Faster, Stronger: Why Web3 Is Racing Ahead of Traditional Businesses

Better or Just Different?

For those who work in the blockchain industry, web3 is clearly the future and all “legacy” businesses using web2 technology are on the way to becoming obsolete. The reality is more nuanced. While the proportion of businesses that gravitate to web3 or utilize foundational elements of its technology will increase significantly over the next decade, the majority of all commerce will continue to be conducted on web2 infra for the foreseeable.

While the drawbacks to the current hub-and-spoke internet, in which data is stored on central servers, are well documented, it will take more than a few hacked servers and customer data scandals to change this paradigm. For all its flaws, the web2 model is all most businesses have ever known and they see little reason to change from a system that’s more or less working.

For those businesses bold enough to recognize the limitations of web2, however, and to see the vast potential of the decentralized web, web3 beckons. It’s here that much of the latest tech, radical new business models, and novel company structures can be found.

Web3 Innovators In Action

Pick a blockchain and a native project that has an energetic community formed around it and you should be able to get a handle on what it is that makes web3 so irresistible. Take Solana, for example, which has earned a reputation for catering to consumers but is also now attracting enterprises and professional trading firms on account of its deep liquidity, low fees, and speed that put EVM networks in the shade.

To pick another project that encapsulates the sort of qualities web2 can’t optimize for, consider Polymarket. The prediction market has become so influential it’s transcended crypto and is now routinely referenced by legacy media when quoting the latest election odds and sporting bets. It turns out that the sort of qualities blockchain is renowned for – transparency, data integrity, decentralization – are qualities that even non-crypto users can appreciate once they see a tangible use case for the tech. 

Web3’s Flywheel Effect

As web3’s ability to innovate accelerates, it draws existing businesses into its orbit. This flywheel effect has seen industries ranging from AI to real-world assets succumb to the forces elevating web3 to new heights, bringing billions of dollars in assets onchain and unlocking new use cases. But this adoption isn’t just driven by web3’s siren call – it’s also a consequence of web2’s slowness to adapt.

While traditional companies have the capacity to innovate, they face increasing challenges related to data privacy concerns, centralized control, and market saturation. Traditional companies – those operating before the advent of the internet – have historically driven innovation through product development, scaling operations, and building customer trust over decades. That may have worked in the 20th century but it won’t cut it in the 21st as AI and blockchain disrupt every industry they touch.

The proliferation of data privacy scandals and waning trust in institutions has left many customers skeptical of companies’ ability to safeguard personal data. Users feel disempowered by platforms that control data ownership, content moderation, and monetization.

To a large extent, traditional companies have exhausted their ability to innovate using the old, centralized model and are seeking ways to differentiate themselves. Web3 offers new business models based on user empowerment, tokenized economies, and decentralized governance. The onus is on forward-thinking companies to seize the initiative rather than waiting until they’re the last to jump ship.

Web3’s decentralization, transparency, and community-driven foundation offer a fundamentally new approach that empowers users and has the potential to restore trust in digital platforms. This makes web3 well-positioned to address the challenges facing legacy companies and to drive future innovation in ways that web2 cannot.

While web3 businesses are still bound by the same rules that constrain their web2 counterparts, the former’s willingness to move fast and break things, as the adage goes, has inspired the creation of new financial markets, monetization models, and mechanisms for community ownership. This willingness to take risks, coupled with an acknowledgement that it’s the people that make the product and not the other way around, is why web3 is the most exciting digital industry in the world today.