While 2021 brought Non-Fungible Tokens (NFTs) into the mainstream, it also witnessed a growing amount of interest in Web 3. Paradigm Shift, a venture capital firm explains why this space is something that you should care about and how it has the potential to reshape the internet could reshape as we know it.
To understand Web 3, we must first delve into the history of the internet, which dates back to the 90s. It was during this time that our computers became an encyclopedia and information became available to us with a few clicks of the mouse. However, this version of the internet had its limitations. Websites were mainly static, and there was no concrete way for us to interact with the net. This we can say was the first stage of the internet, or Web 1.
With the advent of sites like Facebook and YouTube, the concept of the internet has evolved. This period, which we can term “Web 2,” enabled us to like, share, and create content in a manner that was previously impossible. Web 2 also coincided with the rise of the smartphone. This meant that the net was now mobile and could be carried with us at all times.
However, while on the surface, Web 2 might seem ideal, it comes with some serious issues, mainly in the form of privacy, with big tech (Meta, Google, Apple, Amazon, etc.) keeping track of our online footprint in order to serve us ads and posts, which in turn gives them a phenomenal amount of control over our internet experience.
Web 3 hopes to address this issue. By building on the fundamentals of the blockchain, i.e., decentralization, Web 3 aims to give back power to the user, by offering them complete control over their data.
The space has been a keen area of interest for venture capital firms across the globe, and one such firm is Paradigm Shift, a Venture Capital Fund from India that aims to back founders building in India for global markets. The firm was founded by Govind Mundhra and sibling duo Dhruv and Surabhi Washishth, with the latter being India’s youngest woman general partner. The fund has made its first foray into the realm of blockchain with the Bribe Protocol and Arcana Network as part of its portfolio.
Given Dhruv’s background in VR and crypto, he was able to offer some insight on what funds look for when investing in Web 3.
“We invest in web3 infrastructure, DAO tooling, DeFi and are also looking at Metaverse projects given my background in VR,” Washishth stated.
“While there’s a lot of noise around web3 right now, the basic fundamentals that it stands for — a ‘trustless, permissionless, decentralized internet’, is a promising reset to the way a lot of platforms were structured over the past decade. At Paradigm Shift, we’re supremely excited by the new primitives being built in the web3 ecosystem especially at the infrastructure level.”
Washishth also believes that incorporation of Web 3 will be gradual stating that, users will be phased into new features with the concept still in its infancy.
“A lot of functionality is still being built, it is still early days. Especially for consumer facing applications,” Washishth said.
“There is a lot of talk about UX improvements around DeFi, wallets, privacy architecture and rightly so, it is quite hard for the average user to navigate most applications. Also, a lot of these functionalities will be baked into the architecture layer, so many consumers will not even know they’re dealing with something new per se – that’s the way it should be.
“There are many aspects of blockchain technology which have been integrated very deeply in various functionalities already. There definitely are aspects which will not see the light of day too, but overall many aspects of this ‘new internet’ will be here to stay because they are better in many respects.
“A focus on privacy as opposed to selling user data, a focus on Projects working on ensuring privacy being a key feature etc are great resets to the way platforms were structured over the past few years.”
The concept of privacy seems to be a recurring theme regarding the benefits of Web 3. However, while the intention is undoubtedly noble, there are some obvious issues with the current vision for Web 3. For one, a decentralized internet means there will be a system of lawlessness as a lack of regulations surrounding what is appropriate content becomes murky.
Secondly, the burden of the server costs might fall on the user as there will not be any motivation for big tech to host their current servers if there is no tangible benefit for them. Finally, the entire system seems to hinge on the viability of crypto tokens, which, given the state of things, seems like a very volatile foundation to build on.
Nevertheless, Washishth and his team seem optimistic about the prospect and future of the Web 3 ideology.
“At the very root of it, technology is always about disrupting the status quo – creating something new,” Washishth explained.
“It is about exploring new possibilities and things which are inherently better than what we’re used to in their current iterations, stick on. So, A VC firm which is able to back projects that create better versions of the current tech stack will benefit immensely.”
It will certainly be interesting to see what the future of the internet is. While Web 3 might seem like a utopian concept, it still has its drawbacks at this point in time, and as stated by Washishth, Web 3 is still in its nascent stages.