There is a pervasive notion that the third-generation web is biased towards the gaming and cryptocurrency industry. However, a 2021 report by the U.S.- India Strategic Partnership Forum states that the third-gen web will be crucial for India to realise its $1.1 trillion digital asset opportunity by 2032.
From a policy perspective, the next-gen web is complex. Part of the problem lies with the diverse descriptors employed by experts. Also, the web’s immense social relevance is hard to comprehend.
Web 3 is not Web 3.0
Some experts term the third-gen web as ‘Web3’, while others use the descriptor ‘Web 3.0’. For web-tech buffs, Web3 is decentralised, privacy-oriented, blockchain-driven and crypto-asset friendly; while Web 3.0 upholds the property of the ‘semantic web,’ which is powered by Artificial Intelligence (AI). The real point about the semantic web is its ability to recombine information available on different websites to generate new content and knowledge resources that are more authentic and creative. Followers of Web 3.0 claim that their version is endowed with robust capability on the data analytics front. This way, it is argued that Web 3.0 will create far better search engines.
Of the two variants, Web3 seeks to radically transform the manner in which data is generated, monetised, shared and circulated. Further, it advocates decentralised data storage systems with the objective of unshackling the oligopolistic grip of technology behemoths over data. Web3 has file-sharing systems such as the Inter-Planetary File System which are cryptographically protected, more secure and capable of functioning off Internet and off blockchains. In this manner, Web3 seeks to overcome the data storage barriers of blockchains.
Web3’s boldest element is the strategic role it assigns to non- custodial wallets that function as digital passports for users to access blockchain-enabled transaction platforms. These wallets aid the creation of a ‘ownership economy,’ whereby creators themselves control their content. Fundamentally, they work as the digital proof of identity.
Web3 seeks to replace micro-economic organisations with decentralised autonomous organisations (DAOs). At a more macro level, it seeks to create a distributed economic system, where special classes of native digital tokens and cryptocurrencies would form the media of monetary circulation. In general, Web3 platforms would serve to raise the efficiency of peer-to-peer transactions.
Apart from utility tokens that enable users to access life support services, Web3 systems also seek to generate fungible digital assets to reward local providers of data storage capacity for their services. Asset tokens that are native to the new-gen web have the potential to function as capital mobilisation tools for Web3 projects. Likewise, stakeholders of DAOs can utilise tokens to exercise their voting rights. The NFTs of Web3 are more dynamic as they seek to incorporate improvements brought in by incremental innovations.
How India can benefit
India’s handcraft industry is renowned for design-related innovations, many of which are not protected by Intellectual Property rights. The digital tokens minted by Web 3 platforms would enable our handcraft enterprises to secure their innovations. Web 3-based instruction tools enable the rapid dissemination of grassroots innovations from master artisans to fellow members, which would improve the economic fortunes of craftsmen and artisan communities in north-east, western and peninsular India.
India’s major digital public infrastructure push and the large-scale deployment of Internet of Things (IoT) in rural development projects offer major possibilities for deploying Web 3 in rural areas. One of the understated facts of India’s transformation story in recent times has been the rapid rise of community data. The Atal Bhujal Yojana is an important source of data on groundwater utilisation practices and aquifer contamination, although this resource remains largely untapped for want of data analytics capabilities at the community level. This limitation can be overcome by Web3’s (decentralised) analytics systems. Web 3.0 can also yield insights from large volumes of community data, generated by IoT-enabled development programmes such as the Jal Jeevan Mission. Web 3.0’s natural advantage of facilitating ‘analytics at the edge’ provides considerable scope for mapping the water use habits of communities. Similarly, early warning systems for floods will improve with Web 3.0 due to data analytics facilities being obtained at the sub-basin level. Thus Web 3.0 will have a transformative role in regionally disadvantaged areas.
One constraint today is the inability of data analytics capabilities to catch up with the pace of data generation in rural areas. India has a rapidly expanding pool of data analytics and web design talent. By providing incentives for decentralised analytics and tokenising them (as envisaged in Web 3), it is possible to draw upon the talent pool for the benefit of rural communities.
Indeed, India’s National Blockchain Strategy 2021 proposes to explore tokenisation and apply blockchains solutions for development programmes. It will be a natural progression for India to craft a third-gen web strategy that optimises public interest. Such a strategy should seek to combine the welcome features of Web3 and Web 3.0.
A Damodaran is Distinguished Professor, Indian Council for Research on International Economic Relations, New Delhi. Views expressed are personal
