Some critics of Web3 say it is owned by VCs, which is a major concern, especially since Andreessen Horowitz, a prominent investor in the cryptocurrency, holds a majority of UNI tokens. Furthermore, the recent spate of hacks and multi-million-dollar losses highlight the risks of cryptocurrency technology. Blockchains, which record every transaction, have an open ledger, but privacy concerns haven’t been resolved yet.
As an alternative, some crypto proponents have suggested that Web3 is necessary for building a metaverse. The term Metaverse, as it is often referred to, refers to a virtual network of virtual worlds that allows users to create their own identities and connect with others through the Internet. Some crypto enthusiasts have argued that Web3 is an essential part of this vision because it allows the creation of metaverses with no centralized company or set of rules.
In addition to blockchains, the Web3 ecosystem includes other technologies, including games and decentralised finance. This ecosystem also has a growing digital art community, which forms the heart of Web3.
Unlike web2 games, Web3 gives users the ability to own their digital assets. In web2 games, users purchased in-game items tied to an account. If the creators of the game decide to delete the account and items, they can simply remove the account and their digital assets. With Web3, however, ownership is transferred to the user directly through non-fungible tokens, which can then be traded on the open market. By allowing players to sell or buy these tokens, they can recoup the value of their in-game items.
However, Web2 is still controlled by a few big companies that reap massive profits. People create content for platforms like Facebook but rarely get anything in return. Facebook, for instance, doesn’t pay them a cent for every advert that they see on its site. YouTube, meanwhile, pays content creators a small amount. In general, Web2 has made content abundant but disposable. The Internet needs more democracy, and Web3 could be a solution.
While the crypto tokens are essential to many web3 applications, they also exist in a regulatory gray area in the United States. Chief financial regulator Gary Gensler argues that many of the tokens are unregistered securities and should be regulated as securities. In addition, the platforms offering these tokens should also be subject to the same regulations as the companies that issue securities. This could be a problem in the future. As a result, Web3 has been attacked by Bitcoin proponents, but the technology has yet to catch on.
Besides VCs, investors can also fund Web3 projects through crowdfunding campaigns. These projects are typically funded by an Initial Coin Offering (ICO) which enables project founders to sell crypto tokens that may be worth more in the future. In addition to crowd funding, large Web3 projects have also attracted venture capital firms. These investors know the technology and how to develop a successful roadmap. The risks and rewards of Web3 projects are also worth considering.