Pros and Cons of Web3

Web3, the use of blockchain technologies to store computer states and user data, is on the rise. Before really understanding how it works, we can see the advantages and disadvantages to adopting this new system of online interaction.

Benefits to using Web3: 

• Power to the People: You get to control who sees your data.

• Digital Ownership: When you buy a digital good, it is stored in your Crypto wallet as an NFT. Any digital good you buy becomes potentially liquid. You can directly exchange it for digital currency on an NFT exchange.

  • NFT Exchange: A giant bookstore that also sells art, video game items, movies, apps… textbooks… you name it

  • In the past, video game digital goods were not liquid, and were stuck in the ‘walled gardens’ of the video games where you bought them. It was essentially impossible to convert your efforts on video games into money. Now, you can play a game, get a legendary item, and then sell it on an NFT exchange for CASH.

• New ways to make money emerge, new digital economies get created, and international barriers are knocked over. Cultures mix.

  • Multiple companies and entities are creating NFTs and value online. You can tap in to the value they are generating by owning a piece of their networks and the rising value of their tokens.

  • Community Tokens, such as the Bored Ape Yacht Club, rise because they are limited in number and because the tokens provide interesting benefits. For example, you can only go to Gary Vee’s VeeCon if you have one of his NFTs.

• Public, Democratic Governance of the Network: the members of a network decide what changes get implemented on the Network, that is, members vote on new changes. Instead of centralized entities making all the decisions.

  • For example, recently Robinhood blocked traders from buying and selling the GameStop stock. This is an example of a centralized entity controlling what you are able to do online. In the case of Web3, people who hold tokens get voting rights, and that’s the mechanism for making changes. If for any reason, you are not happy with the result, you can ‘fork’ the code because it is open source. By forking, I mean that you can grab the code and make your own version of the application.

• All code is open source, so all users can see how the algorithm is producing certain results on decentralized applications and improve it.

Disadvantages to using Web3: 

• Old Governments are seeking to crack down on this new form of power

• It is still clunky because developers need to learn new platforms, libraries, toolkits… etc.

• Transaction speeds are a work in progress.

• It’s difficult to know what projects will stay afloat, whether they are currencies, social networks, or anything else.

Feel free to poke holes in my analysis, always happy to learn.