As we move deeper into the AI era, many questions about data privacy and control remain unresolved. By now, most of us are fully aware that everything we do online causes personal data to be generated and shared. The centralized nature of the companies and government agencies it passes through means they have total control over who sees it and what can be done with it. Even if we put trust in their privacy policies and compliance with regulations like GDPR, it doesn’t eliminate concerns about data breaches and thefts.
Some say that Web3, with its decentralized databases and blockchain-based apps, offers solutions. It promises enhanced privacy and security, giving us back control and ownership of our data. In theory, at least, Web3 tools and technologies, secured by encryption, are beyond the control or censorship of any single entity, including tech giants and governments.
Although overshadowed by the buzz around generative AI in 2023, work on the next generation of web3 apps and technologies continues. Could 2024 be the year these innovations break into the mainstream? Let’s explore the trends that will shape its trajectory over the coming 12 months and beyond.
Sustainability In Blockchain And Web3
Top of the list of concerns must be the fact that blockchain and web3 technologies clearly have a sustainability problem. Computing using distributed and encrypted resources simply uses a lot of energy. At its peak in 2022, the Bitcoin network alone was estimated to consume the same amount of energy as Finland. In response, more efficient technologies, such as the Ethereum networks’ proof-of-stake algorithms, have been developed, and green web3 initiatives have emerged. Regenerative Finance, for example, has emerged as a way of leveraging the technology for environmental and sustainable initiatives.
Social Web3
Web3 promises decentralized social tools that its champions say will lead to more private, censorship-free communications and networking, with users keeping control of their content and data. Transparent, open-source algorithms could help to track and block attempts at spreading disinformation, with policies administered democratically through blockchain-based voting mechanisms. We’d probably have to look past 2024 to see something like this challenging the likes of Facebook or TikTok. But social tools like Mastodon that are built of decentralized principles are already emerging and growing in popularity, so I expect to see ongoing innovation in this space.
A Bitcoin Bull Run?
Cryptocurrency plays a big role in web3. It’s no coincidence that many web3 projects fail when the price of Bitcoin crashes, causing funding to dry up. In 2024, another Bitcoin halving will take place, which traditionally has caused the value of the number one cryptocurrency to increase. Of course, I don’t want to make financial predictions, but if it does happen, it will inevitably lead to an injection of funding and enthusiasm into web3.
Decentralized Finance (DeFi)
Decentralized finance (DeFi) is a term used for an emerging breed of financial services products built on blockchain and web3 technologies. Often, they are built around web3 capabilities of enabling peer-to-peer commerce and lending while circumventing “middleman” banks and financial institutions with their high fees. In recent years, these products have been attracting investment, meaning that in 2024, they’re more accessible than ever.
Web3 And The Immersive Internet
Call it “metaverse,” if you must. However, many web3 ideas are intrinsically linked to concepts of immersive online environments that mirror the real world. Web3 and blockchain technology have applications in online identity (such as avatars) and the creation of unique digital assets via NFTs. It can also be used to govern and administer online entities, from community groups to corporations, allowing members to democratically elect representatives and vote on the passage of rules and regulations. One prediction it’s easy to make is that the web will continue to evolve to become more immersive in 2024, but we’ll also get a better sense of what web3 will bring to the table.
Central Bank Digital Currencies (CBDCs)
These are essentially cryptocurrencies issued by central banks. Obviously, because they’re under the control of the banks that issue them, they aren’t decentralized. And they aren’t supposed to be! Instead, CBDCs can be thought of as attempts to move the technology used to administer financial services onto blockchain infrastructure, where it can be managed more efficiently and transparently. China will continue piloting its digital yuan in 2024, joining other countries like the United Kingdom, Bahamas, Nigeria and Sweden that have launched or discussed plans for CBDCs.
High-Profile Fraud and Other Crimes
There’s no getting around the fact that a lot of fraudsters and criminals have made themselves famous (and often made a lot of money) in the crypto world that underpins web3. The FTX collapse and penalties handed out to Binance this year could just be the tip of the iceberg if the industry continues to grow at rates that some are predicting. With legislators dragging their feet, it’s still very much a Wild West industry. So if you’re going to be involved, be careful.