Tom Barrett is the chairman of surroundan ICANN accredited domain name registrar.
Web3 offers the potential of a huge and lucrative new horizon for entrepreneurs and companies of all sizes, but with it comes the risk of unknown and unregulated business practices. Can companies and entrepreneurs afford to wait for regulation to catch up?
Top companies have already started establishing their presence on the blockchain, so the answer seems to be “no”. In fact, it’s likely that companies and entrepreneurs who are already paving the way to Web3 will also show us the way to a more reliable and, yes, regulated blockchain. In order for consumers to take the leap to Web3, consumers must be convinced that they can trust it.
On the one hand, proponents of the decentralized web argue that decentralization makes it more secure. On the other hand, news of bad actors transferring millions of dollars of blockchain wallets tells us otherwise.
So, how do we get from the chaos of an unregulated new frontier to the relative order of a regulated and trusted Web3?
See – and solve – the problems.
A tried-and-true option is the simple but time-tested path to new paths that innovators have long followed: these entrepreneurs and businessmen, who we will usually call visionaries in the future, look at current shortcomings with Web3, see them as opportunities, and act. .
For example, Web3 needs user-friendly identifiers to point to digital wallets and digital identities, just as Web2 needed domain names to point to IP addresses in the 1990s. Consumers want their digital identity to have a personally meaningful name. Likewise, businesses looking to engage these consumers will also want a meaningful web3 address. Startups and forward-thinking entrepreneurs are working on ways to make this happen.
Another example: on Web3 companies will have to follow different rules than under Web2. The first promise of the blockchain is that it is a decentralized and privacy-first space— there is no company intervention, requiring you to provide personal information and extract that user data to sell and monetize in other ways. On Web3, users can remain anonymous while deciding who has access to their personal data.
This is a mixed blessing; the blockchain provides more user privacy, but also less recourse for users and brands that have been abused by fraudulent practices, as site owners can also get away with posting inaccurate contact information or simply ignore user complaints. There is no entity like Web2’s Internet Corporation for Assigned Names and Numbers (ICANN), which requires public WHOIS databases to disclose the contact information of any Web2 domain so that websites can be removed or seized for fraudulent activity or abuse of trademarks. (Full Disclosure: I am a volunteer participant in ICANN’s policy-making efforts and my company is an accredited registrar.) Anonymity violates Know-Your-Customer laws that require companies to collect personal information from each customer.
Is there a workaround so that users can maintain control of their own data, but businesses can build secure and reliable sites? Of course, cybersecurity companies are already working on ways to protect people and businesses on the blockchain. But they can all be surpassed by a blockchain startup or open source initiative that has the same goal: the blockchain is a team sport, after all.
Ask the right questions.
Easier said than done, but one way to approach a new frontier is to ask how people can make money from it and how to track that money. In a TIME/Next Advisor article, for example, Chris Chen, CFP of Insight Financial Strategists, drew an analogy with the California gold rush: instead of being the people who dig for gold and rarely make a profit (cryptocurrencies), look for ways to be the people who selling axes and spades (blockchain developers).
Mirror, a Web3 version of the Medium publishing platform, is an example of this. Where Medium allows people to post their own articles, Mirror does and also gives authors the opportunity to sell those articles. Will Mirror just be a blockchain version of Medium? Or could it become a way for major journalists and authors to pursue and publish their articles and content without interference from publishers and advertisers with an interest in destroying ideas that don’t support their politics or their bottom line?
Anticipate the problems.
At the moment, almost everything goes on the blockchain. That includes choices for Web3 addresses with extensions like .eth and .crypto. There is the possibility that the blockchain will spawn millions more different extensions. Another extension could overtake .eth and .crypto in popularity in the same way that Google eventually came to dominate Yahoo, Internet Explorer and other Internet browsers.
Millions of different Web3 extensions can also be a source of consumer confusion, leading to loss of engagement, sales, and revenue. Without regulations to protect trademark owners’ rights, cybersquatting will be common with these Web3 extensions.
While ICANN guarantees that .com and its hundreds of other extensions will continue to exist even if the companies using the extensions cease to exist, there is no such guarantee for Web3 extensions.
One way startups address this potential for abuse and confusion is by asking if we need extensions like this at all. For example, companies can set their own web3 address with their name or brand (.dotbrand) instead of another third party extension (yourbrand.eth). Wouldn’t that be the ultimate solution to stop the look-alikes or face the prospect of hunting your name or brand among millions of extensions?
Of course, even a blockchain-based .dotbrand extension has limitations, especially to ensure the uniqueness of all blockchains. But again, this presents an opportunity that someone will eventually fix, leading to mass consumer adoption.
These are just a few examples of the ways entrepreneurs and startups can fill the regulatory gap by creating the tools to make Web3 a safe space for consumers and brands to interact. Regulation will come, but it will always be slower than technological progress. The opportunities presented by Web3 ‘issues’ are there, promising for enterprising innovators among us.
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Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.