It's a paradigm as old as Facebook: Those who scroll the Internet — as nearly every oxygen-breathing consumer likely does — share information such as cookies, IP address, geographic data, political leanings, and shopping preferences with the friends of today's web giants.
This social contract is commonplace in what's known as ''Web 2." For years now, top tech companies have been accessing our data in exchange for providing ''free" Internet tools. We've watched Facebook (now Meta), for instance, navigate a torrent of legal battles over the past decade, arguing for the right to track user activity, likes, shares, follows, and other consumer preferences. And because the tools provided were so useful, Internet users, at least tacitly, agreed.
Meanwhile, guided by passionate rallying cries such as the Cypherpunk's Manifesto — which calls for privacy (due to deep corporate distrust) as a measure to preserve dignity in an open society — a small but mighty group of developers and finance professionals have been ushering in a new future in which our data could actually become our currency.
It's called Web3, a future in which online transactions will take place on blockchain. You may know blockchain: the decentralized, permissionless digital ledger upon which non-fungible tokens (NFTs) and cryptocurrency are minted. Today's corporate professionals are beginning to find blockchain hard to ignore. Forbes recently came out with its Blockchain 50 list of companies using the technology to improve internal processes, speed up transactions, and increase supply chain transparency (among other uses) — sealing Web3's reputation as the future poised to disrupt our current online norms.
"People conceive of Web3 as a chance to restart both the Internet and traditional financial systems," said Jonathan Padilla, former PayPal head of blockchain strategy and CEO/Co-Founder of Snickerdoodle Labs.
Blockchain data is publicly available and permanent. So, imagine if your favorite museum kept a public record of every transaction you made when you swiped your credit card. Or if the movie theater had an open-source ledger noting each time you used a Fandango ticket code to get in. That's what Web3 and the parallel digital world known as the metaverse promises: In-game video game purchases made with crypto, shopping in a metaverse department store using your crypto wallet. And a permanent ledger documenting every experience that you can open up and share with whatever company or advertiser wants it — for a cost.
Just think of the data Web3 will generate. And if we play our cards right, consumers will own it all ourselves. ''Self sovereignty of data is of the utmost importance," said Padilla. Of course, developers and engineers will need to work out a few kinks, according to Medha Parlikar, Chief Technology Officer at Casper Labs, a blockchain built specifically for wide-scale enterprise adoption. ''Companies hold a lot of consumer data," she says, which puts them at a risk of liability. ''Specifically when talking about financial institutions, they hold personally identifiable information, [that's] highly sensitive."
The question of how data will be both protected and stored in Web3 remains to be seen, as currently there are few requirements to share personally identifying information like social security numbers, dates of birth, or even legal names when opening crypto wallets or joining crypto communities. Often, people are anonymous, their online identities masked by NFT profile pictures and cryptic Discord handles. The anonymity of crypto wallets has been, for some, one form of data protection, but as we look to a future in which we all have Web3 avatars who engage in personalized online behavior, preferences, and social interactions, there will need to be a way to verify identity without trusting centralized databases to hold all our data.
Casper Labs is working on something called a know-your-customer (KYC) token, which anonymizes personally identifiable information into an encrypted token on blockchain. The solution is meant more for enterprises, specifically financial institutions. The consumer's data is hidden, but the token record exists. This token could then be linked to your phone via QR code, or potentially even a face or thumbprint scan for an added layer of verification, depending on the use or purpose of the data. ''All [brands would] need to do is trust the token. They don't need to look at the data itself," Parlikar says.
Soon, people will be able to use crypto wallets similarly to how we use the familiar 'Sign in with Google' integration on websites today. However, we're several years away from this future, Parlikar says, who estimates it will take at least 10 years before digital wallets become user-friendly enough to become mainstream. Executives today who are planning to take their business to Web3 should prepare for challenges along the way as we define a new social contract between consumers, their data, and the tech companies who already store it.
That said, once new software tools are built to make digital wallets more widely adopted, the blockchain promise is that people will be able to communicate and collaborate with the same efficiency as Web 2 but with total data sovereignty.
Have you listened to the Chief podcast? Tune into "The New Rules of Business" latest episode, Destination: Metaverse, to hear Chief Co-Founders Carolyn Childers and Lindsay Kaplan talk about the promises — and potential dangers — of Web3 with experts Janine Yorio and Cathy Hackl. Follow wherever you get your podcasts.
