Web3’s 4 key principles for reshaping the digital landscape


To answer that question, we must first understand the evolution of the internet, which has gone through several distinct eras—often referred to as Web1, Web2, and now Web3. Each era brought about new possibilities and challenges. Web1 was the early web where information was presented on static websites. Web2 introduced interactive elements, collaborative apps, social media, and saw the rise of tech giants like Google and Facebook.

However, Web2 was a double-edged sword. While it brought immense economic gains, global connectivity, and empowered marginalized voices, it also faced significant setbacks. Its reliance on advertising revenue resulted in the exploitation of user data and a shift toward engagement-driven platforms at the expense of open ecosystems. Recommendation engines, while valuable for personalized content, inadvertently funneled users into echo chambers, amplifying extremism and misinformation. Furthermore, behemoths like Apple and Google imposed exorbitant fees on developers and seized control over app stores, creating bottlenecks for innovation.

Now we stand on the brink of Web3, often referred to as the “read-write-own” web. This new era, underpinned by blockchain technology, reinstates control and ownership of data, content, and creative works to individuals.

Web3 introduces four core principles that promise to reshape the digital landscape: ownership, commerce, identity, and governance. These principles hold promise in addressing many of Web2’s shortcomings and offering a more equitable, user-centric, and open internet.

1. Ownership: Redefining digital property rights

In the Web1 and Web2 eras, most of us were mere tenants in the digital world. We used platforms and services, but we didn’t truly own our digital presence. Web3 flips the script by introducing digital assets known as “tokens,” which can be thought of as containers for value in the same way websites are containers for information. Just as there is a near infinite number of different configurations for a website, there is a near infinite number of different ways tokens cans represent ownership in everything from money to stocks, art to collectibles, data, natural assets, and much more. Moreover, tokens enable two or more individuals to transact digitally and peer to peer without an intermediary.

2. Commerce: Transforming business models

Web3 is enabled by several technologies including blockchains, which are a digital medium for value.  In the same way the first eras of the web transformed how we move and store information, blockchains promise to transform business models across various industries by transforming how we move and store value. In financial services, DeFi is reshaping lending, trading, and funding. Stablecoins—digital assets backed by fiat currencies—handle trillions of dollars in transactions on blockchains like Ethereum.

This is about more than money and markets. Culture needs a new business model, and Web3 can help us get there. Web3 simplifies how we fund creative ventures. It removes industry gatekeepers and amplifies underrepresented voices. It creates new ways for creators everywhere to earn a living. In a few short years, more than three hundred different NFT projects have generated at least $1 million in royalties for creators, who can continue to earn money instantly and frictionlessly when their works are resold. Thailand boasts more NFT holders than the U.S., Canada, and Germany combined. On Ethereum, the largest network in Web3, creators have earned more than $1.8 billion in royalties.

3. Identity: Empowering users

In Web2, user data became a valuable commodity, but individuals had little control or ownership over it. Data aggregators monetized user information, leading to concerns about privacy and user exploitation. Web3 addresses this by giving individuals control over their data. Much as a traditional wallet contains useful information and valuable assets, so too does a digital wallet contain not only money and other digital goods but a person’s unique identifiers.

So with Web3, you own your data and can use it as a way to unlock services and other benefits. Spectral Finance, for example, is helping users bootstrap digital credit scores to unlock financial services. This shift empowers users to safeguard their data, ensuring that they, not corporations, benefit from it. It’s a step toward a more user-centric internet that respects privacy and user rights.

4. Governance: A stake in the system

Web3 turns internet users into internet owners—they can earn ownership stakes in products and services by holding tokens. This aligns their interests with the platforms they rely on and gives them a say in governance decisions.

For instance, in DeFi, early users of applications like Compound and Uniswap received tokens as rewards for contributing to the ecosystem. Web3 extends the Silicon Valley maxim that to attract the best talent, you need to share in the upside, and applies it globally to anyone who uses Web3 applications.

As governments and regulators grapple with the dominance of big tech, Web3 is emerging as a compelling alternative. It’s more than just a technological shift; it’s a philosophical one—a call to action that reverberates through the digital landscape, an invitation to question the status quo and envision a future where the internet truly belongs to everyone.

Alex Tapscott is author of the upcoming book Web3: Charting the Internet’s Next Economic and Cultural Frontier. The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

As PayPal joins the fray, the stablecoin wars draw ever closer


Tether has long been the big dog of stablecoins and, in recent years, has only grown in dominance. The token accounts for 68% of the global supply of stablecoins, up from 50% in January. Tether’s total market value is larger now than at the peak of the 2021 bull market.

But it is far from the only player. On Monday, a major financial services company joined the conversation: PayPal announced that it’s finally rolling out its own stablecoin, PYUSD. Like USDT and Circle-owned USDC, which boasts a $20 billion supply of its own, PYUSD will be backed dollar-for-dollar with short-term U.S. government debt and cash.

Stablecoins have proven incredibly lucrative for Tether, so it’s no surprise why PayPal and others might want to enter the market: PayPal is facing stiffer competition in payments and is looking for ways to diversify into higher-margin areas. Stablecoins are a logical fit, and potentially a lucrative one at a time when Tether’s figures suggest that it’s poised to post a bigger profit than Starbucks, Blackrock—and even PayPal itself. The claim can be taken with a grain of salt given that Tether’s operations are notoriously opaque, but, even in light of this, the company is likely making a lot of money. How?

It’s useful to know USDT gets issued, or “minted,” against money deposited with Tether. USDT is a global, frictionless U.S. dollar alternative used widely as a medium of exchange and store of value, and demand has been surging. Tether invests those deposits in government securities often yielding 5% or more.­­ Because USDT holders do not earn interest, the yields Tether earns on its investments are almost pure profit. In banking, this is spread between what’s paid on deposits and what’s earned via lending is known as the net interest margin, or NIM.

When interest rates go up, banks need to set more money aside in case they experience defaults in their loan book, as rising rates often strain borrowers. And eventually, customers demand higher interest on their savings, which squeezes the margins. Tether does not have any of these issues: It only lends to the U.S. government, which is considered risk-free, plus users don’t expect a return. 

How long can USDT keep printing money like this? After all, at some point users might want to earn a return on USDT, especially if it’s sitting idly in a wallet as a U.S. dollar savings instrument, which is common in countries like Nigeria and others where the local currency is unstable or the financial sector undeveloped. Could a rival launch a competing interest-bearing centralized stablecoin that simply passes through interest from government securities to holders?

Such a product would differ from the quasi-decentralized stablecoin DAI that pays interest to holders based on yields from lending out the crypto assets it holds as collateral. And certainly, it would bear no similarity to complex and risky “algorithmic stablecoins,” like TerraLuna’s undercollateralized UST, which collapsed last year. What I am suggesting is simple and boring: Let’s call it USDI—”I” for interest payments.

Under this model, holders of USDI would be eligible for the yields on the underlying securities simply by holding it in their wallet of choice. To avoid the kind of duration mismatch of long-term and short-term assets that sunk Silicon Valley Bank, USDI could offer higher yields to holders willing to lock their assets in a smart contract for six months or a year, kind of like an on-chain certificate of deposit, or CD. USDI could retain earnings and become quite profitable while also setting aside reserve funds, all while passing interest payments to holders.

Critics might argue that this product is a solution in search of a problem since U.S. depositors can already hold money in a bank, buy treasuries, or invest in a money-market fund. This ignores the billions of people globally who would be ecstatic to have a way to store value in U.S. dollars while also earning a risk-free return on government securities. Another big hurdle is regulations. To paraphrase the adage “If it walks like a bank and talks like a bank, it’s a bank,” stablecoin issuers would be wading into a new and highly regulated world by offering interest to holders. Also, who’s to say Tether doesn’t just flip a switch and pay out interest itself? Given the potential network effects, that would be hard to compete with. 

Then again, companies can’t accomplish much if they give up before trying. On Web3’s economic frontier, everything is possible—and even PayPal appears to be aware of this. Anyone who cares about the future and wants to play a role in shaping it should be watching the stablecoin wars closely.

Alex Tapscott is the author of Web3: Charting the Internet’s Next Economic and Cultural Frontier (Harper Collins, Sept. 19, available for preorder). The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not reflect the opinions or beliefs of Fortune.

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