Question: What do you get when you smash together aspirational Web3 papers produced by venture capital firms and over-the-top metaverse publications by large consulting companies?
Answer: the European Commission’s (EC) strategy on Web 4.0 and virtual worlds, published on July 11, 2023.
The overall aim is laudable — few would quibble with the EC’s stated intention, “to steer the next technological transition and ensure an open, secure, trustworthy, fair, and inclusive digital environment for EU citizens, businesses, and public administrations.” We could also forgive the hyped nature of the factsheet from which I’ve just quoted, which regrettably presents projections as “facts” and perpetuates the myth that virtual worlds revolve around head-mounted devices such as virtual-reality headsets. But its positioning of Web 3.0 as a given, complete with cryptocurrencies and token economics, is problematic at best and dangerous at worst.
You Can’t Define Web 4.0 Without Consensus On What Web 3.0 Is
So what is Web 4.0 according to the EC? The factsheet offers “digital and real objects and environments integrated and communicating between each other, enabling immersive experiences.” The glossary in the Staff Working Document is more elaborate and also includes reference to “more collaborative, decentralized, and user-centered approaches.” So far, so squishy — that’s the nature of trying to come up with definitions for concepts that remain vague and on which opinions vary widely. There’s also no right or wrong, which is why there’s typically no point in quibbling with definitions. I say “typically,” because, here, we have an exception: The authors of the various EC publications appear to be in a muddle when it comes to describing what Web 3.0 is. This matters, because it goes to the heart of how we want to shape the evolution of the web, so please bear with me while we do a little detour around terminology.
Here’s what Forrester concluded, after extensive investigation of the terms Web 3.0 and Web3: “Today, Web3 and Web 3.0 almost always refer to the same concept — a ‘new’ web, based on the principles of decentralization and giving power back to the individual, delivered via public blockchains. There was a time when Web 3.0 meant something different, and some purists try to preserve the distinction. At Forrester, we tend to stick to ‘Web3’ but also recognize that the terms have become interchangeable. The context will usually make it clear which ‘Web 3.0’ it is; when in doubt, ask.” (As the EC documents mostly use Web 3.0, I’ll stick to that in this blog post.)
Contrast this with the aforementioned Staff Working Document. In the body of the text, it says that “the 3rd generation of the World Wide Web evolves around decentralization and tokenized economies,” but the definition in the glossary describes the original concept of the Semantic Web. There’s no attempt to outline how we got from that original semantic concept of Web 3.0 to today’s token-driven public blockchains, and references to “Web3” (without explanation) only add to the confusion.
Today’s Web 3.0 Cannot Be A Foundation For The EU’s Web 4.0 Vision
What’s not to like about a worldwide web that’s fairer and more equitable than what we have today and that isn’t dominated by a small number of large global players? The challenge: How do we get there? We have yet to see how the lofty ideals of Web 3.0 can translate into reality, as we’ve pointed out previously. Quite the contrary: At this point, Web 3.0 is exhibiting the same monopoly-building, rent-seeking, and value-extracting tendencies that its proponents decry about Web 2.0.
Rather than (seemingly) uncritically perpetuating the narratives of crypto bros and techno utopians, those involved in crafting this EU strategy should examine the important aspects of Web 3.0 more critically and outline (just like they did in relation to virtual worlds) how we can collectively resolve some of the inherent contradictions in the principles for Web 3.0 and how individuals are (and will be) protected by existing and future legislation. Let’s look at just a few:
- Decentralization. There’s a lot of decentralization theater going on in today’s Web 3.0: Many blockchain networks, services, and applications are centrally controlled, whether it’s by corporate entities, single individuals, or groups of people. That’s not necessarily a bad thing. As we’ve said many times, complete decentralization is neither possible nor desirable. What we need is a constructive debate on what “decentralization” means and why certain central control points or trusted third parties may be unavoidable, not the pretence of “decentralized” and the seemingly unthinking parroting of those claims.
- Giving control back to the individual. In today’s Web 3.0, this equates to giving responsibility to the individual. That’s responsibility for managing your own keys, managing your own data, and managing counter-party risk, as well as active involvement in the running of communities. That’s simply not tenable and takes us back to the point about central control points and trusted third parties: When do we need them, and how do we govern them?
- Empowerment and democratization. Once again, Web 3.0 ideals have so far not translated into reality. Direct participation in today’s Web 3.0 requires a level of tech savviness that few possess, and the crypto-economic principles evidenced in today’s public blockchains favor early adopters and the (token-) wealthy.
- Blockchains as the foundation. Phrases like “known as the technology of trust” just perpetuate the myths around the technology. Blockchains are not inherently more secure, and data on a blockchain is only trustworthy if one can be sure that it was truthful and correct at the time of recording. There’s no mention of the trade-offs between the potential benefits afforded by the technology and the challenges of managing distributed systems, especially when they are supposedly not under the control of a single entity. And last, but by no means least, it’s careless to talk about “open and permissionless blockchains” without at least acknowledging that we have yet to figure out how to keep individuals safe in such environments and offering suggestions for how community governance can be made to work.
- NFTs and the creator economy. We’d be the first to agree that nonfungible tokens (NFTs) have a lot of potential; because tokens are programmable, they can be entirely self-describing, which means that they can include metadata about the asset as well as the rules that apply to it. What NFTs don’t do is automatically bestow any rights to the asset itself — all the recipient or buyer “owns” is a token on a blockchain. NFTs also can’t guarantee the availability and integrity of the assets themselves, unless they are fully digital and reside on the same blockchain. And as many artists have already found out the hard way, NFTs create as many problems as they (supposedly) solve. Again, this document is a missed opportunity to examine in more detail how the promise of NFTs stacks up against reality and how the EU could take the lead in discussing ways of addressing the challenges faced by creators who want to reach buyers and be rewarded fairly for their work.
The EU Can Still Take The Lead But Needs A Different Approach
If the EU wants to demonstrate leadership in shaping a new and more equitable worldwide web, policymakers need to stop being in thrall to unproven concepts. The EU has strong existing and pending legislation that’s designed to keep people safe in digital environments, such as the GDPR, the Digital Services Act, and the proposed AI Act. The EU should take a hard look at today’s Web3 reality and all the ways in which it violates the spirit or letter of those laws and make concrete suggestions about how to fix it. This would then open the door to a more constructive debate about how we can transform today’s self-referential ecosystem of financial engineering into a Web 3.0 that actually delivers benefits to all.
