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Web3 could possibly be huge: How it handles trust and identity will undoubtedly be critical

Computer eye, Web3 and metaverse concept

Image Credit: Elen11/Getty

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Web3 is really a classic Next Big Thing: very exciting with tremendous potential, but nonetheless in its infancy with a lot of unknowns. Because the Harvard Business Review recently wrote, [Web3] supplies a read/write/own version of the net, where users have a financial stake and much more control on the web communities they participate in. Moving some control from the tech giants to everybody else sounds intriguing, why all of the drama about Web3 in discussion groups, online skirmishes, conferences, and the media?

Youve seen the news: so therefore got scammed for $X an incredible number of crypto and in a few recent cases, a lot more than mere millions. The victims include sophisticated companies. The blockchain may be the foundation of Web3, even though it solves some problems, it has additionally enabled new ones. Based on who you ask, Web3 is really a fundamental makeover of the web, a scam, a hyped rebranding of Blogging platforms 2.0, or all of the above. And industry-savvy folks are prepared to argue all sides with religious fervor.

Web3: Many camps of thought on trust and identity

Within the planet of Web3 advocates, you can find at the very least three groupings of opinion on the problem of identity. For individuals who arent familiar, heres an instant run-through.

Some envision Web3 as a global where our identities remain secret where our true legal identity is never supplied and therefore can’t be easily exploited by tech giants and governments.

On another end of the spectrum may be the full-trust community, that is focused on a Web3 where everyones true legal identity goes everywhere using them, so that they will presumably become more trustworthy and accountable in Web3.

Finally, between those two purist positions is really a gray zone thats well-liked by some who endorse pseudonymity; that’s, users can build-up an online persona and reputation, and that creates some trust, but real identities are often concealed. A user will be known only as LAballplayer6, not by his real name, Lebron James. Regarding illegal behavior, police can presumably link the pseudonym to the true person behind it. Marketers selling consumer items cannot, though.

One reason I’m optimistic that Web3 actually is a Next Big Thing is that its dynamic and vibrant enough to encompass these different viewpoints and deliver different environments.

Web3 might help solve a variety of problems. Removing the middleman can be an oft-mentioned feature. Conducting business beyond the eyes and ears of governments and Big Tech is another popular one. Furthermore, Web3 should remove friction from complex transactions that could unfold quickly or very slowly.

Web3, secrecy version

Web3 isnt nearly crypto. Some view it because the missing link between crypto and items that matter an instrument that removes friction and middlemen.

As a hypothetical example, lets say you write lyrics to a song. You copyright your brand-new song and post it on the blockchain, inviting investors to get into ownership of half the song. Ten thousand people enjoy it and each invests $5. You dont value their identities; you’re just paying them smaller amounts. The song continues on to earn $20 million. Each investor earns $1,000 in royalties. You retain $10 million. Web3 could be the answer for situations like these. No expensive clearinghouse or central broker needed everything happens in a decentralized, trustless way, which is what blockchain enables.

There may be tax and accounting implications aswell; in the event that you, the songwriter, anonymously puts all of the accounting operations because of this investment vehicle irrevocably beneath the control of a blockchain-based contract, then who’s in charge of filing 10,001 tax forms, showing royalty payments to each investor?

Web3, with unshakable identity

As stated earlier, there’s an opposing camp that wants robust digital identity to safeguard precisely what happens in Web3. Actually, Web3s acceptance by lots of people will likely be determined by robust identity verification; that’s, on zero anonymity. Thats anathema to the secrecy advocates, needless to say, but wIthout some accountability, some buyers or sellers may cool off fearfully from transactions of most kinds. Digital identities and online IDs usually do not reassure them because those could be stolen wherever they’re, even the state digital IDs a few countries like Estonia and Singapore have issued.

For inescapable identity to become a foundational section of Web3, there would need to be considered a continuous linkage between each partys real-life physical identity and their on-chain digital identity. It might be impossible, in a transaction, to cover up ones true identity. To create trust, the linkage can’t be a one-time transaction that could make impersonating the physical identity the simplest way to compromise the integrity of an on-chain digital identity. An unbreakable linkage helps it be harder for bad actors to continually scam others because their history is public.

Web3, with some identity: Pseudonyms

Web3 sometimes appears as potentially bridging the gap between somebody’s physical identity and their digital identity via blockchain technology. This shows that each individual could have a decentralized identity, which encompasses both their online and real-world legal versions. An individuals online commerce activity would then be on chain, meaning it could be public and easily searchable via their individual on-chain wallet. The question becomes just how much of these real-world identity will be visible or attainable through investigation or subpoenas.

Theoretically, at the very least, if anyone does bad things in this version of Web3, their pseudonym or online identity could have a poor history and everyone would note that trail of broken promises. Their poor behavior would follow their online identity, but without visible linkage to who the bad actor is in real life. To say it topic generates controversy will be an understatement. Some reject the idea of each internet user having a distinctive online identity they cannot shake and that is stamped onto every online transaction they perform. Others find this ineffective in preventing fraud.

There may be different flavors of pseudonym-based identity as solutions arrived at market with inventive tradeoffs of privacy versus trust. Tinder and Airbnb illustrate the issue of discovering the right balance. On these platforms, if theres no clear photo of one’s date or lodging host, you may assume that you will be coping with a con artist. There are numerous degrees of identity verification, some voluntary, among others not. Thousands of people love these services, and thousands do get scammed or deceived.

In Web3, we may accept people concealing their real identity for small transactions or because some trusted third entity insures their honest behavior for all of us. If theyre selling you an automobile, though, youd probably demand full usage of know who they’re, to verify owner happens to be authorized to market that property.

Web3: Transformative, with several details to sort first

Theres a significant chance of Web3 to redefine what the continuing future of digital identity (and of cryptocurrency) can look like, but whichever privacy/trust balance is struck, the problem of identity should be dealt with. The options are exciting; Web3 may help cryptocurrency find its invest our economic lives, as Web1 and Blogging platforms 2 did for PayPal. The mix of cryptocurrency, Web3, and blockchain may possibly also significantly transform how exactly we pay for almost anything and enable various new methods to perform payments, investments, and contracts, but only when the parties to a transaction acknowledge verifiable identity versus secrecy.

Each day will most likely come when Web3 is essential to everyone having an internet connection, even though it doesnt quite match what Web3 visionaries expect today. It’ll probably be too large for just about any one method of personal identity to prevail completely. You will see zones with an increase of accountability among others with an increase of anonymity. Web3 will undoubtedly be diverse and pluralistic.

Rick Song is CEO of Persona

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