaming and podcasting; social media.

Countless enterprises have slotted traditional business models into the Web2 framework, building audiences using centralised databases, communicating with customers via blogs, emails and social media, and conducting targeted advertising campaigns using data behemoths like Google and Facebook. Amazon is perhaps the best example of a Web2 success story: last year, the retail giant reported annual revenue of $469 billion . As well as building its global e-commerce business, the company has become a leader in the cloud infrastructure service market via Amazon Web Services (AWS), as well as the video streaming market thanks to Amazon Prime.

In the Web2 paradigm, users pay for goods and services using the legacy financial system, directly linking their bank account/credit card to individual company databases or using third-party services such as PayPal. The vast majority of web users also use insecure browsers and search engines that continually harvest their data in order to build consumer profiles and serve advertising content.

Gatekeepers and intermediaries have been the primary beneficiaries of Web2, as users have had to operate according to the terms of each platform. Gavin Wood, co-founder of blockchain platform Ethereum, summed up the intrinsic flaws of Web2 in a 2018 essay that popularised the term Web3: “With so much of the world’s data channelled through so few cables, the inconvenient truth is that unless we put in place open software protocols, our increasingly digital society will continue to be at risk from malicious “authorities” both within society and (as in the case [of] Russian tampering of our elections) from outside.” How Web3 Fixes the Internet Economy

According to Wood, the Goliaths at the summit of the Web2 pyramid “make money from our fealty, feeding us our information, and cutting us off when inconvenient.” While Web3 will not make these Goliaths obsolete overnight, the move toward permissionless and open technologies empowers the internet’s 5 billion users to exercise their self-sovereignty every step of the way.

There are many practical examples that demonstrate the utility of blockchain-based technologies in this regard. Consider decentralised finance (defi) as one example: these permissionless financial products enable users to save, trade, lend and borrow without visiting a bank account or surrendering their identity, which if left on a centralised database could make them the target of identity theft/fraud.

The emergence of NFTs and peer-to-peer marketplaces, meanwhile, allows artists and creators to connect directly with fans. Naturally, replacing intermediaries with smart contracts – which automate transactions based on fixed terms – enables such artists to earn more from their work into the bargain. Smart contracts can also allow creators to earn future royalty payments when their work, commodified as a digital token, is sold on the secondary market.

If defi represented the first wave of Web3 protocols, gamefi (gamified finance) and […]

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