Opinions expressed by Entrepreneur contributors are their own.
As the CEO of SaaS Partners, I’m fortunate to have a front-row seat to the latest in tech. We advise and partner with the best startups around the world to help them leverage technology to optimize their operations and achieve serious scale. It’s hard for me to recall a conversation with any tech founder in the past year that did not involve any mention of Web3, crypto or NFTs. While some people just can’t wrap their heads around the hundreds of thousands of dollars being spent on a Mega Yacht in The Sandbox and on Bored Ape NFTs being displayed on Twitter profiles, others swear this is just the beginning. What everyone seems to have in common, however, is that they all “want in.” And yet, very few understand what’s really unfolding or where to start.
So before you go buy that digital Gucci handbag in Roblox or set up your virtual office headquarters in Decentraland (like the Barbados embassy has recently done), I’d like to give you the low-down on what I understand to be very important issues facing the continued development of Web 3.0. I’ll walk you through what it will take to resolve them and, in light of it all, what you can begin to do today to ensure your business has an edge when the “future of the internet” finally arrives in all its glory.
Most people tend to fall for the hype. Most people are uncomfortable with what they don’t understand. Most people will only learn something new when it’s staring them in the face and they have no choice. Let that not be you.
The challenges facing Web 3.0
Most people behind the recent hype cycle surrounding Web3 are just looking to make a quick dollar. If, on the other hand, you’re looking to participate from a more long-term and strategic perspective, I’d invite you to first understand the challenges facing the underlying infrastructure upon which the new virtual world is being built. In my opinion, while Web 3.0 is a certainty, it’s going to take us at least 5-10 years to really get there. There are numerous limitations to blockchain tech, namely its cost-efficiency, scalability, accessibility, and user experience, all of which make achieving mass adoption a medium to long-term scenario.
When the blockchain was initially envisioned, one of its key attractions was costless transactions. Just a few years in, and blockchain tech is turning out to be extremely expensive and energy intensive to run.
Governments are beginning to get worried; China, formerly a major hub of crypto mining, has gone to great lengths to restrict crypto operations by banning crypto mining. Multiple other countries including Sweden, Russia, Kosovo, Iceland and Kazakhstan are all following suit amidst energy concerns. It is heartening though to see a serious shift towards the use of more eco-friendly methods of natural gas, hydroelectric, wind and solar projects popping up to power crypto mining. Even at a more granular level, there is a ton of innovation happening. Most decentralized apps are putting very little code on the actual blockchain to maneuver around the high transaction costs, and I am seeing more startups working on alternative ways to monetize the network to offset those costs. While there are massive strides being made in an effort to make this tech more cost-effective, I’d say cost still remains a considerable barrier that needs to be overcome in the near term.
In a decentralized network, transactions become slower because every transaction or change in state that has to be processed needs to be pushed through the entire peer-to-peer network. The computing power this takes is phenomenal, and the very transactions that were supposed to be near-instantaneous often take a long time to process or require very high “gas fees” to speed up transaction times. For the uninitiated, “gas fees” are payments made by users to compensate for the computing power required to process and validate transactions on the Ethereum blockchain. So the intended “costless” transactions can become quite expensive.
As another cause for concern, we’ve got the leading microchip manufacturer in Intel saying that from a computational perspective, even though we’ll be at 5-10 times our current computing power over the next five years, we need to be at 1000 times to make Web3, and eventually the metaverse, a reality. To get around the problem of scalability, I’m seeing an increasing number of projects working with off-chain transactions in hopes of improving processing times (only to go back to put the completed transactions back on the blockchain) — but these “solutions” have their own flaws, including issues around consensus and governance. So while software innovation is occurring faster than we’ve ever seen, there’s still a massive gap here; the hardware is several orders of magnitude away from catching up with the software.
All of us like to work with interfaces that seem intuitive. It’s why we love booking vacation rentals through Airbnb’s website. It’s why we love catching a ride using the Uber app. If you’ve tried to do anything on the blockchain or interact in Web3, however, you’ll already know there’s a very steep learning curve involved. Your existing web browsers won’t support direct access to Web3 experiences. You need a MetaMask wallet for your Ethereum. You need a Phantom wallet for your Solana. You need to go through the process of adding a whole bunch of browser extensions or plug-ins just for the most basic benefits, and it’s all very cumbersome when compared to the straightforward web browsers we’re used to. For mass adoption to occur, we’re going to need Web3 to become substantially easier to access and navigate. And the masses will require educational content and training around how to get started.
The last major hurdle I see in the realization of Web 3.0 is accessibility; Elon Musk’s Starlink is still figuring out how to bring internet connectivity, i.e., Web 1.0 and Web 2.0 to many parts of the developing world. In addition to reach, we’re going to need mass-scale hardware upgrades to both servers and end user devices as current mobile and IoT devices are not prepared for the Web3 revolution.
If you think about it, despite all this, we’re moving at an impressive pace. It took the automobile over 50 years to reach mass adoption, and it took the internet about half of that. While it won’t take us as long in achieving an open and permissionless web, we still have a long way to go.
The moves you can make today to position your business for the future
Now that you know that a full-fledged Web3 is a few years away, what’s the best approach you can take now so that you come out on the right side of the wave? Begin with three simple steps.
How much do you truly understand about the fundamentals driving Web3? What projects or programs are you tracking? Do you have a resource dedicated to understanding the movements in your industry? To get started, you need to proactively figure out how you want to ultimately position your brand as a Web 3 player, so that you’re not struggling to catch up. Set up Google Alerts and track “Web3” as a keyword. Once you’ve done that, you’ll get a daily email with a roll-up of everything big happening in the space.
Study the pioneers
Brands that intend to build a first-mover advantage have already started making their Web3 and metaverse bets. Think Nike and Adidas. Think Pepsi. Think Zara. Think Snoop Dogg. Yes, Snoop Dogg. What can you learn from them? Which projects are they choosing? How are they positioning themselves? How successful have their ICOs or NFT launches been? What problems are they solving? How have they adapted their business models? What did they do wrong? Learn from their mistakes as well as your own, and you’ll be able to move faster.
Web3 will impact the future of business finance as business payments and transactions become decentralized as well. I’ll just assume that someone at this point has thrown out the term “DeFi” at you recently. You will need exposure to decentralized finance, or DeFi, in order to stay relevant and send/receive payments in Web3. But that doesn’t mean you can’t start small. For instance, one of the easiest ways to get started right now is by setting up your wallet and purchasing a Web3 domain that you can use to launch your Web 2.0 and Web 3.0 experiences. Think about how hard it is to find a simple .com domain right now. The same thing will happen with Web3 domains sooner than later. The other benefit here is that instead of renting your domain name from GoDaddy or Google as most of us do today, you will actually own your Web3 domain. I recommend using the Ethereum Name Service (ENS) to purchase your domain. From there, you can associate it to your wallet address so your identity and transactions will be tied back to you. You can then give customers an easier way to pay you instead of sending them your wallet’s hex address, which is ridiculously long and easy to transpose. With that, you’ll be off to a great start. You don’t have to go all out — just try to get a little more familiar each day with foundational concepts of Web3 so that you’re ready to pivot when the time comes.
I wish you luck as you begin to envision your digital foray, and I’ll see you in the future.