How Do We Take the Temperature of Web 3.0 Technology Building Blocks
Follow the Breadcrumbs of Who is Using What, and Not Just Who is Investing in What, for a Bigger Picture of Where We Sit Today
If you follow the pundits and tech leaders like I do, there seem to be “two trains running” re: what is and isn’t Web 3.0. Namely, “who” owns its core components is a hot topic. There are simple ways of looking at things that don’t involve a lot of, or any, controversy.
A product leader’s number-one responsibility involves cutting through the hype and helping leadership understand where that company sits within the value delivery system of a new product. Should we, can we, are we, etc.
With Web 3.0, where do product leaders start? By examining the foundational technology building blocks and customer adoption of new technologies.
Metrics Always Matter More than Hype
What metrics do we use to get a “health check” of value creation for new technology? For a snapshot of how broadly consumers are adopting any new technology, measure:
- What are the potential vs. actual users and continued user growth
- How actively and frequently consumers use and see the benefit
- Can you monetize that benefit consistently?
How will core building blocks get adopted? To gain broad adoption across consumers and businesses globally, new tech needs these core building blocks:
- Scalability
- Interoperability
- Regulatory compliance
- Standardization
Where are we with those building blocks of the core components of Web 3.0?
Blockchain Platforms
These have evolved and grown a lot over the past decade, and there remains much promise around blockchain’s speed, agility, and transparency. While most folks are familiar with Bitcoin or Ethereum platforms, you’re about to get inundated with announcements about more secure, newer, high-performing platforms. What do the actual stats say?
- Overall, blockchain applications are 0.5–2% of the world population today, with an expectation that 80% of the world’s population will use the platform by the end of this decade. Outside of gamers and serious crypto fans, everyday consumers don’t know the value of these platforms.
- With most tech folks knowing of Bitcoin and Ethereum, there are over 100+ blockchain platforms, and those other platforms are highly specialized and evolving rapidly.
- While new platforms show promise, they still have limited adoption in real-world use cases. Sure, there are clear value propositions for some verticals: Financial services (digital currencies, payments), consumer packaging and retail (secure transactions), healthcare (digital identity), and media (NFTs). Whether or not it offers value to other verticals yet? Who knows. While many executives are investing in these technologies, user adoption is still catching up (exception: some broad investment in cryptocurrencies).
We need far more standardization, higher transaction speed, ease of use/interoperability, and lower energy consumption for broad adoption. We also need to see a clearer regulatory environment.
Payments and Wallets
Crypto
Today, there are 6000+ cryptocurrencies in the world. (A little perspective. The United Nations recognizes 180 currencies. Total.) While crypto adoption increased in the last two years, most adoption is in developing nations (Vietnam, India, Pakistan, Ukraine, Kenya, and Nigeria). Mostly, crypto is used for peer-to-peer payments, currency trading, and as a hedge against currency devaluation. While emerging markets are seeing the boom, developed and/or regulated markets are not ready for adoption outside of inflation, US dollar hedge, or speculation.
Governments have to drive the broader adoption for all consumers to accept cryptocurrency widely for daily use, less likely given their incentive (money still works in most countries). Developed nations are working on centralized digital currencies or implementing new regulations on digital currencies to crack down on misuse (I mean ransomware attacks, cybercrime, etc.).
Wallets
Wallets are widely viewed as tools that will democratize the web by giving consumers control of their own digital identities and currencies. 5-year-old MetaMask is a popular crypto wallet and interacts with 3,700 unique “Web3” applications. It’s enjoyed exponential growth since 2020, with currently 21 million monthly active users (with most of its growth driven by gaming apps). A reminder that the web presently has 5B users. This is still very much a niche product (even if it’s exploding within its own niche).
While it has poor user reviews around usability and performance, it is a critical component to democratize the decentralized web. MetaMask and other peer players have a long way to go to make the app accessible and usable to 5B+ global users.
Digital Assets/NFT
NFTs are hard to explain, and that may be because they’re still so, well, new. As such, the core Web 3.0 components (such as they stand today) have the most issues with underlying platform scalability, secure storage limitation, and interoperability hurdles. Most importantly, I think they suffer from limited value perception.
Yes, CyptoPunk’s $532M sale last year made headlines. A few surveys cite that as many as 4M US users own NFTs, and the transaction value is over $11B in Q3 2021. The reality is that it is most likely that NFTs are used by a handful of investment funds and wealthy investors exclusively.
NFTs rely on blockchain platforms, which we already discussed have a range of underlying mass adoption issues. The NFT learning curve is steep (I struggle to explain how to use NFT marketplaces, store/trade NFTs, etc.). Right now, those marketplaces lack freedom and offer limited copyright protection. Today, the kind way to describe an NFT is an experiment in digital ownership for very, very wealthy people.
Device Enablers: VR and AR
There’s speculation that the VR market will grow to $200B+ in 2022, with 171M users worldwide.
The current reality: In 2021, only 17% of the US population will use VR at least once a month. (Again, some context. How many times did you use your favorite app in the last hour, let alone month?) Considering the clunky user experience today, I don’t think that’s a solid number. I own an Oculus Galaxy headset, and yes, I love a few apps. But, the inconvenient and time-consuming onboarding experience is an obstacle (and far from a help) to my daily communication, collaboration, or productivity.
What’s needed? Time. This technology is still cooking. We need a simpler experience, a more open and broader app ecosystem, and lower price points. Today, the market is led by Meta/Facebook. That company’s primary motivator is building a centralized ecosystem, so it won’t satisfy the broader and headier Web 3.0 goals. For that, we need other players with the financial muscle and ambition to bring this technology to mass adoption.
Web 3.0 is Not Prime Time…Yet.
What does the product guy think? A recap first: For any new technology to work, it has to hide complexity from the user and bring consistent value to someone’s home or professional life. If it’s complicated and people can’t use it, it won’t reach mass adoption. (Remember that “enterprise” is just consumers at work…if it’s hard for them to use it, it’s still not making their professional lives easier.
Web 3.0 technology is crawling along, and we are at very least at the beginning steps of a long journey. Today, we still don’t have enough players, or metrics from wide adoption, to know what consumers will want, use, or need.
