The Exciting Future of Web3 and Blockchain: Revolutionizing Digital Ownership and Commerce

Tech Talk June 09, 2024

The Exciting Future of Web3 and Blockchain: Revolutionizing Digital Ownership and Commerce

 

I am extremely excited about the potential of a Layer One blockchain and its impact on how we interact with each other. Layer One has the potential to revolutionize commerce through the use of digital assets.

From Web1 to Web3

During Web 1.0, we saw the birth of eBay, which gave individuals the ability to auction off physical items. In Web 2.0, we witnessed the rise of ride-sharing apps like Uber and vacation rental apps like Airbnb, allowing people to rent out their property to make money. My belief is that Web3 will give people the ability to auction off and trade digital assets. The difference between previous iterations and Web3 is that Web3 is highly reliant on company trust. While companies have shown a tendency to prioritize profit over culture, there is a strong chance we will never see the full power of Web3. However, if companies incorporate a Web3 model and consumers choose to do business with these companies first, this could open the door to a brand new form of commerce: the digital marketplace where you can trade and auction any digital assets.

 

What is the blockchain?

The boring definition of Web3 is blockchain: a distributed ledger technology that ensures transparency and security, making it an ideal foundation for managing digital transactions without the need for traditional intermediaries. A blockchain is a database where multiple copies are stored on a network of peer-to-peer computers. Imagine there was a MongoDB database, and we all had a copy of it. If someone attempts to update their name in the database, the peer-to-peer system validates the name based on encryption. Once each peer validates the encryption, the name change is put into a block, which is then added to a chain of previous name changes. This chain is the ledger, which cannot be changed or altered. After the name change is successfully added to the chain, the transaction is complete.

How Do Ethereum and Bitcoin Relate to This?

Ethereum and Bitcoin are both Layer One blockchains. These two L1s are currently at the forefront of the industry and are the closest to creating this scenario.

GameStop on the Blockchain

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GameStop is currently in the news again for its volatile stock. But what makes GameStop interesting is that it has become a sort of meme, giving it great public PR. This makes it a prime candidate to be the first to jump into the blockchain space. GameStop, a brick-and-mortar company, has been outpaced by Web 2.0 companies like Blockbuster. However, if GameStop embraces blockchain, it can not only compete with platforms like Steam but also retain its current business model. GameStop could build a Layer Two that allows users to connect their blockchain wallets to their GameStop accounts.

 

Every game available for purchase on GameStop’s new marketplace could be converted into a tradable token. This would give users the ability to trade and auction games they are no longer playing. GameStop could include a clause in the smart contract to receive 30% of all resales. This strategy eliminates risk for GameStop. Users buy games from their marketplace, then resell them on the same platform. Even if Steam creates a similar version, GameStop would still receive 30% of the resale. There is no inventory for GameStop to hold and no risk of unsold items. Plus, the market dictates the price of the game. Now, people who go to GameStop to sell their games won’t resent the company because the market determines the price, not an arbitrary system set up by the company. The idea is that companies use the resale marketplace to get quantity over game value. More people will look at the resale market to purchase a game, and GameStop will continually make a cut from each additional resale. For game trading, GameStop could charge a fee if users want to trade games with each other. The goal is to create a marketplace for people to interact. As long as the fees and smart contracts remain reasonable, people will be more than willing to explore available options.

McDonald’s Monopoly on the Blockchain

McDonald's Corp. To Go Orders Ahead Of Earnings Figures

Another real-world example is McDonald’s Monopoly. This game allows customers to collect Monopoly stickers from their food packaging, which can be redeemed for prizes like a free McFlurry or larger cash rewards by collecting certain properties. What if McDonald’s turned each game piece into a token and allowed users to trade and buy pieces? McDonald’s could again program in a cut of each transaction or a trade fee. This would increase interest in the game and generate more sales for the company. For those trying to collect pieces for bigger prizes, trading and auctioning could help them complete their sets. McDonald’s would get a cut of the money from these trades, mitigating their risk.

 

This concept could also be applied to promo codes. Most users don’t use promo codes, but if companies made their promo codes tradable, someone who doesn’t want the code could sell it for a small amount, while the buyer gets a discount, and the company guarantees a sale. The ultimate goal of this technology is to create a win-win situation for everyone involved. Just as Web 2.0 enabled Airbnb to allow homeowners to rent out their properties for extra income while offering cheaper vacation options to travelers, Web3 could enable digital asset trading while generating more sales and a cut of resales for companies.

 

Blockchain in Gaming and Other Industries

MC Hips Klaus SKin in Warzone, MW2, MW3 Tracer Pack: hippin' hoppin' Bundle

Blockchain technology can significantly impact various industries:

  • Gaming: Users could auction off limited-edition skins at high prices and receive a cut from resales.
  • Restaurants: Companies like Chipotle could auction off tokens for free burritos for life, allowing customers to get one free regular menu item a day indefinitely. These tokens could sell for substantial amounts, generating significant PR and cash inflows for the company.
  • Fashion: Similar models could be applied to exclusive fashion items, allowing for tradable tokens with resale value.

 

 

The Importance of Company Commitment

brown tabby cat on green and white textile

Ultimately, companies care about their bottom line. While Web3 sounds promising, if the payment model doesn’t bring in more revenue, companies won’t utilize it. Recently, there have been examples of companies undercutting initial promises to prioritize profit. For example, when Call of Duty moved from Warzone to Warzone 2, players expected their skins and camos to transition as well, but instead, everything was reset, making previous purchases worthless.

 

In World of Warcraft, introducing microtransactions ruined the game’s integrity. What made World of Warcraft great was the effort required to level up and obtain exclusive items. When players could simply buy their way to level 100, the game lost its allure. This pattern is seen in broader loyalty programs, with constantly changing point systems and expiration dates. For blockchain technology to work successfully, companies need to honor the tokens they mint. If companies frequently fail to honor these tokens, trust in digital assets will erode.

 

The Gamification of Life

person playing Pokemon Go during daytime

Web3 leads to the gamification of life, enabling the trading of tokens that represent the right to digital and physical assets alike. In car racing, for example, instead of physical blue papers representing car ownership, tokens could be used, making it easier to trade and put into arbitration apps. Imagine for the next Spider-Man movie, Marvel runs an augmented reality giveaway where users collect Spider-Man trading cards at certain spots, similar to Pokémon Go. Once they collect enough cards, they get a free movie ticket. Combining this with blockchain further incentivizes people, as they could trade the cards for money even if they don’t want to see the movie. This creates buzz and allows people to profit from your product, attracting even those who aren’t initially interested.

Conclusion

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While there is still a long way to go in terms of infrastructure, transaction costs, legalities, and finding companies willing to invest, the ability to instantly create value and incentivize participation is what makes Web3 so enticing. It builds on the concepts introduced in Web 1.0 with eBay and continued in Web 2.0 with Uber and Airbnb. Recently, we saw the beginnings of this with the NFT craze, but the core issue was the lack of company backing and real-world value. The real winner in this space will be the company that creates a Layer One blockchain connecting them all. Whoever wins this race to create the infrastructure for companies to easily link their Layer Two solutions and find a payment model that goes unnoticed will dominate the market.

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Chris Snowden

Author

Hi, I'm Christopher Snowden, a Shopify developer. I enjoy building and learning about e-commerce solutions that help businesses grow. With the rise of AI, I believe it is important for developers to understand more aspects of business and have a deeper understanding of how their skills translate to profit. Let's connect and collaborate! Follow me on social media to stay updated with my latest projects and insights.